Investing.com – BP (NYSE:) shares fell on Tuesday after the energy giant warned its second-quarter results will be affected by lower refining margins and also expects to take an impairment charge of up to $2 billion.
At 06:30 ET (10:30 GMT), BP shares were down 3.9% to 455.98 pence.
BP warned in a statement released earlier Tuesday that weak refining margins and disappointing oil trading results were likely to weigh between $500 million and $700 million on its second-quarter results due on July 30.
The oil company also noted that it would take an impairment charge of up to $2 billion in the second quarter related to the ongoing review of its Gelsenkirchen refinery in Germany.
Upstream production in the second quarter is now expected to be “broadly flat” compared to the previous quarter, BP said, adding that it expects an average gas marketing and trading result.
“The trading update should result in an earnings decline of around 20% for the second quarter, mainly driven by lower trading contribution q/q (in both gas and oil) and negative revisions in refining,” Jefferies analysts said .
The bank maintains a buy rating and a price target of 590p.
BP also disappointed in the first quarter of the year, with the energy giant posting lower-than-expected underlying profits due to a drop in oil and gas prices.
Underlying replacement cost profit – a measure of net revenue – fell to $2.72 billion, compared with $4.96 billion in the corresponding three-month period last year. Forecasts compiled by the company expected a figure of $2.87 billion.
BP noted that results were also hurt by an outage at its main Whiting refinery in Indiana and a “significantly weaker” fuel margin, both of which offset “strong” oil trading performance and higher realized refining margins.
