BP Plc expects weaker upstream production in Q4

BP plc (LON:BP) has announced its fourth quarter 2024 trading statement.

The following Trading Statement provides a summary of BP p.l.c.’s (bp) current estimates and expectations for the fourth quarter of 2024, including data on the economic environment as well as group performance during the period.

The information presented is not comprehensive of all factors which may impact bp’s group results for the fourth quarter 2024 and is not an estimate of those results. Also refer to bp’s third quarter and nine months 2024 group results announcement on 29 October 2024 for fourth quarter and full year 2024 guidance items which continue to apply unless explicitly stated. A summary of that guidance is also provided in the Appendix to this Trading Statement. All information provided is subject to the finalization of bp’s financial reporting processes and actual results may vary.

Murray Auchincloss has recently undergone a planned medical procedure from which he is recovering well. He will be back in the office by February. To ensure his full recuperation the capital markets event previously scheduled for 11 February in New York will now take place on 26 February in London. The fourth quarter and full year 2024 results date is unchanged and they are expected to be published at 0700 GMT on 11 February.

Updated 4Q24 guidance^a

•      Upstream production^b in the fourth quarter is expected to be lower compared to the prior quarter, with production lower in oil production & operations and in gas & low carbon energy.

•      In the gas & low carbon energy segment, realizations^c, compared to the prior quarter, are expected to have a favourable impact in the range of $0.1 – 0.2 billion including changes in non-Henry Hub natural gas marker prices. The gas marketing and trading result is expected to be average.

•      In the oil production & operations segment, realizations^c, compared to the prior quarter, are expected to have an unfavourable impact in the range of $0.2 – 0.4 billion, including the impact of price lags on bp’s production in the Gulf of Mexico and the UAE. Compared to the prior quarter, exploration write-offs are expected to be $0.1 – 0.2 billion lower.

•      In the customers & products segment, compared to the prior quarter, results are expected to be impacted by the following factors:

◦     customers – seasonally lower volumes, lower fuels margins, foreign exchange losses, and a one-off inventory purchase price adjustment relating to our bio-ethanol acquisition. 

◦     products – weaker realized refining margins in the range of $0.1 – 0.3 billion and a higher impact from turnaround activity. The oil trading result is expected to be weak.

•      Other items:

◦     Net debt at the end of the quarter is expected to be lower compared the prior quarter, including proceeds from divestments of around $2.8 billion, the issuance of around $2.5 billion perpetual hybrid bonds primarily in anticipation of refinancing perpetual hybrid bonds callable from June 2025 and/or March 2026, and acquired net debt of around $3.0 billion from the completion of the bp Bunge Bioenergia and Lightsource bp transactions.

◦     The fourth quarter results are expected to include non-cash, post-tax charges related to impairments of $1.0 – 2.0 billion attributable across the segments. These items are treated as adjusting items and excluded from underlying replacement cost profit.

Updated FY24 guidance^a

•      The underlying effective tax rate for the full year is now expected to be around 42% compared to the previous guidance of around 40% primarily due to changes in the geographical mix of profits.

•      bp now expects other businesses & corporate underlying annual charge to be around $0.6 billion for 2024 compared to the previous range of $0.3 – 0.4 billion due to foreign exchange losses.

^a                All impacts influence bp’s underlying RC profit before interest and tax, unless stated otherwise.

^b                Includes bp’s share of production of equity-accounted entities.

^c                Realizations are based on sales by consolidated subsidiaries only – this excludes equity-accounted entities.

Trading conditions

Brent averaged $74.73/bbl in the fourth quarter 2024 compared to $80.34/bbl in the third quarter 2024. 

US gas Henry Hub first of month index averaged $2.79/mmBtu in the fourth quarter 2024 compared to $2.15/mmBtu in the third quarter 2024.

The bp RMM* averaged $13.1/bbl in the fourth quarter 2024 compared to $16.5/bbl in the third quarter 2024.