BP posts $5.7bn annual loss after coronavirus decimates oil market
Oil supermajor BP swung to a $5.7bn ($4.2bn) reported loss in 2020 as the coronavirus pandemic sent oil demand plummeting.
The combination of lower oil and gas prices, significant exploration write-offs and refining margins and depressed demand sent the firm deep into the red after 2019’s $10bn profit.
The firm also undershot analyst expectations for quarterly underlying profit by some way, with a take of $115m well short of Jefferies’ estimate of $380m.
Shares in BP fell 3.0 per cent as markets opened this morning.
Hargreaves Lansdown analyst Susannah Streeter said today’s figures were a stark reminder of “just how difficult the conditions are for BP as it attempts a rapid energy transition amid sunken oil demand”.
A historic plunge in oil prices last spring was the precursor for the record loss, with the firm writing off $17.5bn from the price crash alone.
The devastation came just weeks after BP had unveiled an ambitious plan to pivot to becoming an “integrated energy company”.
As a result, chief executive Bernard Looney announced a wholesale restructuring of the firm, with 10,000 people set to leave.
By the end of the fourth quarter, half of these had done so.
The fourth quarter itself saw BP make a profit of $1.4bn, mainly due to the proceeds from its sale of its petrochemicals business.
This $2.3bn is part of a plan to make $25bn in divestments from non-core assets by 2025.
Yesterday it announced the sale of a 20 per cent stake in a massive gas project in Oman to Thailand’s national oil firm for $2.6bn.
BP said that it expected proceeds from divestment to reach $4-6bn in 2021.
Looney said: “2020 will forever be remembered for the pain and sadness caused by Covid-19. Lives were lost – livelihoods destroyed. Our sector was hit hard as well. Road and air travel are down, as are oil demand, prices and margins.
“It was also a pivotal year for the company. We launched a net zero ambition, set a new strategy to become an integrated energy company and created an offshore wind business in the US. We began reinventing bp – with nearly 10 thousand people leaving the company.”
Streeter added: “The focus for the company in the longer term will be on making the most of its remaining oil fields while investing in a low carbon future, but it will be like walking a tight rope for the business.’’