BP shares drop after weak Q2 operating results

Shares of BP p.l.c. traded lower after the company revealed its operations update for the second quarter of fiscal year 2024, with oil operations expected to be weak following a strong first quarter.

In the production and oil operations segment, the company anticipates realizations to have a favorable impact of between $100 million and $300 million compared to the first quarter, considering the effects of price lags in production in the Gulf of Mexico and the United Arab Emirates.

The British oil giant expects upstream production to remain stable in the quarter compared to the previous quarter, with stable oil production and a slight decline in gas and low-carbon energy production.

In the gas and low-carbon energy segment, the company projects realizations to have a negative impact of around $100 million compared to the previous quarter, which includes decreases in physical market Henry Hub natural gas prices.

Additionally, the gas marketing and trading result is expected to be average in the second quarter following a strong first quarter.

BP projects that lower refining margins will have a negative impact of between $500 million and $700 million due to weaker middle distillate margins and narrower differentials in North American heavy crude, along with a higher level of restart activity.

Furthermore, the company revealed that second-quarter results are expected to include adverse post-tax adjustments of between $1 billion and $2 billion for asset impairments and onerous contract provisions, including charges related to the review of the Gelsenkirchen refinery.

Last month, BP agreed to buy the 50% stake that Bunge Global SA held in its joint venture with BP, BP Bunge Bioenergia S.A., for a value of approximately $1.4 billion,