BP expects calmer waters in North Sea
Energy major BP has swung to a gaping annual loss of $5.7 billion (£4.2bn) after oil prices and demand slumped amid the pandemic.
The oil giant’s underlying replacement cost losses – one of the closely watched performance measures – compare with profits of $10bn in 2019 and come despite a bounceback in the second half of the year as oil prices staged a recovery.
On a reported basis, the group, which remains a key North Sea player, tumbled into the red with replacement cost losses of $18.1bn against profits of $3.5bn a year earlier after large write-downs.
Chief executive Bernard Looney said: “2020 will forever be remembered for the pain and sadness caused by Covid-19. Lives were lost, livelihoods destroyed.
“Our sector was hit hard as well. Road and air travel are down, as are oil demand, prices and margins.”
He described 2020 as a “pivotal year” for the group as it launched a net-zero goal and overhauled itself in a move that saw nearly 10,000 jobs go.
“We expect much better days ahead for all of us in 2021,” Looney added.
Richard Hunter, head of markets at Interactive Investor, noted: “BP has made some strong progress in recent months but unfortunately for
the year as a whole, the damage had already been done as the effects of the pandemic ravaged both oil demand and therefore its price.
“The company’s outlook in the immediate future is understandably cautious and somewhat out of its hands, with supply controlled by Opec and demand currently depressed by the effects of the pandemic.
“Even so, BP is working hard to grow while transforming and to streamline while venturing into new areas. The
company has continued to engender longer term optimism from investors, with the market consensus of the shares as a buy remaining intact.”
David Barclay, head of office at Brewin Dolphin Aberdeen, said: “While BP transforming itself to remain relevant in a de-carbonised world is a positive move, there is still a delicate balancing act for the company to play in the months and years ahead, evolving its business whilst attempting to remain attractive to investors.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, added: “Turning a tanker around with a storm raging was never going to be an easy manoeuvre and these numbers underline just how difficult the conditions are for BP”
BP’S results for the final quarter of 2020 show it made underlying profits of $115 million (£84m), having swung out of the red in the previous quarter, but the figures were worse than expected.
It said oil prices have risen since the end of October, helped by the rollout of the Covid vaccine worldwide, while it also expects demand to bounce back this year.
Brent crude had started the year on around $61 per barrel, but dropped to $55 before January was out, even briefly dipping below $19 in April.