BP’s shares are taking a dip in the pre-market on Friday after the company unveiled its revised third-quarter guidance. The outlook paints a mixed picture for the energy giant, with some areas showing stability while others signal potential challenges.
On the positive side, BP expects upstream production to remain steady compared to the previous quarter. This stability encompasses both oil production and operations, as well as gas and low-carbon energy. The gas & low-carbon energy segment is projected to benefit from favorable realizations, driven by changes in non-Henry Hub natural gas prices, contributing an estimated $0.1 billion.
However, the company anticipates a negative impact on realizations in the oil production & operations segment, ranging from $0.1 billion to $0.3 billion. This downturn is attributed to price lags, particularly in the Gulf of Mexico and UAE. Furthermore, BP anticipates higher exploration write-offs, potentially impacting earnings by $0.2 billion to $0.3 billion.
The company also expects average gas marketing and trading results. In the customers and products segment, steady fuel margins are expected, with seasonally higher volumes offset by increased costs. Nonetheless, weaker realized refining margins are projected to negatively impact earnings by $0.4 billion to $0.6 billion, and oil trading performance is anticipated to be weak.
As a result of these factors, BP projects a higher net debt at the end of the quarter, primarily driven by the weaker realized refining margins.
The third quarter of 2024 saw Brent crude averaging $80.34 per barrel, a decrease from $84.97 per barrel in the second quarter. Meanwhile, BP’s refining marker margin (RMM) averaged $16.5 per barrel, down from $20.6 per barrel in the previous quarter.
Investors seeking exposure to BP can consider the Donoghue Forlines Yield Enhanced Real Asset ETF (DFRA) and the First Trust Exchange-Traded Fund IV FT Energy Income Partners Strategy ETF (ARCA: EIPX).
At the last check on Friday, BP shares were down 0.71% at $32.12 in the pre-market.
