BP in 2020 set out its ambition to become a net zero company “by 2050 or sooner.”
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BP shares dropped on Tuesday after the firm flagged it expects to post an impairment of up to $2 billion in the second quarter and warned of lower refining margins weighing on its results.
BP shares were down 2.6% in early market trading at 08:39 a.m. London time.
In a Tuesday statement, the company said it anticipates weak refining margins and oil trading performance will weigh on its second-quarter results, due out on 30 July. The hit is estimated between $500 million to $700 million.
The energy firm also expects to record post-tax asset impairments and contract provisions in the range of $1 billon to $2 billion in the second quarter. The hit includes charges relating to BP’s ongoing review of its Gelsenkirchen refinery in Germany.
Upstream production in the second quarter is now expected to be “broadly flat” compared to the previous quarter, BP said, adding that it anticipates an average gas marketing and trading result.
The overall enegy sector has “modestly” underperformed, said RBC analyst Biraj Borkhataria, adding that “nevertheless, there are some puts and takes here, with stronger than anticipated upstream volumes offset by weakness elsewhere.”
BP is facing a period of transition after former CEO Bernard Looney resigned less than four years in the post due to undisclosed personal relationships with colleagues before becoming CEO. The company appointed Murray Auchincloss as permanent CEO in January.
The firm is targeting at least $2 billion in cash cost savings by the end of 2026. Weaker margin in fuels and lower gas and oil prices impacted BP’s results in the first quarter, leading to a drop in profit.
Last week, rival energy giant Shell similarly announced that it expects to record a post-tax impairment hit of up to $2 billion, mainly linked to its Singapore and Rotterdam plants. It added that its second-quarter performance of trading and optimization in the core gas division is expected to come in below the first quarter of 2024 “due to seasonality.”