(Corrects some figures to millions from thousands.)
BP PLC on Friday said it expects net debt to be higher at the end of the third quarter, primarily due to less profitable refining activities.
In a trading update, the London-based oil major said weaker refining margins will hit earnings in the customers and products segment by between $400 million to $600 million compared to the prior quarter, and that the oil trading result is expected to be weak.
Brent prices were weaker over the course of the third quarter, BP noted. The North Sea benchmark averaged $80.34 a barrel in the third-quarter, down 5.4% from $84.97 in the second.
Net debt will also be increased by the re-phasing of around $1 billion of divestment proceeds into the fourth quarter, the firm said.
Upstream production in the third quarter is now expected to be broadly flat compared to the prior quarter, with production broadly flat in oil production & operations and in gas & low carbon energy. BP had previously expected output to be lower than the second-quarter’s.
In the gas & low carbon energy segment, realizations, compared to the prior quarter, are expected to have a favourable impact of around $100 million. The gas marketing and trading result is expected to be average.
BP expects a $100 million to $300 million hit in the oil production & operations segment compared to the prior quarter. This includes the impact of price lags on BP’s production in the Gulf of Mexico and the United Arab Emirates.
BP also expects a $200 million to $300 million impact from higher exploration write-offs quarter-on-quarter.
BP will release its full third-quarter results on October 29.
Shares in BP slipped 0.3% to 409.48 pence each in London on Friday morning. The wider FTSE 100 index was marginally higher.
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