BP sees 60% refining margin jump, debt fall, but flags more impairments
BP•BP estimated its third-quarter refining indicator margin rose nearly 60% to $46.7 per barrel and forecast net debt of $13.5 billion to $14.4 billion. It also flagged $3 billion to $4.5 billion in impairments in its gas and low-carbon energy segment.
1. Margins and impairments
BP estimated its refining indicator margin for July-September at $46.7 per barrel, up from $29.6 in the second quarter and $15.8 a year earlier. The company said stronger refining margins would lift third-quarter profit in its products segments by $1.9 billion to $2.1 billion compared with the previous quarter. BP also flagged $3 billion to $4.5 billion in impairments related to its gas and low-carbon energy segment, but gave no further details.
2. Debt and production
BP expects third-quarter net debt of $13.5 billion to $14.4 billion, reaching its target range of $14 billion to $18 billion about a year early. It estimated overall obligations, including hybrid bonds, leases and Deepwater Horizon liabilities, at $43.6 billion to $44.6 billion, down from $53.6 billion in the prior quarter; the figure excludes a $6 billion sale of a stake in Castrol. Upstream production was estimated at 2.19 million to 2.24 million barrels of oil equivalent per day, compared with 2.2 million in the second quarter.
3. Trading outlook
BP expects its third-quarter gas marketing and trading result to significantly exceed the previous quarter, while its oil trading result is expected to be broadly flat. The company is due to report results on October 30 and plans a strategy and outlook update on December 15.
