BP Expects Third-Quarter Net Debt of $13.5 Billion to $14.5 Billion, Down From $22.3 Billion

BP plc expects net debt of $13.5 billion to $14.5 billion at the end of the third quarter, down from $22.3 billion three months earlier, the company said in its trading statement on Oct. 13. The guidance implies a reduction of $7.8 billion to $8.8 billion in a single quarter, Oil Authority calculations show.

The update gives investors a first read on how the Middle East disruption has affected one of Europe's largest oil companies. It points to stronger refining and gas trading, offset by lower oil realizations and up to $4.5 billion of impairments.

BP Says Total Net Debt, Hybrids and Leases Will Fall $9 Billion to $10 Billion

BP said the total of net debt, hybrid bonds, leases and Gulf of America settlement liabilities should fall by around $9.0 billion to $10.0 billion from the second quarter. That measure includes the $1.0 billion redemption of hybrid securities on Sept. 30.

Remaining hybrid bonds and securities are expected to be around $12.0 billion, compared with $13.0 billion at the end of the second quarter. The company listed capital expenditure of around $3.0 billion for the quarter.

Net debt reflects higher income taxes paid of around $1.0 billion and a working capital release of up to $1.0 billion, the statement said.

BP Gas Marketing and Trading Result Expected to Be Significantly Higher

In its gas and low carbon energy segment, BP said the gas marketing and trading result is "expected to be significantly higher" than in the second quarter. The company did not give a dollar figure.

Realizations in that segment should add $0.1 billion to $0.3 billion. Segment production is expected at 775,000 to 795,000 barrels of oil equivalent per day, compared with 765,000 in the second quarter.

BP Refining Margins Add $1.9 Billion to $2.1 Billion

The customers and products segment should benefit from stronger realized refining margins, in a range of $1.9 billion to $2.1 billion. BP's refining indicator margin averaged $46.7 per barrel in the third quarter, compared with $29.6 in the second.

Refining throughput is expected at 1.375 million to 1.405 million barrels per day, after the Gelsenkirchen divestment closed on July 31. BP expects a significantly lower customers result, citing weaker fuels margins and higher base oil prices in Castrol.

The oil trading result should be broadly flat from the second quarter, the company said.

BP Upstream Production Guided at 2.19 Million to 2.24 Million Boe Per Day

Reported upstream production is expected at 2.19 million to 2.24 million barrels of oil equivalent per day, compared with 2.201 million in the second quarter. BP said the quarter includes continued disruption in the Middle East and no impact from weather events in the Gulf of America.

Oil production and operations realizations should reduce results by $0.2 billion to $0.4 billion. Brent averaged $96.99 per barrel in the quarter, BP said, compared with $103.85 in the second quarter.

Exploration write-offs should be significantly lower because the prior quarter included the impact of the sale of BP's interest in Bay du Nord, the project off Newfoundland.

BP Expects $3.0 Billion to $4.5 Billion of Impairments

The third-quarter results are expected to include post-tax impairments of $3.0 billion to $4.5 billion. BP said the charges primarily relate to transition businesses in the gas and low carbon energy segment and are excluded from underlying replacement cost profit.

The group's underlying effective tax rate is expected to be around 30%, reflecting the geographic mix of profits.

ICE Brent December Settles at $105.69 on Day of BP Update

ICE Brent December futures settled at $105.69 per barrel on Oct. 13, down 96 cents on the day. The U.S. Energy Information Administration's Henry Hub spot price was $3.14 per million British thermal units.

BP Reports Third-Quarter Results on Oct. 30 and Updates Strategy on Dec. 15

BP will publish third-quarter group results on Oct. 30, when confirmed net debt and full-year tax guidance are due. The company will host a strategy and outlook update in New York City on Dec. 15.