Oil major BP said it expects to book $4 billion to $5 billion in fourth-quarter impairments, mainly tied to its low-carbon energy businesses, as it redirects spending to oil and gas to boost returns under new leadership including Chair Albert Manifold.
The company said in a trading statement today ahead of results on February 10 that the impairments are excluded from underlying replacement cost profit, its version of net income. A spokesperson declined to say which projects were affected.
New CEO Meg O'Neill will replace interim chief Carol Howle in April after Murray Auchincloss's abrupt exit last month as BP sought to improve its profitability and share performance which has lagged competitors like Shell in recent years.
BP about year ago slashed its annual spending on energy transition businesses from $7 billion to a maximum of $2 billion as it embarked on a major strategy shift back to oil and gas.
It wants to sell its stake in solar power groupLightsource bp, has spun off its offshore wind business into joint venture JERA Nex BP and has abandoned plans to build a biofuels plant in Amsterdam.
Jera Nex BP was not among winners at a British offshore wind power contract auction this week after having committed hundreds of millions of dollars in 2021 with German regional utility EnBW to UK seabed rights. Jera Nex BP did not immediately respond to a request for comment.
Lower oil prices, trading to weigh on earnings
BP warned that weaker oil trading and falling prices will weigh on fourth-quarter earnings.
It expects lower oil prices to reduce quarterly earnings by $200-400m while weaker gas prices could trim another $100-300m. European benchmark gas prices fell 9% in the period, and Brent crude averaged $63.73 a barrel, down from $69.13 in the third quarter, as oversupply fears hit markets.
BP expects net debt to have dropped to $22-23 billion by the end of 2025 from $26.1 billion in the third quarter, helped by divestments of about $5.3 billion, above earlier guidance.
The figure excludes $6 billion fromselling a majority stake in its Castrol lubricants unit. BP aims to cut debt to $14 billion–$18 billion by 2027.
Refining margins slipped to $15.20 a barrel from $15.80 in the previous quarter. BP's 440,000-barrel-per-day Whiting refinery in the US suffered outages after an October fire, adding to earlier disruptions from flooding and a major 2024 outage.
BP also raised its expected tax rate for 2025 to 42% from 40%.
