Fredrocko
blood pressure (New York Stock Exchange:BP) expects to record impairment charges of $1 billion to $2 billion for the second quarter and warned of weak oil trading earnings amid “significantly lower” refining margins, sending its shares lower. falling by 3.8% in pre-market trading on Tuesday.
Provisions for impairment of assets after taxes and extraordinary contracts include charges related to the ongoing overhaul of its Gelsenkirchen refinery in Germany.
Lower realized refining margins are expected to have an adverse impact of between $500 million and $700 million, driven by weaker middle distillate margins, tighter North American heavy crude spreads and a higher level of recovery activity.
BP (BP) expects second-quarter upstream production to be broadly unchanged sequentially, with output largely unchanged in oil production and operations and slightly lower in gas and low-carbon power.
In the gas and low carbon power segment, realizations are expected to have an adverse impact of approximately $100 million compared to the first quarter, including decreases in non-Henry Hub natural gas marker prices.
In terms of oil production and operations, realizations are expected to have a favorable impact of between $100 million and $300 million compared to the first quarter. The British oil and gas giant will report second-quarter results on July 30.
BP’s (BP) forecast comes just a day after Exxon Mobil (XOM) warned of weaker gas prices weighing on its second-quarter upstream earnings, as well as a big drop in refining margins.