BP Can Operate as a Going Concern for 12 Months if Brent Falls to Zero -- Commodity Comment
February 02 2021 - 4:33AM
Dow Jones News
By Ian Walker
BP PLC on Tuesday reported a swing to profit in the fourth
quarter of 2020, and said it can continue to operate as a going
concern for at least 12 months even if the price of Brent crude
fell to zero.
On gas prices:
"The current tightness on global [liquefied-natural-gas] markets
and higher U.S. gas prices will lift other regional gas
prices."
"U.S. gas markets are likely to benefit from lower production
and a recovery in international LNG demand driven by demand in
Asia."
"We expect the U.S. gas market to tighten in 2021 as supply
declines and demand for LNG exports recovers."
On downstream:
"In the first quarter of 2021 we expect material impacts in
downstream as a result of the pandemic, with increased Covid-19
restrictions resulting in lower product demand."
On fourth-quarter trading:
"The result for the fourth quarter mainly reflects lower liquids
and gas realizations, lower production including the impact of
divestments, and a significantly weaker gas marketing and trading
contribution, partly offset by lower depreciation, depletion and
amortization."
"Compared with the same period in 2019, the result for the
fourth quarter primarily reflects lower oil prices partially offset
by favorable foreign exchange effects."
On operating as a going concern:
"Reverse stress tests performed indicated that the group will
continue to operate as a going concern for at least 12 months from
the balance sheet date even if the Brent price fell to zero."
On Covid-19:
"BP sees the prospect of an enduring impact on the global
economy as a result of the Covid-19 pandemic, with the potential
for weaker demand for energy for a sustained period."
On oil supply:
"From the oil supply side, limited growth from non-OPEC+
countries coupled with active market management from OPEC+ means
that for 2021 we anticipate a normalization of the currently high
inventory levels."
On 2021 production:
"We expect full-year 2021 underlying production to be slightly
higher than 2020 due to the ramp-up of major projects, primarily in
gas regions, partly offset by the impacts of reduced capital
investment and decline in lower-margin gas assets."
Shares at 0840 GMT were up 9.05 pence, or 3.4%, at 258.05
pence.
Write to Ian Walker at ian.walker@wsj.com
(END) Dow Jones Newswires
February 02, 2021 04:18 ET (09:18 GMT)
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