BP profit slumps in Q4 on pandemic-led hit to energy demand

Oil major BP profit fell sharply in the fourth quarter of the year as the Covid-19 pandemic roiled energy demand, pressuring oil and gas prices and leading to higher exploration write-offs.

For the three months ended 31 December, the underlying RC profit for the fourth quarter fell to £115 million from £2.57 billion year-on-year.

For the year to through December 2020, the company reported a underlying replacement cost loss of £5.69 billion, compared with a profit of £10 billion year-on-year.

'Performance was significantly impacted by lower marketing performance in the downstream, with volumes remaining under pressure due to Covid-19 and continuing pressure on refining margins and utilization,' the company said.

The results were also impacted by a 'significantly weaker result in gas marketing and trading and higher exploration write-offs,' it added.

Downstream profit fell to £126 million from £1.44 billion year-on-year while upstream profit fell to £697 million from £2.68 billion.

Production fell 8.1% to 3,473mboe per day, with upstream output down 9.9%.

The company cut its dividend by 50% to 5.25 cents per share for the quarter.

'We remain on track to meet our target of $35 billion between the fourth quarter of 2021 and first quarter of 2022, which will trigger the start of share buybacks, subject to maintaining a strong investment grade credit rating,' the company said.

Looking ahead, BP forecast oil demand to recover in 2021 amid expectations for a normalization of the currently high inventory levels as OPEC and non-OPEC countries limit output.

'Looking to the first quarter of 2021, we expect industry refining margins and utilization to remain under pressure,' the company said.

'In our marketing businesses we expect renewed COVID-19 restrictions to have a greater impact on product demand, with January retail volumes down by around 20% year on year, compared with a decline of 11% in the fourth quarter,' it added.