British oil giant bp expects to record impairment charges of between £2.26 billion and £3.4 billion in the third quarter of this year, partly due to its transition towards renewable energy.
According to the company, the anticipated charges are linked to its gas and low-carbon energy businesses.
This marks the second time this year that bp has faced significant asset impairments. In January, the company reported write-downs of £3.02 billion and £3.77 billion, according to the Daily Mail.
The latest forecast comes after the FTSE 100-listed company acknowledged last year that its efforts to shift towards green energy had been misguided.
bp is now redirecting investment away from low-carbon businesses and towards oil and gas production, as the sector benefits from disruptions to oil supplies caused by the war with Iran.
The company told investors that Chief Executive Officer Meg O’Neill would present an updated strategy at her first investor presentation in New York in December.
bp expects oil and gas production to reach between 2.19 million and 2.24 million barrels of oil equivalent per day (boe/d), up from approximately 2.2 million boe/d recorded in the second quarter.
"bp has spent years trying to reinvent itself as an energy company, and it looks set to have made a profit this quarter thanks to its very strong refining operations," said Alex Pugh, an analyst at Freetrade.
He added that although oil prices had declined, disruptions in the Middle East had sharply increased refining margins, partly offsetting losses elsewhere, including at the pump.
Chris Beauchamp, chief market analyst at IG, said the sharp rise in oil prices had restored BP’s leading position. He added that movements in the company’s share price suggested investors appeared willing to overlook a substantial reduction in its green energy business.