BP Projects Higher Production and Strong Trading, Weighed Down by Softer Energy Prices

BP (NYSE:BP) announced on Friday that it expects increased oil output and solid trading results for Q2, although weaker price realizations in its upstream operations may dampen overall earnings. Shares rose 2.2% by 03:48 ET .

Upstream production is forecasted to rise compared to Q1, primarily driven by higher oil volumes, especially from BPX Energy. Gas and low carbon energy output also saw a modest uptick.

However, realized prices in the gas and low carbon segment dropped by $0.1 billion to $0.3 billion, reflecting shifts in natural gas market prices outside the Henry Hub benchmark. The oil production segment experienced a larger decline of $0.6 billion to $0.8 billion, influenced by production mix and regional price fluctuations in the U.S. and UAE.

In the customers and products division, BP anticipates better results supported by seasonally higher volumes and improved fuel margins. Refining margins strengthened to an average of $21.10 per barrel in Q2, up from $15.20 in Q1, aided by reduced turnaround activity. Oil trading also posted robust gains.

The average Brent crude price for the quarter was $67.88 per barrel, down from $75.73 in Q1, while U.S. Henry Hub natural gas prices fell to $3.44 per mmBtu from $3.71. The lagged differential between WTI CMA and WCS crude narrowed to $10.01 per barrel from $11.97 previously.

BP expects a slight decrease in net debt by quarter-end. The company’s underlying charge related to other businesses and corporate expenses is expected to remain consistent with previous quarters.

Post-tax adjusting items are projected between $0.5 billion and $1.5 billion for the quarter and will be excluded from underlying replacement cost profit.

Guidance remains unchanged, with full-year capital expenditure forecasted at approximately $14.5 billion and an effective underlying tax rate near 40%. Divestment proceeds are anticipated to total between $3 billion and $4 billion, mainly in the second half of the year.

BP also expects Gulf of Mexico oil spill-related payments of $1.2 billion pre-tax for 2025, with $1.1 billion due in Q2.

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