BP 3Q Hurt by Weaker Refining Margins, Oil Trading, Lower Liquid Realizations -- Energy Comment
01 Novembro 2022 - 05:36AM
Dow Jones News
BP PLC said Tuesday that it expects to report an increase in
upstream production this year as it reported an on-quarter fall in
third quarter underlying replacement cost profit. Here's what the
oil major had to say:
On earnings performance:
"Compared to the second quarter, the result was impacted by
weaker refining margins, an average oil trading result and lower
liquids realizations, partly offset by an exceptional gas marketing
and trading result and higher gas realizations."
On adjusting items:
"This charge includes adverse fair value accounting effects of
$10.1 billion, primarily due to further increases in forward gas
prices compared to the end of the second quarter, partly offset by
$2.0 billion gain on sale relating to the formation of Azule
"BP now expects reported upstream production to be slightly
higher compared with 2021 despite the absence of production from
our Russia incorporated joint ventures. On an underlying basis, we
expect upstream production to be higher."
"BP continues to expect the other businesses & corporate
underlying annual charge to be in a range of $1.2 billion-1.4
billion for 2022. The charge may vary from quarter to quarter."
"BP continues to expect the depreciation, depletion and
amortization to be at a similar level to 2021."
"The underlying effective tax rate [ETR] for 2022 is expected to
be around 35% but is sensitive to the impact that volatility in the
current price environment may have on the geographical mix of the
group's profits and losses."
"BP now expects divestment and other proceeds to be slightly
over $3 billion in 2022. Against a target of $25 billion of
divestment and other proceeds between the second half of 2020 and
2025 BP has now received $15.3 billion of proceeds."
"BP continues to expect Gulf of Mexico oil spill payments for
the year to be around $1.4 billion pre-tax including the $1.2
billion pre-tax paid during the second quarter."
"On average, based on BP's current forecasts, at around $60 per
barrel Brent and subject to the board's discretion each quarter, BP
continues to expect to be able to deliver share buybacks of around
$4.0 billion per annum and have capacity for an annual increase in
the dividend per ordinary share of around 4% through 2025."
"Looking forward, the outlook for working capital remains
subject to a number of factors, including price. However, following
the build in working capital as a result of rising gas prices since
2021, we now expect the working capital movement to include a
release of around $7 billion, weighted toward the second-half of
2023 and 2024, primarily as LNG cargoes are delivered."
On capital expenditure:
"Capital expenditure in the quarter was $3.2 billion. BP now
expects capital expenditure of around $15.5 billion in 2022, if the
acquisition of Archaea Energy completes before year end."
"In refining, we expect margins to remain high, the benefits of
which will be partially offset by elevated energy prices, a higher
level of turnaround activity, and operational impacts following the
shutdown of the BP-Husky Toledo refinery in Ohio, U.S."
"During the third quarter BP generated surplus cash flow of $3.5
billion and intends to execute a $2.5 billion share buyback prior
to announcing its fourth-quarter results, bringing total announced
share buybacks from 2022 surplus cash flow to $8.5 billion,
equivalent to 60% of 2022 surplus cash flow year to date."
"For 2022 and subject to maintaining a strong investment grade
credit rating, BP remains committed to using 60% of surplus cash
flow for share buybacks and intends to allocate the remaining 40%
to further strengthen the balance sheet."
On macro outlook:
"BP expects oil prices to remain elevated in the fourth quarter
due to the recent OPEC+ supply cut reducing supply amid ongoing
uncertainty associated with Russian oil exports."
"BP expects global gas prices to remain elevated and volatile
during the fourth quarter due to a lack of supply to Europe with
the outlook heavily dependent on Russian pipeline flows or other
"BP expects industry refining margins to remain elevated in the
fourth quarter due to sanctioning of Russian crude and product and
energy prices are also expected to remain high."
Write to Ian Walker at firstname.lastname@example.org
(END) Dow Jones Newswires
November 01, 2022 04:21 ET (08:21 GMT)
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