bp warns of 4Q profit hit, drop in refining margins
- Weaker production, refining margins and trading to hit profit
- Shares down nearly 3% after underperforming peers in past year
bp has warned that its 4Q results will be hit by weaker oil and gas production, refining margins and trading.
Shares in the group, which have underperformed those of most of its rivals over the past year, were down nearly 3% in morning trade. bp will still publish its 4Q and full-year results as planned on Feb. 11.
CEO Murray Auchincloss is expected at the capital markets event to unveil his strategy for the company, after sharply slowing down investments in renewables and low-carbon energy and focusing on higher-return oil and gas projects since taking office in January last year.
"We remain of the view that the incumbent board do not have the courage to change direction and revitalize the strategy," said Panmure Liberum analyst Ashley Kelty. "The pressure on CEO Auchincloss will only continue to build unless he shows that he can be his own man and step out of Bernard Looney's shadow."
BP said a drop in refining margins and the impact of turnaround and maintenance activity would result in an up to $300-MM drop in profit quarter-on-quarter. The group could see a further $200-MM to $400-MM reduction in its oil production and operations unit, it said, and it also expects a decline in production.
Global gasoline and diesel demand has fallen short of expectations, while the launch of new oil refineries in Asia and Africa has resulted in oversupply.
The group's 3Q underlying replacement cost profit - its definition of net income - was already the weakest since 4Q 2020, when profits collapsed during the pandemic, at $2.27 B.
Last week, Shell warned of weakness across multiple divisions, while ExxonMobil signaled a $1.75-B drop in 4Q earnings.
bp expects its net debt at end-December to have fallen quarter-on-quarter, while exploration write-offs are seen falling by $100 MM to $200 MM.
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