BP (LSE:BP.) signaled on Friday that second-quarter oil production will rise alongside a solid trading performance, though earnings may be constrained by softer price realizations in upstream segments. Shares increased 2.2% as of 07:48 GMT.
The company expects upstream output to surpass first-quarter levels, with notable growth in oil production, particularly driven by BPX Energy’s operations. Gas and low carbon energy output also edged higher.
Price realizations in gas and low carbon energy declined slightly by $0.1 billion to $0.3 billion, influenced by fluctuations in non-Henry Hub natural gas prices. In the oil production segment, a larger decrease of $0.6 billion to $0.8 billion was seen, attributed to changes in production mix and regional pricing in the United States and United Arab Emirates.
BP’s customers and products segment anticipates stronger results due to seasonally increased volumes and improved margins on fuels. The refining margin averaged $21.10 per barrel in Q2, up from $15.20 in the previous quarter, supported by less turnaround downtime. Oil trading activity remained robust.
During the quarter, Brent crude prices averaged $67.88 per barrel, down from $75.73 in Q1, while Henry Hub gas prices slipped to $3.44 per mmBtu from $3.71. The one-month lagged WTI CMA and WCS crude differential narrowed to $10.01 per barrel from $11.97.
BP projects a slight reduction in net debt by the end of the quarter. Charges related to other businesses and corporate expenses are expected to be consistent with earlier quarters.
The company anticipates post-tax adjusting items ranging from $0.5 billion to $1.5 billion this quarter, which will be excluded from its underlying replacement cost profit.
BP maintains its full-year guidance with capital expenditures at around $14.5 billion and an effective underlying tax rate near 40%. Divestment proceeds are expected between $3 billion and $4 billion, mainly in the second half of 2025.
Payments associated with the Gulf of Mexico oil spill are forecasted at $1.2 billion pre-tax for the year, with $1.1 billion expected in Q2.
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