BP (NYSE:BP) raised its third-quarter production guidance on Tuesday, pointing to stronger upstream performance supported by increased output from both its oil and gas and low-carbon operations. Higher gas production at its U.S. shale unit, bpx energy, is expected to be a major factor behind the improvement.
The company had previously indicated output could dip slightly below the second quarter’s 2.3 million barrels of oil equivalent per day.
Despite the upgraded production view, BP warned that oil trading results were weak during the quarter. Brent crude averaged $69.13 a barrel in Q3, compared with $67.88 in the second quarter, the company said.
In its gas and low-carbon business, lower natural gas benchmarks outside Henry Hub are expected to reduce realizations by roughly $100 million. Gas marketing and trading results were described as “average.”
BP also anticipates about $0.1 billion in additional exploration write-offs versus the prior quarter. Realizations from oil production and operations are projected to stay largely flat, with timing effects from barrels in the Gulf of Mexico and the UAE playing a role.
The company expects post-tax asset impairment charges between $200 million and $500 million across business segments, which will be excluded from underlying earnings.
The customers and products division should benefit from stronger seasonal retail volumes, while fuel margins are set to remain stable.
Refining margins are expected to add between $300 million and $400 million, supported by less turnaround activity, which is expected to help offset compliance costs and weather-related issues at the Whiting refinery in the U.S.
Net debt is forecast to remain close to $26 billion, reflecting $1.2 billion in planned hybrid bond redemptions and around $1 billion in higher tax payments, partially balanced by a working capital release.
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