LONDON— BP PLC returned to profit in the fourth quarter but said the pandemic, which battered the oil-and-gas industry in 2020, would continue to challenge its business this year.
Covid-19 has sapped demand for oil, hitting prices, and prompted the world’s biggest energy companies to slash spending, cut jobs, write down the value of their assets and—in the case of BP and Royal Dutch Shell PLC—lower dividends. The crisis led U.S. oil giants Exxon Mobil Corp. and Chevron Corp. to discuss a merger, according to people familiar with the matter, although the talks didn’t progress.
BP said Tuesday its earnings had suffered from weaker gas marketing and trading results, while refining margins and utilization remained under pressure. However, this was partly offset by income from asset sales, including some proceeds from the $5 billion sale of its petrochemicals business to Ineos Ltd.
The company reported a replacement cost profit—a metric similar to the net income figure that U.S. oil companies report—of $825 million for the three months ended Dec. 31, from a loss of $4 million in the year-earlier period. For the full year, it reported a loss of $18.1 billion, from a profit of $3.5 billion in 2019.
BP said Covid-19 restrictions would continue to sap demand early in 2021 and that the pandemic may have an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period.
