British oil giant BP announced that it foresees $4 billion to $5 billion in impairments in the fourth quarter, mainly linked to its energy-transition businesses. This move comes as BP redirects its investments back to oil and gas, following a strategic capital reallocation away from lower-carbon ventures led by Chair Albert Manifold. Meg O’Neill is set to assume the role of chief executive officer in April, succeeding interim boss Carol Howle after the sudden departure of Murray Auchincloss.
The impairments mentioned are not anticipated to impact the company’s underlying replacement cost profit, which is its equivalent of net income. However, BP did not specify the exact projects associated with these impairments. The company highlighted that these charges, ranging from $4 to $5 billion, are primarily related to the gas and low carbon energy segment and are excluded from the underlying replacement cost profit.
In the fourth quarter, BP reported that its oil and gas production remained relatively stable compared to the previous quarter, standing at 2.4 million barrels of oil equivalent per day. Despite this, the company expects a decrease in earnings from its gas business due to weaker realizations, with oil likely to see a reduction of $200 million to $400 million and gas by $100 million to $300 million from the previous quarter.
BP also mentioned that the quarterly results will be influenced by stronger realized refining margins of approximately $0.1 billion, offset by a higher impact from turnaround activities and the temporary effects of reduced capacity following a fire at the Whiting refinery. The company anticipates a weak oil trading result, with global benchmark Brent crude prices averaging around $63.73 a barrel in the October to December quarter, down from $69.13 in the third quarter.
