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BP slices 25% off capex budget as it responds to coronavirus crisis

Capex for 2020 is expected at US$12bn and it plans to cut US$2.5bn of costs.

BP PLC - BP slices 25% off capex budget as it responds to coronavirus crisis

BP PLC (LON:BP. told investors it will cut this year’s capital spending by 25% to around US$12bn, and, it aims to cut US$2.5bn of annual costs by the end of 2021.

The major international oiler detailed the measures it is taking in response to the coronavirus (Covid-19) pandemic, and, it highlighted some US$32bn of cash reserves at the end of the first quarter.

It noted “no significant operational impact” in the first quarter, but, said this could change through the second quarter.

READ: Shell is most vulnerable amongst big oil peers - analyst

BP is significantly impacted by the fall-off in fuel demand and the huge reduction in economic activity – across most of its businesses. It highlighted that the downstream division has seen “significant and growing decline” in demand, particularly for jet fuel and lubricants.

The company said this was evident in China though towards the quarter-end the trend extended into larger US and European markets.

In upstream, BP expects to report first-quarter production volumes of 2.55mln to 2.6mln barrels of oil per day which would be lower than in the preceding three-month period.

BP anticipates it will make US$1bn of impairments for the quarter, meanwhile, it continues to review potential first quarter impairment charges.

The oil major also highlighted measures it has taken to support communities in which it operates.

It donated US$2mln to the COVID-19 Solidarity Response Fund which supports the World Health Organization.

In the UK, BP is providing free fuel to emergency service vehicles and air ambulances. Similar programmes are in place in Spain, Turkey, Poland, and Australia, while in Germany it has provided fuel cards to health care workers.

BP is donating personal protective equipment (PPE), from its own stocks, to health services in the United States, UK, France, Belgium, Spain, The Netherlands and Germany.

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Price: 305.75 GBX

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Market Cap: £61.94 billion
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