BP (LSE:BP.) expects to recognise post-tax impairment charges of between $3.0 billion and $4.5 billion in the third quarter of 2026, primarily related to its gas and low-carbon energy businesses, according to a trading update released on Tuesday.
The oil and gas company also forecast a substantial reduction in net debt during the three months ended 30 September, alongside improved refining performance and stronger gas marketing and trading results.
BP expects net debt to be between $13.5 billion and $14.5 billion at the end of September, compared with $22.3 billion at 30 June.
The projected reduction represents a decline of approximately $7.8 billion to $8.8 billion over the quarter.
The company identified several factors affecting its debt position and cash movements during the period, including the redemption of hybrid securities, higher income tax payments, working capital releases and capital expenditure.
BP did not provide a detailed reconciliation of the expected net debt reduction in the supplied trading update.
The anticipated impairment charges relate to changes within the company’s gas and low-carbon energy operations.
These non-cash accounting charges are expected to affect BP’s reported third-quarter earnings, although they do not necessarily represent equivalent cash expenditure during the period.
The company expects to recognise the impairments as part of its financial results for the quarter, with the final amounts subject to its reporting process.
In upstream operations, BP narrowed its third-quarter production guidance to between 2.190 million and 2.240 million barrels of oil equivalent per day (boe/d).
This compares with production of 2.201 million boe/d in the second quarter.
The company maintained its full-year production guidance of between 2.180 million and 2.270 million boe/d, indicating no change to its annual output expectations.
BP also reported a reduction in realised crude oil prices during the quarter.
The company’s average realised Brent price was $96.99 per barrel in the third quarter, compared with $103.85 per barrel in the preceding three-month period.
The decline in realised prices represents a reduction of approximately 6.6% quarter on quarter.
Despite the lower average realised Brent price, BP expects improved performance from its refining operations.
The company indicated a third-quarter refining margin contribution in the range of $1.9 billion to $2.1 billion, alongside expected refinery throughput of between 1.375 million and 1.405 million barrels per day.
The anticipated refining performance reflects conditions in global fuel markets, where supply disruptions have supported refining margins.
Energy markets have experienced significant volatility during 2026, with disruptions linked to the conflict involving the United States and Iran affecting oil supplies and refining operations in the Middle East.
Additional pressure on refining capacity has followed Ukrainian attacks on Russian energy infrastructure in recent months.
These developments have contributed to changes in crude oil and refined product markets, influencing trading conditions for international energy companies.
BP’s downstream business includes refining and marketing activities, which are affected by movements in crude oil prices, product prices and refinery operating margins.
The company also expects a stronger contribution from its gas marketing and trading activities during the third quarter.
BP said the result from this business is expected to be significantly higher than in the second quarter, although it did not provide a specific earnings estimate.
Gas marketing and trading performance can vary between reporting periods, reflecting changes in commodity prices, market volatility and trading activity.
The expected improvement represents another factor influencing BP’s third-quarter earnings alongside its upstream production, refining performance and impairment charges.
The company’s trading update provides preliminary operational and financial indicators ahead of the publication of its complete quarterly results.
BP is scheduled to release its third-quarter earnings on 30 October 2026, when it will provide further information on profitability, cash flow, debt and performance across its operating businesses.
The results will also provide additional detail on the impairment charges associated with its gas and low-carbon energy operations.
For the third quarter, BP’s financial performance is expected to reflect contrasting developments, including significant impairment charges, lower realised Brent prices, improved refining margins and a stronger gas trading contribution.
The company enters its earnings announcement with net debt expected to have fallen substantially from the end of June, while maintaining its full-year upstream production guidance.
About BP
BP is an international energy company engaged in the exploration, production, refining, trading and marketing of oil, natural gas and related energy products.
Its operations include upstream oil and gas production, refining, fuel marketing and energy trading, alongside activities in lower-carbon energy.
The company’s financial performance is influenced by global commodity prices, production volumes, refining margins, trading conditions and capital investment requirements.
BP operates across international energy markets and reports financial results covering its upstream, downstream and other energy-related businesses.
The company is listed on the London Stock Exchange under the ticker LSE:BP. and on the New York Stock Exchange under NYSE:BP.
Leave a Reply