BP enjoys stronger upstream performance but oil trading was weaker

BP PLC anticipates a mixed third quarter of 2025, projecting stronger upstream and refining performance, driven by higher Brent crude prices averaging $69.13/bbl and increased gas production, with refining margins strengthening by $0.3-0.4 billion. However, this positive outlook is tempered by expected weaker oil trading results, a negative impact from gas realizations, and anticipated post-tax asset impairments of $0.2-0.5 billion, while net debt is projected to remain around $26 billion.

Analysis

BP PLC anticipates a mixed third quarter 2025, with stronger upstream and refining performance driven by higher Brent crude prices, averaging $69.13 per barrel compared to $67.88 in Q2. Production is expected to increase, primarily from gas output at bpx energy and improved gas and low-carbon energy division performance. Refining margins are projected to strengthen by $0.3-0.4 billion due to reduced turnaround activity.

These gains are partially offset by an expected weakness in oil trading results and a negative impact of approximately $0.1 billion from gas realisations. Additionally, seasonal costs and an unplanned outage at Whiting tempered refining improvements. The company also anticipates recording post-tax asset impairments ranging from $0.2 billion to $0.5 billion.

Despite higher tax payments and the redemption of $1.2 billion in hybrid bonds, net debt is projected to remain stable at around $26 billion. This update suggests underlying operational strength in core segments, yet highlights ongoing volatility in trading and the impact of non-operational charges on the overall financial picture.

Key Decisions for Investors

• Investors should monitor the full Q3 results on November 4th for confirmation of these preliminary figures and detailed segment performance, particularly the actual impact of oil trading and gas realisations.
• Evaluate the implications of the $0.2-0.5 billion asset impairments on future earnings stability and asset valuation, alongside the company's ability to manage its $26 billion net debt position.
• Consider BP's operational resilience in upstream and refining against the backdrop of commodity price fluctuations and the company's strategic shift towards low-carbon energy, which is showing improved performance.