BP PLC (LSE:BP.) guided to higher upstream output and stronger refining margins in the second quarter trading update, offset by lower prices received for oil and gas.
Ahead of its results due on 5 August, the FTSE 100 oil and gas producer posted a short update that said upstream production is expected to be higher than the 2,239 million barrels per day in the first quarter, led by gains in the BPX Energy onshore US business.
Output in gas and low-carbon energy is also expected to be marginally higher.
However, realisations, or sales prices received in other words, for the gas and low carbon segment are forecast to reduce profit by $0.1-0.3 billion versus the first quarter.
Oil realisations are expected to reduce profit by $0.6-0.8 billion, which BP said was partly due to pricing lags and production mix effects in the Gulf of America and the UAE.
Brent crude averaged $67.88 per barrel in the second quarter, down from $75.73 in the first quarter, while the average US gas price was down to $3.44 per unit from $3.65.
The company’s refining margin rose to $21.10 per barrel from $15.20 over the same period.
In the customers and products segment, BP expects stronger fuel and refining margins, with realised refining margins adding $0.3-0.5 billion, and oil trading is expected to deliver a strong performance.
Post-tax asset impairment charges of between $0.50 billion and $1.50 billion across segments are expected, which will be treated as adjusting items and excluded from underlying profit.