By Adam Whittaker
BP warned lower oil and gas prices would hit its second-quarter performance, but said it expects higher upstream production and a strong result from its oil trading division.
The British energy major said lower oil sales could hurt earnings by up to $800 million and lower gas sales by as much as $300 million. The warning came after a volatile quarter for prices, driven by a shift in OPEC+ policy, uncertainty over U.S. tariffs and escalating tensions in the Middle East.
Sweeping U.S. tariffs stoked fears of a global economic slowdown, sending Brent crude sharply lower. Prices briefly rebounded later in the quarter on renewed concerns over supply disruptions when tensions between Israel and Iran flared up, but the rally quickly lost momentum.
Upstream production is instead expected to be higher than the previous quarter boosted by U.S. operations, BP said, after previously guiding for broadly flat production at around 2.24 million barrels of oil equivalent a day.
BP said Brent crude averaged $67.88 a barrel in the second quarter compared with $75.73 a barrel in the first quarter. U.S. gas prices averaged $3.44 a million British thermal unit, down from $3.65.
The customers and products divisions benefited from seasonally higher volumes and stronger refining margins, which could give a boost of up to $500 million to the products segment, the company said. The second-quarter refining margin marker averaged $21.1 a barrel compared with $15.2 a barrel in the preceding quarter.
BP also said it expects to book between $500 million and $1.5 billion in after-tax impairment charges in the period.
In midday trade, BP's shares are up 1.8% to 395.55 pence, after rising nearly 2.5% earlier in the session.
The company's update should prompt a more than 10% increase in consensus earnings forecasts, supported by stronger-than-expected upstream production and a solid contribution from trading, Jefferies analysts Giacomo Romeo and Kai Ye Loh said in a note.
BP said results from its oil trading division should be strong, while its gas marketing and trading result is expected to be average. Earlier this week, Shell said it expects its second-quarter performance to be hit by significantly lower earnings from its trading division in its core integrated gas business.
BP is shifting its focus back to oil as part of a strategic reset that includes plans to sell $20 billion in assets by 2027 to help reduce debt.
The company said Friday that it expects its net debt to be slightly below the $27 billion it had reported for the end of March. It is targeting $14 billion-$18 billion in net debt by the end of 2027.
Write to Adam Whittaker at adam.whittaker@wsj.com
(END) Dow Jones Newswires
07-11-25 0650ET
