BP slashes oil forecast and estimates up to £13.95 billion of write-downs in the second quarter

British Petroleum (LON: BP) slashed its long-term price forecasts for oil and gas on Monday as it warned of a lasting impact of the Coronavirus pandemic on the energy sector. The company also said that the virus outbreak will accelerate a global shift to renewable energy. In the current quarter, BP now estimates £10.36 billion to £13.95 billion of write-downs.

Shares of the company were reported more than 3% down in premarket trading on Monday. At 309 pence per share, BP is roughly 35% down year to date in the stock market after recovering from a low of 234 pence per share in March. Learn more about how do people make money on the stock market.

BP to expand its focus on renewable energy

Much like its competitors, BP is likely to take a significant hit to its quarterly revenue as the pandemic weighs heavily on the global oil demand. The impairments, as per the British oil major, are likely to increase its debt burden and fuel the need to slash its dividend in the upcoming months.

CEO Bernard Looney of BP is scheduled to present a new strategy in September that is expected to reinvent the company via expanding its focus on renewable energy. In the first week of June, British Petroleum agreed to lower the price of its North Sea Assets that it is selling to Premier Oil.  

The British multinational reduced its price forecast for Brent oil to £43.85 per barrel (average) until 2050 that represents a 30% decline as compared to its previous estimate of £55.80. As per Barclays, BP’s outlook came in the lowest versus other leading energy companies in Europe.

BP to slash its workforce by 15%

In an announcement last week, British Petroleum had announced plans of slashing its workforce by 15%. The London-headquartered company is scheduled to release its second-quarter financial results on 4^th August. In the first quarter report announced in the last week of April, BP posted a 67% decline in its net profit due to a sharp slump in global oil prices.  

BP’s performance in the stock market was reported slightly downbeat in 2019 with an annual decline of a little under 10%. At the time of writing, the British multinational oil and gas company has a market cap of £62.94 billion.