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BP Plc Resets Price Outlook; To Incur Non-cash Impairment Charges, Write-offs

BP Plc (BP.L,BP_UN.TO,BP) has revised its long-term price assumptions, lowering them and extending the period covered to 2050. Bp said it now sees the prospect of the COVID-19 pandemic having an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period. The company is also reviewing its intent to develop some of its exploration intangible assets.

The company's revised investment appraisal long-term price assumptions are now an average of around $55/bbl for Brent and $2.90 per mmBtu for Henry Hub gas, from 2021-2050. bp has also revised its carbon prices for the period to 2050 and these now include a price of $100/teCO2 in 2030.

BP Plc noted that these actions will lead to non-cash impairment charges and write-offs in the second quarter, estimated to be in an aggregate range of $13 billion to $17.5 billion post-tax. The company currently estimates non-cash, pre-tax impairment charges against property, plant & equipment in the range of $8 billion to $11 billion, and write-offs of exploration intangibles in the range of $8 billion to $10 billion.

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