BP PLC's (LSE:BP.) short update ahead of its third-quarter results was not entirely clear but debt continues to be a "large concern", said analysts, and suggests share buybacks may need to be cut back.
The short guidance update, given ahead of 4 November results, suggests production will be higher than the second quarter's 2.27 million barrels of oil equivalent per day (mmboepd) but it was not said whether it would be higher than the first quarter's 2.38mmboepd.
"It will still be lower y-o-y due to declines impacting the wider portfolio," analysts at Panmure Liberum said, noting that price realisations were broadly flat, but refining margins will be stronger and that no guidance was given on refinery uptime.
With net debt set to be unchanged at $26 billion, the analysts said: "this is a large concern given BP is targeting reducing this to $18 billion by 2027.
"This remains a fanciful goal given falling output, softer commodity prices and ongoing need to sell off more valuable assets – of which there are less in the portfolio after the push into low margin renewables.
"If this is to be achieved, the scale of buybacks may need to be trimmed further."
The oil trading business was reported to be performing poorly on oil trading with gas trading average.
"Investors will not be much clearer on what to expect as the statement is vague and woolly – BP should follow Shell's lead and provide clear granular guidance – but being vague does help BP if its going to miss expectations (again)."