Oil giant BP will write off as much as $17.5 billion (Dh64.3bn) as the company revises down its long-term energy price assumptions in the wake of the Covid-19 pandemic.
“With the Covid-19 pandemic having continued during the second quarter of 2020, BP now sees the prospect of the pandemic having an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period,” the company said in a statement to the London Stock Exchange on Monday.
BP said there is a growing expectation that “the aftermath of the pandemic will accelerate the pace of transition to a lower carbon economy and energy system, as countries seek to 'build back better' so that their economies will be more resilient in the future”.
The lowering of its long-term price expectations, and a review of its intent to develop some of its exploration intangible assets “will lead to non-cash impairment charges and write-offs in the second quarter, estimated to be in an aggregate range of $13bn to $17.5bn post-tax,” the company said.
BP revised its long-term assumptions for Brent crude down to $55 per barrel and for Henry Hub gas (from 2021-2050) to $2.90 per million British Thermal Units.
Brent crude prices dropped from highs of almost $69 per barrel in January to $19.33 as demand buckled due to movement restrictions put in place to stop the spread of Covid-19 and an unravelling of an agreement to cut production. Prices recovered to $40 per barrel last week as the Opec+ alliance renewed a commitment to production cuts with a tighter enforcement regime.
“We have reset our price outlook to reflect that impact and the likelihood of greater efforts to 'build back better’,” the company's chief executive Bernard Looney said.
“We are also reviewing our development plans. All that will result in a significant charge in our upcoming results, but I am confident that these difficult decisions – rooted in our net zero ambition and reaffirmed by the pandemic – will better enable us to compete through the energy transition."
BP launched a new strategy under Mr Looney in February, where it set a target of becoming a ’net zero’ carbon emissions company by 2050, which involves a restructuring of its operations that could see up to 10,000 jobs, or about 14 per cent of its workforce, cut.
“Sales could accelerate as the prospects of a global recovery in oil demand are being dashed by worries of a second wave contagion. If this is the case, an extended period of travel restrictions and slower industrial activity could send the price of barrel down to [the] $20 level,” said Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank.
The company had $130.2bn of assets at the end of March, of which oil and gas properties made up $88.6bn and exploration intangibles $14.2bn.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
MATCH INFO
Watford 2 (Sarr 50', Deeney 54' pen)
Manchester United 0
White hydrogen: Naturally occurring hydrogen
Chromite: Hard, metallic mineral containing iron oxide and chromium oxide
Ultramafic rocks: Dark-coloured rocks rich in magnesium or iron with very low silica content
Ophiolite: A section of the earth’s crust, which is oceanic in nature that has since been uplifted and exposed on land
Olivine: A commonly occurring magnesium iron silicate mineral that derives its name for its olive-green yellow-green colour
The Case For Trump
By Victor Davis Hanson
Crazy Rich Asians
Director: Jon M Chu
Starring: Constance Wu, Henry Golding, Michelle Yeon, Gemma Chan
Four stars
The bio
Date of Birth: April 25, 1993
Place of Birth: Dubai, UAE
Marital Status: Single
School: Al Sufouh in Jumeirah, Dubai
University: Emirates Airline National Cadet Programme and Hamdan University
Job Title: Pilot, First Officer
Number of hours flying in a Boeing 777: 1,200
Number of flights: Approximately 300
Hobbies: Exercising
Nicest destination: Milan, New Zealand, Seattle for shopping
Least nice destination: Kabul, but someone has to do it. It’s not scary but at least you can tick the box that you’ve been
Favourite place to visit: Dubai, there’s no place like home
The specs
Engine: 2.0-litre 4-cylturbo
Transmission: seven-speed DSG automatic
Power: 242bhp
Torque: 370Nm
Price: Dh136,814
UAE currency: the story behind the money in your pockets
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Tips to stay safe during hot weather
- Stay hydrated: Drink plenty of fluids, especially water. Avoid alcohol and caffeine, which can increase dehydration.
- Seek cool environments: Use air conditioning, fans, or visit community spaces with climate control.
- Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
- Dress appropriately: Wear lightweight, loose and light-coloured clothing to facilitate heat loss.
- Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
- Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
- Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.
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Padmaavat
Director: Sanjay Leela Bhansali
Starring: Ranveer Singh, Deepika Padukone, Shahid Kapoor, Jim Sarbh
3.5/5
Tank warfare
Lt Gen Erik Petersen, deputy chief of programs, US Army, has argued it took a “three decade holiday” on modernising tanks.
“There clearly remains a significant armoured heavy ground manoeuvre threat in this world and maintaining a world class armoured force is absolutely vital,” the general said in London last week.
“We are developing next generation capabilities to compete with and deter adversaries to prevent opportunism or miscalculation, and, if necessary, defeat any foe decisively.”
