BP Warns Of Weaker Refining Margins, Higher Debt: Details

BP p.l.c. BP shares are trading lower on premarket on Friday. The company disclosed updated third-quarter guidance.

The company expects upstream production to remain roughly flat compared to the previous quarter, with stable output in both oil production & operations and gas & low-carbon energy.

In the gas & low-carbon energy segment, BP projects realizations to have a favorable impact of about $0.1 billion due to changes in non-Henry Hub natural gas prices.

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Also, in the oil production & operations segment, the company anticipates realizations to have an unfavorable impact of $0.1 billion to $0.3 billion, influenced by price lags, particularly in the Gulf of Mexico and UAE.

Apart from this, BP projects higher exploration write-offs to negatively affect results by $0.2 billion to $0.3 billion. The company anticipates gas marketing and trading results to be average.

In the customers and products segment, fuel margins should remain steady, with seasonally higher volumes partially offset by increased costs.

However, weaker realized refining margins are expected to have a negative impact of $0.4 billion to $0.6 billion, and oil trading performance is expected to be weak.

BP now anticipates higher net debt at the end of the quarter, mainly due to weaker realized refining margins.

In the third quarter of 2024, Brent crude averaged $80.34 per barrel, down from $84.97 per barrel in the second quarter. Meanwhile, BP’s refining marker margin (RMM) averaged $16.5 per barrel, compared to $20.6 per barrel in the second quarter.

Investors can gain exposure to the stock via Donoghue Forlines Yield Enhanced Real Asset ETF DFRA and First Trust Exchange-Traded Fund IV FT Energy Income Partners Strategy ETF (ARCA: EIPX).

Price Action: BP shares are down 0.71% at $32.12 premarket at the last check Friday.

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