By Christian Moess Laursen
BP expects a boost to first-quarter profit from higher oil, gas and low-carbon energy production, while lower natural-gas prices will temper gains.
The British energy major on Tuesday backed its guidance of higher upstream production--the extraction of raw crude oil and natural gas--in the first quarter, with higher output in oil production and operations and slightly higher production of gas and low-carbon energy compared with the previous quarter.
In the fourth quarter, BP's oil production was 1.42 million of oil-equivalent barrels a day, while it produced 899,000 BOE a day of gas and low-carbon energy.
Its shares were up 1.7% to 518.00 pence at 0743 GMT, having climbed 13% over the past three months.
The update follows that of BP's closest rival Shell, which on Friday lifted its guidance for first-quarter production of integrated gas and liquefied natural gas.
The London-based oil-and-gas companies are the first European majors to provide updates on first-quarter production and earnings amid concerns that natural-gas businesses could face pressure after prices dropped on year in 2023, following a spike in 2022 when Russia invaded Ukraine.
BP said lower natural-gas prices will likely hit both its gas and low-carbon energy segment as well as its oil production and operations segment this quarter.
It said Brent averaged $83.16 a barrel in the quarter compared to $84.34 in the preceding quarter, while gas prices averaged $2.25 per million British thermal units versus $2.88.
Additionally, profit from its gas and low-carbon energy segment is expected to take a hit of $400 million to $600 million, mainly due to lower natural-gas prices and the devaluation of the Egyptian pound. Price lags on production in the Gulf of Mexico and the United Arab Emirates are expected to drive a $300 million-$600 million dent to profit from oil production and operations.
However, its gas marketing and trading result is expected to be strong, the company added.
In the first quarter of 2023, the FTSE 100-listed energy group reported gas and low-carbon energy production of 969,000 BOE a day and oil production of 1.36 million BOE a day.
BP also said its net debt is expected to increase in the first quarter, mainly reflecting a working-capital build plus phasing of capital expenditure and divestment and other proceeds, as previously guided.
For the full-year, BP still sees slightly higher upstream production than in 2023, with higher oil production and lower gas and low-carbon energy production.
Write to Christian Moess Laursen at christian.moess@wsj.com
(END) Dow Jones Newswires
04-09-24 0406ET
