In a research note sent to Rigzone by the HSBC team late Tuesday, HSBC Senior Global Oil and Gas Analyst Kim Fustier said BP’s third quarter trading statement was “mixed to negative”.
“Gas trading was ‘average’ (same as 2Q), while oil trading was ‘weak’ as oil price volatility subsided (implying a big delta vs ‘strong’ in 2Q),” Fustier said in the note.
“On the positive side, 3Q oil and gas production is expected to be higher vs 2Q vs ‘slightly lower’ previously, thanks to U.S. onshore (BPX) growth. This is the second consecutive quarter when production will exceed initial guidance, which suggests good operational regularity, though the financial impact may be muted given low U.S. gas prices,” Fustier added.
“In Downstream, stronger refining indicator margins ($15.8/b vs $11.9/b in 2Q) and ‘significantly lower’ turnarounds (as expected) are partly offset by environmental costs and the unplanned Whiting outage in August caused by severe weather,” Fustier continued.
“Net debt is expected to be stable q-o-q at $26 billion including a working capital release, better than our forecast of a modest increase,” Fustier stated.
In the research note, Fustier revealed that HSBC was raising its BP third quarter earnings forecast by four percent to $1.9 billion “as higher production and a positive refining mark-to-market are offset by weaker oil trading”.
“Our updated forecast is slightly below consensus. We believe that 2Q marked the start of a recovery at BP. But as the mixed 3Q update shows, it will take several quarters of consistent delivery for BP to establish a track record,” Fustier said in the note.
Rigzone has contacted BP for comment on the HSBC research note. At the time of writing, BP has not responded to Rigzone.
In a release posted on its website on October 14, BP announced “updated third quarter 2025 guidance”.
“Reported upstream production in the third quarter is now expected to be higher compared to the prior quarter, with production higher in both oil production and operations, primarily higher gas production in BPX energy, and in gas and low carbon energy,” BP said in its release.
“In the gas and low carbon energy segment, realizations, compared to the prior quarter, are expected to have an impact of around $(0.1) billion, including changes in non-Henry Hub natural gas marker prices. The gas marketing and trading result is expected to be average,” it added.
“In the oil production and operations segment, realizations, compared to the prior quarter, are expected to be broadly flat, including the impact of the price lags on BP’s production in the Gulf of America and the UAE. Compared to the prior quarter, exploration write-offs are expected to be around $(0.1) billion higher,” it continued.
“In the customers and products segment, compared to the prior quarter, results are expected to be influenced by the following factors; customers – seasonally higher volumes with broadly flat fuels margins; products – stronger realized refining margins in the range of $0.3 to 0.4 billion and a significantly lower level of turnaround activity, partly offset by seasonal effects of environmental compliance costs and the impact of unplanned Whiting outage due to exceptional weather conditions. The oil trading result is expected to be weak,” BP went on to state.
Looking at “other items” in the release, BP said the third quarter results “are expected to include post-tax adjusting items relating to asset impairments in the range of $0.2 to $0.5 billion, attributable across the segments”.
“These items are excluded from underlying replacement cost profit,” it added.
BP also mentioned that “net debt at the end of the third quarter is expected to be broadly flat compared to the end of the second quarter at around $26 billion including the impact of the redemption of $1.2 billion perpetual hybrid bonds on 1 September as planned, higher income taxes paid of around $1 billion and a working capital release”.
The company highlighted in the release that, in its updated third quarter guidance, all impacts influence BP’s underlying RC profit before interest and tax, unless stated otherwise. It also pointed out that reported upstream production includes BP’s share of production of equity-accounted entities and that realizations in the gas and low carbon energy segment and the oil production and operations segment are based on sales by consolidated subsidiaries only. It added that this excludes equity-accounted entities.
BP stated in its release that the trading statement provides a summary of BP’s current estimates and expectations for the third quarter of 2025, including data on the economic environment as well as group performance during the period. The company added that the information presented is not comprehensive of all factors which may impact BP’s group results for the third quarter of 2025 and highlighted that it is not an estimate of those results.
“All information provided is subject to the finalization of BP’s financial reporting processes and actual results may vary,” the company said in the release, which revealed that BP’s group results for the third quarter are expected to be published on November 4.
To contact the author, email andreas.exarheas@rigzone.com
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