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BP profits drop 96% as pandemic hits energy demand

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BP reported a 96 percent drop in fourth quarter profits, as the pandemic took a hit on energy demand and the company suffered from weaker business results.

Underlying profit on a replacement cost basis – a measure of income closely followed by oil analysts – was $ 115 million in the three months to Dec.31. estimate.

This quarterly profit compares with $ 2.6 billion in the same period the previous year.

The fourth quarter ended a brutal year for the industry with government-imposed lockdowns and travel bans to contain the pandemic, which significantly affected profits.

For the full year, BP fell to a loss of $ 5.7 billion, its first in a decade. This is due to collapsing energy prices, a depreciation in the value of multibillion-dollar oil and gas assets, lower refining margins and depressed demand.

In 2019, he reported a profit of $ 10 billion.

BP said quarterly performance was “significantly” affected by lower marketing performance in downstream businesses, pressurized fuel sales due to the pandemic, and lower refining margins.

The company also said the decline in gas marketing and trading results and the rise in exploration write-offs had a significant impact.

BP, which returned to profit in the third quarter with the recovery in crude prices and energy demand, had previously warned of a volatile outlook.

The price of crude oil recovered from last April lows – below $ 20 a barrel – helped by a nascent market recovery and the rollout of vaccinations. Although Brent is again above $ 55 a barrel, it is still far from the level of around $ 70 a year ago.

The rebound helped BP’s stock price, which last year fell to decades-long lows.

The pandemic is accelerating the transformation of the oil company led by chief executive Bernard Looney, who started his post last February and has pledged to turn BP into a net-zero emissions company by 2050.

BP is selling assets and reshaping its business for a lower carbon future, which includes restructuring the company and cutting 10,000 jobs.

BP reduced its dividend in August for the first time since the Deepwater Horizon disaster in 2010 to 5.25c, which it has since maintained, including in the last quarter.

The company cut capital spending by billions of dollars, cut costs dramatically, secured new lines of credit, issued bonds and blocked exploration activity. BP expects capital spending to reach $ 13 billion in 2021.

He also wants to sell $ 25 billion in assets by 2025 to reduce debt and pay for his green energy push.

The company said net debt – which stood at $ 39 billion in the fourth quarter – will increase in the first quarter of 2021, but it is still aiming to hit its target of $ 35 billion by the end of this year.

This week, BP announced the sale of a 20% stake in an Omani gas block for $ 2.6 billion.

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