BP NYSE:BP expects to record about $1 billion in second-quarter impairment charges tied to its gas and low-carbon energy business as the company continues shifting its strategy back toward oil and gas.
The charges will be excluded from underlying replacement cost profit. They follow up to $5 billion in energy transition-related writedowns announced earlier this year as BP scales back investments in low-carbon projects.
BP is one of the world's largest integrated energy companies, producing oil and natural gas while operating refineries, fuel retail networks and trading businesses. The company has recently refocused on its traditional hydrocarbon operations to improve profitability and shareholder returns.
Despite the impairment, BP expects several parts of the business to perform well. Stronger refining margins are projected to add $1.2 billion to $1.4 billion to second-quarter results, while oil trading is expected to outperform the first quarter. Net debt is also forecast to fall to $22 billion-$23 billion from $25.3 billion.