BP expects to post a weak natural gas trading result for the first quarter, as well as lower gas output, as the UK-based supermajor is resetting its strategy back to core oil and gas operations.
Reported upstream production in the first quarter is expected to be lower compared to the prior quarter, with oil production slightly higher and gas and low-carbon energy output lower, including announced divestments in Egypt and Trinidad completed towards the end of prior quarter, BP said in a Q1 trading statement on Friday.
The oil trading result is expected to be “average,” said the company, which also expects oil and gas realizations for the first quarter to be broadly flat compared to the fourth quarter of 2024.
Higher refining margins are expected to contribute between $100 million and $300 million to the first-quarter earnings compared to the prior quarter.
Notably, BP said its net debt at the end of the first quarter is expected to be around $4 billion higher compared to the fourth quarter, primarily due to a working capital build, which is largely expected to reverse, reflecting seasonal inventory effects, timing of payments including annual bonus payments and payments related to low carbon assets held for sale.
In its strategy reset in February, BP pledged to reduce its net debt to $14-billion-$18 billion by 2027, from more than $20 billion now.
So far this year, BP has been looking to show investors, including activist hedge fund Elliott, it is working toward creating more value for shareholders.
This month, BP began announcing new oil and gas project start-ups as part of its plan to have 10 major projects launch worldwide between 2025 and 2027 and grow upstream production.
BP’s teaser for the Q1 results follows similar trading updates from other supermajors. Shell sees LNG liquefaction volumes down in the first quarter, while U.S. supermajor ExxonMobil expects its first-quarter earnings to be higher than in Q4 by up to $2 billion, thanks to higher oil and gas prices and rising refining margins.
By Tsvetana Paraskova for Oilprice.com
