BP p.l.c. has released its trading statement for the third quarter of 2024, offering insights into its expected performance ahead of the full results announcement on 29 October. While the company’s upstream production remains steady, challenges in refining margins and exploration write-offs could weigh on results.
Upstream Production and Realizations
BP anticipates that upstream production will be broadly flat compared to Q2 2024. This applies to both its oil production & operations and gas & low carbon energy segments. The gas segment is expected to show a modest improvement in realizations, with a positive impact of around $0.1 billion due to non-Henry Hub natural gas price shifts. However, the oil segment faces a potential hit, with an unfavorable impact between $0.1 and $0.3 billion, largely driven by price lags in the Gulf of Mexico and UAE markets.
Exploration Write-Offs Weigh on Oil Segment
In addition to lower oil realizations, the oil production & operations segment is also expected to be burdened by higher exploration write-offs. These write-offs could lead to an additional unfavorable impact of $0.2 to $0.3 billion compared to the previous quarter.
Customers and Products Segment Under Pressure
While BP expects customer fuel margins to remain stable and seasonally higher volumes to boost results, its products segment will likely face challenges. Realized refining margins are projected to be weaker, with an estimated hit of $0.4 to $0.6 billion, while oil trading results are anticipated to be underwhelming.
Higher Net Debt Due to Refining Margins and Delayed Divestments
BP expects net debt at the end of Q3 to rise, driven primarily by weaker refining margins and the deferral of approximately $1 billion in divestment proceeds to Q4 2024.
The company’s guidance for Q3 underscores a mixed financial landscape, with some favorable impacts in gas trading but significant challenges in oil trading, refining, and exploration activities. BP’s final Q3 results will be unveiled later this month.
