BP incurs US $ 4bn historic quarterly loss in coronovirus and falling demand for crude oil

BP incurs US $ 4bn historic quarterly loss in coronovirus and falling demand for crude oil
BP incurs US $ 4bn historic quarterly loss in coronovirus and falling demand for crude oil

BP plc (LON: BP.) Maintained its dividend in the first quarter despite reporting a "historic" loss of $ 4.36 billion over a three-month period due to the coronovirus epidemic (COVID-19) and a large drop in oil demand.

The loss listed on FTSE 100 for shareholders in the first quarter of 2019 compared to a profit of US $ 2.93 billion in the same period in 2019. The replacement cost, based on BP's preferred P / L metric, resulted in the Oiler's loss of $ 628 million compared to a profit of US $ 2.09bn.

Earned an inherent replacement cost benefit of $ 2.4 billion to $ 800 million in the first quarter of 2019.

Exploring specific challenges, the company described low oil prices, declining demand, projected declines in Rosneft returns and lower contribution from the oil business. A US $ 3.7 billion decrease in the value of crude stored as inventory is said to be the main driver of the US $ 4.4 billion loss.

Net debt at the end of the quarter was US $ 51.4 billion, an increase of US $ 6 billion over three months. The company said it withheld US $ 32 billion of the remaining liquidity.

A dividend of 10.5 cents per share was announced as of the fourth quarter of 2019.

"BP's future financial performance, including cash flows, net debt and leverage, will be affected by the extent and duration of current market conditions and the effectiveness of actions it undertakes and its financial interventions," the company said. Said in the statement.

"It is difficult to predict when the current supply and demand imbalance will be resolved and what will be the ultimate impact of COVID-19,

taking action

BP noted that it strengthened its balance sheet by adding $ 10 billion to the revolutions and issued new bonds worth $ 7 billion in April.

The group has reduced its capital spending by 25% from the earlier budget announced in February. Measures include delaying exploration and evaluation activities, while reducing some development costs and improving some projects in the early stages. Such measures are expected to reduce production in 2020 by about 70,000 barrels of oil equivalent per day (boped).

By the end of 2021, there will be a reduction of US $ 2.5bn in cash costs.

However, BP's US $ 15bn asset apportionment program is and continues to be, as seen on Monday with news of a change in its terms of sale for businesses in Alaska, with transactions being improved with rescheduling is. Or early or short-term adaptation.

Specifically, BP said revenue of $ 10 billion would be reviewed by the end of 2020 until the completion of the transaction.

BP stated that it has been supportive of the response to COVID-19 in the communities in which it works in various ways.

The company elaborated that it is providing free fuel and discounts to vehicles and emergency service workers in many countries. He has donated PPE for health services. Researchers investigating the epidemic are using a BP supercomputer in Houston.

Ethanol has been donated from BP's biofuels operations for the production of hand sanitizers. And the company has donated to mental health charity MIND, the World Health Organization's response fund, and supported employee volunteers and matched employee donations to charity.

New CEO Bernard Lunney

“Our industry has been hit by supply and demand shocks on a scale never seen before, but this is not an excuse to change inward. BP, like many other companies, is moving forward and is extending a helping hand to those in need, ”said BP’s new chief executive, Bernard Loney, in the statement.

The new BP chief executive said: “We are focused on efforts to protect our people, support our communities and strengthen our finances. I am particularly proud of the work that our people are doing in all three areas, particularly our partners in operations, from platforms to retailers and elsewhere, who distribute energy and deliver goods in the most difficult conditions Continue to do. "

At the same time, we are taking decisive steps to strengthen our finances, liquidity, reduce expenses and costs faster, lower our cash balance, he said.

Lonnie began his tenure as BP's CEO in February, replacing Bob Dudley.

In London, after starting declining by more than 2%, BP's shares made up some lost ground, and at 308.95p they were down 5.15p or 1.6%.

He said, "Shares have fallen into the open only 2%, reflecting an determinism to reward shareholders, keeping the dividend at 10.5c, even if investors and the market would have forgiven them if they had cut the dividend." Would have been, ". Helal Mia, analyst at Shared Center.

"But this partly reflects BP's liquidity levels of about $ 32 billion, some of which are supported by measures such as capital expenditure cuts."

Mia said: "After the recent unimaginable fall in the price of oil, investors have made up for the inevitable impact on the profits of oil companies and today BP's first quarter results were not surprising."

BP's earnings fall, but gets quarterly dividend

Changes in the size of the commodity environment were accelerated due to declining oil prices and weak demand.

The London-based energy giant shifted to replacement cost losses, similar to the net revenue figure reported by US oil companies. United States period.

BP said a $ 1.4 billion net adverse impact on non-operating items and fair value accounting effects was included.

Excluding one-time items, BP's underlying replacement costs, the company's preferred metric, fell to $ 800 million. A consensus compiled by the company from estimates by 22 brokers is that the company's underlying replacement cost benefit in the first quarter was $ 710 million.

BP said revenue fell from $ 67.51 billion to $ 59.54 billion in this year's quarter.

The company achieved a net loss of $ 4.37 billion with a profit of $ 2.93 billion.

Upstream production per day fell 2.9% to the equivalent of 2.58 million barrels of oil. The underlying profit from replacement costs before interest and taxes on the upstream business producing oil and gas fell to $ 1.02 billion from last year's $ 2.88 billion.

BP said it expects the second quarter to reduce production and uncertainties related to the implementation of sanctions, disinvestments, and the impact of the coronovirus epidemic on oil demand from the Organization of Petroleum Exporting Countries. Factors.

BP stated that cash flow was $ 1.23 billion in operations, excluding payments related to the 2010 Deepwater Horizon oil spill.

Net debt in the period was $ 51.4 billion compared to $ 45.4 billion.

Geared to total net debt and equity, the ratio of net debt was 30.4% to 36.2%. The leverage level is between 20% and 30% of the company's long-term target.

BP said it held its quarterly dividend at 10.25 cents per share.

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