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BP Shares Slide After Warning Of 'Enduring' COVID-19 Impact; Sees $17.5 Billion Q2 Writedown

BP CEO Bernard Looney said the coronavirus pandemic "increasingly looks as if it will have an enduring economic impact' on the global economy.

BP Plc  (BP) - Get Free Report shares slumped lower Monday after the U.K. oil major cut its long-term market outlook and warned investors it may have to take a $17.5 billion writedown on its assets.

BP said the 'enduring impact' of the COVID-19 pandemic on the global economy could include an acceleration of the pace of transition towards lower carbon energy systems over the longer term. More immediately, BP warned, weaker demand and lower oil prices are likely to dominate markets, forcing the group to take no-cash impairment charges of between $13 billion and $17.5 billion over the current quarter.

"BP has revised its long-term price assumptions, lowering them and extending the period covered to 2050 so that it is now consistent with its ambition horizon," the group said in a filing with the London Stock Exchange. "As part of its long-term strategic planning, and in the context of its continuing focus on capital discipline, bp is also reviewing its intent to develop some of its exploration intangible assets."

BP's U.S.-listed shares were marked 5.1% lower in early trading Monday to change hands at $23.47 each, while its London-based shares lead the FTSE 100 lower with a 2% decline. 

BP said it now sees an average price for Brent crude, which forms around 60% of global oil transactions, of around $55 a barrel over the next 30 years, down from its previous forecast of $70 a barrel.

Henry Hub natural gas prices from Erath, Louisiana, which dictate trading on the New York Mercantile Exchange, were forecast at $2.90 per million British thermal units (BTUs), down from BP's prior estimate of $4 per BTU. 

In Monday's oil market trading, WTI futures contracts for July delivery were marked 46 cents lower from their Friday close in New York to change hands at $35.80 per barrel while Brent contracts for August, the global benchmark, were seen 16 cents lower at $38.57 per barrel.