BP has released its Trading Statement, providing preliminary estimates and expectations for the second quarter of 2024. The company anticipates a range of mixed outcomes influenced by fluctuating market conditions and internal operational factors.
Upstream Production
BP projects its upstream production for Q2 2024 to remain largely unchanged compared to the previous quarter. Within this segment, oil production and operations are expected to be stable, while gas and low carbon energy production may see a slight decline.
Segment-Specific Impacts
- Gas & Low Carbon Energy: Realizations in this segment are expected to negatively impact earnings by approximately $0.1 billion, mainly due to declining non-Henry Hub natural gas prices. The gas marketing and trading performance is predicted to be average, following a strong first quarter.
- Oil Production & Operations: This segment is expected to benefit from favorable realizations, with an estimated positive impact ranging from $0.1 to $0.3 billion. This is attributed to price lags affecting BP’s production in the Gulf of Mexico and the UAE.
Customers and Products Segment
- Customers: BP expects stronger fuel margins and improved convenience performance, alongside seasonally higher volumes.
- Products: Significantly lower realized refining margins are projected to adversely impact earnings by $0.5 to $0.7 billion. This decline is attributed to weaker middle distillate margins and narrower North American heavy crude oil differentials, along with increased turnaround activity. However, this will be partially offset by the absence of the first quarter’s Whiting refinery outage, which had a negative impact of approximately $0.5 billion. The oil trading result is expected to be weak following a strong first quarter.
Other Financial Impacts
The second quarter results are expected to include post-tax adverse adjusting items related to asset impairments and onerous contract provisions, estimated to range between $1.0 and $2.0 billion. This includes charges related to the ongoing review of BP’s Gelsenkirchen refinery in Germany.
Market Conditions
- Brent Crude: Averaged $84.97 per barrel in Q2 2024, up from $83.16 per barrel in Q1 2024.
- US Gas (Henry Hub): Averaged $1.89 per million British thermal units (mmBtu) in Q2 2024, down from $2.25 per mmBtu in Q1 2024.
- BP Refining Marker Margin: Remained consistent at $20.6 per barrel in both Q2 and Q1 2024.
Publication and Cautionary Note
BP’s finalized results for Q2 2024 are scheduled to be published on 30 July 2024. The company emphasizes that these preliminary estimates are subject to the finalization of its financial reporting processes, and actual results may vary.
In a cautionary statement, BP highlighted the inherent risks and uncertainties in forward-looking statements, noting that actual outcomes may differ materially due to factors such as price fluctuations, demand changes, currency fluctuations, production results, and geopolitical events, among others.
