Weak oil trading and declining refining margins are expected to lower the fourth-quarter earnings at BP, the UK-based supermajor said on Tuesday, joining other international giants in flagging weaker profits.
BP forecasts that weaker realized refining margins will dent the Q4 earnings by up to $300 million. Refinery turnaround activity is also set to have a higher impact for the fourth quarter compared to the third quarter.
The BP refining marker margin averaged $13.10 per barrel in the fourth quarter of 2024 compared to $16.50 per barrel in the third quarter of 2024, the company said.
“The oil trading result is expected to be weak,” added BP, which also flagged lower upstream oil and gas production in the fourth quarter compared to the prior quarter.
In the oil production & operations segment, realizations are expected to be $200 million-$400 million lower compared to the prior quarter, BP said.
The fourth-quarter results are also expected to include non-cash, post-tax charges related to impairments of $1.0 – $2.0 billion attributable across the segments. These items are treated as adjusting items and excluded from underlying replacement cost profit, BP’s equivalent of net profit.
BP will release fourth-quarter and full-year results on February 11. But the supermajor is postponing the capital markets event previously scheduled for February 11 in New York to February 26 in London, to allow full recuperation to CEO Murray Auchincloss, who has recently undergone a planned medical procedure from which he is recovering well.
BP is not the only supermajor to warn of lower profits for the fourth quarter, due to weaker trading and falling refining margins.
Last week, Shell said it expects its LNG production and trading and oil trading businesses to book significantly lower results for the fourth quarter of 2024, due to seasonality and timing of lifting.
ExxonMobil flagged a weaker profit for the fourth quarter of 2024 because of lower refining margins, estimating the size of the negative impact at $1.75 billion.
By Tsvetana Paraskova for Oilprice.com
