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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  BP plc    BP.   GB0007980591

BP PLC

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Oil majors wipe $80 billion off books as epidemic, energy transition bite

12/01/2020 | 07:43am EST
FILE PHOTO: An Exxon gas station is seen in Houston

LONDON (Reuters) - The world's top energy companies have slashed the value of their oil and gas assets by around $80 billion (60.05 billion pounds) in recent months after revising lower the long-term outlook for fuel prices in the wake of the coronavirus epidemic and the energy transition.

Exxon Mobil, the largest U.S. oil company, announced on Monday it would write down the value of natural gas properties by $17 billion to $20 billion, its biggest ever impairment following the sharp drop in energy prices this year.

It follows similar steps by rivals including Royal Dutch Shell, BP and Chevron since late 2019.

For graphic of Downsizing: https://graphics.reuters.com/OIL-WRITEDOWNS/qmypmxlrovr/chart.png

The so-called oil majors are "acknowledging overly optimistic commodity price views of yesteryear," said Bernstein analyst Oswald Clint.

Most of Exxon's impairments focused on legacy assets from its $30 billion acquisition of U.S. shale producer XTO Energy in 2010, a deal former CEO Rex Tillerson had previously said was "ill-timed."

Following the impairments, companies will focus on the parts of the business that are able to withstand the lowest oil and gas prices, Clint said.

"Balance sheets now reflect the lowest portfolio break-evens in two decades and therefore the most resilient to future commodity price shocks."

Exxon did not disclose its new commodity price outlook. The value of the oil majors plummeted in 2020 after energy demand collapsed due to the pandemic.

The shares of Exxon, Shell and BP have lost over 45% so far this year, more than benchmark Brent oil prices that have lost around 27% and stand today near $48 a barrel.

The impairments made by the European majors also came after they lowered their long-term oil prices forecasts as they prepare to increasingly switch to renewable energy in the coming decades to reduce carbon emissions to net zero.

The revisions might nevertheless lead to a sharp rise in oil prices in the coming years as a result of lower investments in new projects, Clint said.

"We're staring into the abyss when it comes to supply and demand balances due to a dearth of much needed capital investment."

(Reporting by Ron Bousso; Editing by Chizu Nomiyama)

By Ron Bousso


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
BP PLC -1.84% 297.4 Delayed Quote.18.70%
CHEVRON CORPORATION -3.56% 92.09 Delayed Quote.9.05%
ENI S.P.A. -0.40% 8.793 Delayed Quote.3.31%
EQUINOR ASA -0.97% 163.5 Real-time Quote.13.90%
EXXON MOBIL CORPORATION -4.81% 47.89 Delayed Quote.16.18%
LONDON BRENT OIL -0.46% 54.66 Delayed Quote.9.17%
REPSOL S.A. -0.21% 8.646 Delayed Quote.4.87%
ROYAL DUTCH SHELL PLC -1.61% 16.516 Real-time Quote.14.89%
TOTAL SE -1.08% 36.705 Real-time Quote.5.09%
WTI -0.29% 52.022 Delayed Quote.11.60%
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Financials (USD)
Sales 2020 191 B - -
Net income 2020 -22 341 M - -
Net Debt 2020 45 266 M - -
P/E ratio 2020 -3,77x
Yield 2020 6,61%
Capitalization 83 048 M 83 090 M -
EV / Sales 2020 0,67x
EV / Sales 2021 0,57x
Nbr of Employees 67 600
Free-Float 93,3%
Chart BP PLC
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BP plc Technical Analysis Chart | BP. | GB0007980591 | MarketScreener
Technical analysis trends BP PLC
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Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 4,52 $
Last Close Price 4,11 $
Spread / Highest target 61,6%
Spread / Average Target 9,94%
Spread / Lowest Target -38,9%
EPS Revisions
Managers and Directors
NameTitle
Bernard Looney Chief Executive Officer & Director
Helge Lund Chairman
Andy Hopwood COO & Executive VP-Upstream Strategy
Murray Auchincloss Chief Financial Officer
Angela Rosemary Emily Strank Chief Scientist & Head-Downstream Technology
Sector and Competitors
1st jan.Capitalization (M$)
BP PLC18.70%83 090
EXXON MOBIL CORPORATION16.18%202 490
RELIANCE INDUSTRIES LTD-2.41%168 168
CHINA PETROLEUM & CHEMICAL CORPORATION14.70%75 625
NESTE OYJ2.13%56 091
PTT1.76%41 087