BP PLC (LSE:BP.) has warned investors to expect a weaker start to the year from its natural gas trading business and a sharp rise in debt, according to early guidance for the first three months of 2025.
The oil major said gas production would be lower compared to the previous quarter, hit in part by previously announced asset sales in Egypt and Trinidad. The gas and low-carbon energy division is also expected to report weak trading results, although prices were broadly stable.
Oil production was slightly higher, but prices the company received (known as “realisations”) were little changed. BP pointed to the delayed impact of global prices on its operations in places like the Gulf of Mexico and the United Arab Emirates.
In its retail and refining division, BP said the performance was mixed. The "customers" business, which includes petrol stations and convenience stores, benefited from lower costs and stronger logistics, though this was partly offset by weaker seasonal demand. Meanwhile, refining margins improved, adding up to $300mn to the bottom line. Oil trading - a key earnings driver in recent quarters - delivered average results.
BP said net debt rose by about $4bn during the quarter. This was mostly down to seasonal factors such as stockpiling fuel and timing of payments, including staff bonuses and spending on low-carbon projects up for sale. The company expects much of this to unwind in future quarters.
The tax bill is also expected to be high, with the effective tax rate coming in at around 50%, reflecting where BP is earning most of its profits.
Brent crude averaged $75.73 a barrel in the first quarter, slightly above the $74.73 average at the end of 2024. US natural gas prices rose more sharply, up from $2.79 to $3.65 per million British thermal units (mmBtu).
BP will publish full results for the quarter on 7 May