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BP PLC on Tuesday said it expects first quarter upstream production to be higher than the previous three month period but cautioned lower prices would hurt performance elsewhere.
Shares in BP rose 1.9% to 519.50 pence in London on Tuesday morning. The wider FTSE 100 was up 0.1%.
The London-based oil and gas major said upstream production in the quarter ending March is expected to be higher compared to the prior quarter, with production higher in oil production & operations and slightly higher in gas & low carbon energy.
But in the gas & low carbon energy segment, lower gas prices compared to the prior quarter are expected to have an adverse impact in the range of $200 million to $400 million, BP said.
There is also expected to be an adverse impact of around $200 million as a result of the devaluation of the Egyptian pound.
In the oil production & operations segment, lower realizations compared to the prior quarter are expected to have an adverse impact in the range of $300 million to $600 million, BP commented.
This includes price lags on production in the Gulf of Mexico and the UAE and also declines in non-Henry Hub natural gas marker prices, BP stated.
The price of a barrel of Brent oil averaged $83.16 in the first quarter of 2024, down from $84.34 in the last three months of 2023, BP noted.
The gas marketing and trading result is expected to be strong following a strong result in the fourth quarter 2023, BP said.
BP added the customers and products segment is expected to be impacted by several factors compared to the previous three months.
In products, these include improved realized refining margins, expected to result in a benefit in the range of $100 million to $200 million, a significantly lower level of turnaround activity than the prior quarter, offset by the impacts of the February 1 plant-wide power outage at the Whiting refinery.
In customers, BP reported significantly weaker fuel margins, seasonally lower volumes, and the absence of one-off positive effects that impacted the prior quarter.
For the full-year, BP forecast capital expenditure of around $16 billion, weighted to the second half.
Net debt is expected to increase in the first quarter mainly reflecting a working capital build plus phasing of capital expenditure and divestment and other proceeds as previously guided, the company commented.
The news comes after rival oil producer Shell on Friday said that trading in its gas division has fallen from an ‘exceptional’ end to the year. The division’s performance would remain ‘strong,’ Shell said.
BP is expected to release first quarter results on May 7.
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