The result reflected lower prices, demand destruction in the Downstream particularly in March, a lower estimated result from Rosneft and a lower contribution from oil trading. It was also impacted by $0.2 billion non-cash underlying foreign exchange (FX) effects in other businesses and corporate, including FX translation impacts of finance debt in the BP Bunge Bioenergia joint venture.
Replacement cost loss for the 1st quarter was $0.6 billion, compared with a profit of $2.1 billion for the same period a year earlier, including a $1.4 billion net adverse impact of non-operating items and fair value accounting effects.
BP’s revenues in 1Q 2020 dropped to $59.5 billion from $67.4 billion in 1Q 2019. Net debt at the end of the quarter was $51.4 billion, $6 billion higher than a quarter earlier. At the end of the quarter, BP had around $32 billion of liquidity available.
Looking ahead, BP expects 2nd-quarter reported production to be lower compared to the 1st quarter and will be subject to significant uncertainties with regard to the implementation of OPEC+ restrictions, price impacts on PSA and TSC entitlement volumes, divestments, market restrictions given the lack of demand for oil and COVID-19 operational impacts.
The economic impact of the COVID-19 pandemic coupled with pre-existing supply and demand factors have resulted in an exceptionally challenging commodity environment. Product demand has sharply reduced, notably for mobility, contributing sharp falls in refining margins and utilization.