Shares of British Petroleum (BP) are down 4% after the oil major warned of a $2 billion U.S. impairment charge and weak refining margins that are likely to impact its upcoming second-quarter financial results.
BP, as the company is commonly known, said in a news release that weak refining margins and oil trading cost it $500 million U.S. to $700 million U.S. in this year’s second quarter.
The $2 billion U.S. impairment charge is due to BP’s ongoing review of its Gelsenkirchen refinery in Germany, said the London, England-based company.
BP added that its upstream production in the second quarter is likely to be “broadly flat” compared to the previous first quarter.
BP is undergoing a transition under chief executive officer (CEO) Murray Auchincloss who took the helm of the company this past January.
The firm has announced plans to achieve $2 billion U.S. in cost savings by the end of 2026. However, weaker refining margins and lower oil prices have hurt BP’s profitability in recent quarters, a trend that looks to have continued in Q2 of this year.
BP is the second major oil and natural gas producer to issue a warning about its upcoming earnings.
At the start of July, Shell (SHEL) announced that it expects to record a Q2 impairment charge of $2 billion U.S. due to its Singapore and Rotterdam plants, and that it too has seen weaker refining margins and trading activity due to what it called “seasonality.”
BP is scheduled to announce its Q2 financial results on July 30.
Prior to today (July 9), BP’s stock had risen 3% year-to-date and was trading at $36.55 U.S. per share.
