BP just reported their third Q results.
They reported a multi billion loss but they added a caveat that makes it sound like that it might not be as bad as it is presented.
Reported loss for the quarter was $2.5 billion, compared with a $3.1 billion profit for the second quarter 2021. This was driven by significant adverse fair value accounting effects* of $6.1 billion pre-tax, primarily due to the exceptional increase in forward gas prices towards the end of the quarter. Under IFRS, reported earnings include the mark-to-market value of the hedges used to risk-manage LNG contracts, but not of the LNG contracts themselves. This mismatch at the end of the third quarter is expected to unwind if prices decline and as the cargoes are delivered. The underlying result is adjusted to remove this mismatch.
Would someone explain how it might work. Are they hoping the spot price will be less than the contract price in the future, so they won;t need their hedge prices.
thanks
Submitted November 03, 2021 at 06:23AM by dexcel https://ift.tt/3q2kDiF
