BP said its second-quarter results are expected to benefit from significantly stronger oil realizations and refining margins, even as upstream production falls because of seasonal maintenance and supply disruptions in the Middle East.
In a trading update released ahead of its Aug. 4 earnings report, the company forecast reported upstream production of 2.17 million to 2.22 million barrels of oil equivalent per day (boe/d), down from 2.339 million boe/d in the first quarter. The decline reflects planned maintenance, primarily in the Gulf of America, along with the ongoing impact of disruptions in the Middle East. Gas and low-carbon energy production is expected to reach 750,000-770,000 boe/d, while oil production and operations are forecast at 1.42 million-1.45 million boe/d.
Despite lower output, BP expects higher commodity prices to provide a substantial earnings boost. Oil production and operations realizations are projected to improve underlying replacement cost profit before interest and tax by $1.8 billion to $2.1 billion compared with the first quarter, while gas and low-carbon energy realizations are expected to contribute an additional $500 million to $700 million. Gas marketing and trading results are expected to remain broadly unchanged quarter over quarter.
The customers and products segment is also expected to benefit from stronger market conditions. BP forecasts seasonally higher fuel volumes, improved fuel margins, and refining gains of $1.2 billion to $1.4 billion. Refinery throughput is expected to decline to 1.445 million-1.475 million barrels per day due to planned turnaround activity and reduced volumes at the Whiting refinery following an April third-party incident that has since been resolved. Oil trading performance is expected to be slightly stronger than in the first quarter.
The company expects exploration write-offs of about $500 million during the quarter, largely related to the sale of its Bay du Nord project in Canada. Second-quarter results are also expected to include approximately $1 billion in post-tax impairment charges, primarily linked to transition businesses within its gas and low-carbon energy segment. These charges will be excluded from underlying replacement cost profit.
In a trading update released ahead of its Aug. 4 earnings report, the company forecast reported upstream production of 2.17 million to 2.22 million barrels of oil equivalent per day (boe/d), down from 2.339 million boe/d in the first quarter. The decline reflects planned maintenance, primarily in the Gulf of America, along with the ongoing impact of disruptions in the Middle East. Gas and low-carbon energy production is expected to reach 750,000-770,000 boe/d, while oil production and operations are forecast at 1.42 million-1.45 million boe/d.
Despite lower output, BP expects higher commodity prices to provide a substantial earnings boost. Oil production and operations realizations are projected to improve underlying replacement cost profit before interest and tax by $1.8 billion to $2.1 billion compared with the first quarter, while gas and low-carbon energy realizations are expected to contribute an additional $500 million to $700 million. Gas marketing and trading results are expected to remain broadly unchanged quarter over quarter.
The customers and products segment is also expected to benefit from stronger market conditions. BP forecasts seasonally higher fuel volumes, improved fuel margins, and refining gains of $1.2 billion to $1.4 billion. Refinery throughput is expected to decline to 1.445 million-1.475 million barrels per day due to planned turnaround activity and reduced volumes at the Whiting refinery following an April third-party incident that has since been resolved. Oil trading performance is expected to be slightly stronger than in the first quarter.
The company expects exploration write-offs of about $500 million during the quarter, largely related to the sale of its Bay du Nord project in Canada. Second-quarter results are also expected to include approximately $1 billion in post-tax impairment charges, primarily linked to transition businesses within its gas and low-carbon energy segment. These charges will be excluded from underlying replacement cost profit.
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