BP reports its first full year loss in ten years after a ‘brutal’ year

LONDON – Energy giant BP reported a weaker-than-expected full-year net loss on Tuesday after a tumultuous 12-month period in which the global oil and gas industry faced a deluge of bad news.

The UK-based oil and gas company posted an underlying loss of full year replacement costs, used as a proxy for net profit / loss, of $ 5.7 billion. That compared to net income of $ 10 billion for fiscal year 2019.

Analysts polled by Refinitiv had expected a full-year net loss of $ 4.8 billion.

BP also posted fourth quarter net profit of $ 115 million, while analyst expectations of $ 285.5 million are lacking.

The company said full-year results were driven by lower oil and gas prices, significant write-offs on exploration, pressure on refining margins and reduced demand. It warned that the ongoing coronavirus pandemic would continue to affect its performance.

“It is certainly a difficult quarter at the end, I think, of a very difficult year for everyone. And our full year results were badly hit by Covid,” Bernard Looney, CEO of BP, told CNBC’s “Squawk Box Europe.” after the results were published.

“We’ve had the worst recession, I think, in the world since the 1940s. It was a cruel year, I think, for the oil trade – negative prices, fuel demand down 14%, aviation down 50%, and of course we had adjustments to our schedule prices that resulted in impairment and amortization. ”

The latest figures from BP come as energy companies try to prove to investors that they have gained a more stable basis on stronger commodity prices.

The oil and gas industry entered a downward spiral last year, as the coronavirus pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented write-offs and tens of thousands of job losses.

It will likely be known as the worst year in the history of the oil markets, the head of the International Energy Agency said earlier.

The largest oil and gas companies in the world are now trying to leave it behind and instead point to the prospect of an economic recovery in 2021 and hope for a recovery in fuel demand in the coming months.

Looney described 2020 as a “pivotal year” for the company and the “toughest of my career”.

“The good news is that the company continued to perform really, really well and I’m incredibly grateful to our employees around the world for that. Strong security, strong reliability, ahead of plan to take costs … and net debt below $ 39 billion, ”said Looney.

Net debt fell $ 1.4 billion in the fourth quarter and $ 6.5 billion in 2020 to $ 39 billion. Looney said this showed that the company was on track to reach $ 35 billion in net debt.

BP has had a “huge” year strategically, Looney said, adding that the massive rollout of Covid vaccines “can only lead to bright prospects for the year ahead.”

BP shares are down more than 3% Tuesday morning. The company’s share price is up about 6% year-to-date, up from nearly 46% last year.

International benchmark Brent crude oil futures traded at $ 56.85 a barrel Tuesday morning, up about 0.9%, while US West Texas Intermediate futures were up at $ 54.11, about 1% higher.

Oil prices have steadily improved since the start of the year, supported by continued production cuts and the massive roll-out of Covid vaccines.

However, major forecasters, including the IEA and OPEC, have warned that the 2021 outlook for the oil market continues to be clouded by pandemic fears.

An increase in coronavirus cases in recent weeks has led to renewed lockdown measures and travel restrictions in some countries.