BP Plc has revised its long-term price assumptions, lowering them and extending the period covered to 2050. Bp said it now sees the prospect of the COVID-19 pandemic having an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period. The company is also reviewing its intent to develop some of its exploration intangible assets.

 

The company's revised investment appraisal long-term price assumptions are now an average of around $55/bbl for Brent and $2.90 per mmBtu for Henry Hub gas, from 2021-2050. bp has also revised its carbon prices for the period to 2050 and these now include a price of $100/teCO2 in 2030.

 

BP Plc noted that these actions will lead to non-cash impairment charges and write-offs in the second quarter, estimated to be in an aggregate range of $13 billion to $17.5 billion post-tax. The company currently estimates non-cash, pre-tax impairment charges against property, plant & equipment in the range of $8 billion to $11 billion, and write-offs of exploration intangibles in the range of $8 billion to $10 billion.

 

The company said in a statement the strategy focusses on developing a more diversified, resilient and lower-carbon energy company, re-inventing bp into a leaner, faster-moving and lower cost organisation and strengthening its finances in response to the challenging environment.

 

"We have reset our price outlook to reflect that impact (of Covid) and the likelihood of greater efforts to ‘build back better’ towards a Paris-consistent world. We are also reviewing our development plans," Bernard Looney, BP chief executive officer, said.

 

He added that this will result in a significant charge in the company's upcoming results, but these difficult decisions – rooted in its net zero ambition and reaffirmed by the pandemic – will better enable the firm to compete through the energy transition.