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Investing.com -- BP (NYSE:BP) on Friday said it expects higher oil output and strong trading performance in the second quarter, though weaker price realizations across its upstream segments are likely to weigh on earnings.
Shares of the oil company were up 2.2% at 03:48 ET (07:48 GMT).
Reported upstream production is expected to be higher compared with the first quarter, mainly due to increased output in oil production and operations, particularly at bpx energy. Production in the gas and low carbon energy segment was also slightly higher.
Gas and low carbon energy realizations declined by $0.1 billion to $0.3 billion compared to the previous quarter, reflecting changes in non-Henry Hub natural gas marker prices.
Oil production and operations saw a larger decline of $0.6 billion to $0.8 billion, impacted by production mix and regional pricing effects in the United States and United Arab Emirates.
In the customers and products segment, BP expects improved results driven by seasonally higher volumes and stronger fuels margins.
The products business benefited from stronger realized refining margins of $0.3 billion to $0.5 billion, alongside reduced turnaround activity. Oil trading results were described as strong.
BP’s refining marker margin averaged $21.10 per barrel in the second quarter, up from $15.20 in the first quarter.
Brent crude averaged $67.88 per barrel, down from $75.73. The U.S. Henry Hub gas index fell to $3.44 per mmBtu from $3.71.
The differential between WTI CMA and WCS crude, lagged by one month, averaged $10.01 per barrel, compared with $11.97 previously.
The company said net debt at the end of the quarter is expected to be slightly lower than the previous period. The underlying charge for other businesses and corporate remains similar to earlier quarters.
BP anticipates post-tax adjusting items of $0.5 billion to $1.5 billion for the quarter, spread across segments. These items will be excluded from underlying replacement cost profit.
According to guidance issued in the first quarter, full-year capital expenditure remains at around $14.5 billion, and the underlying effective tax rate is around 40%.
Divestment proceeds of $3 billion to $4 billion are expected, weighted toward the second half.
Payments related to the Gulf of Mexico oil spill are forecast at $1.2 billion pre-tax, with $1.1 billion scheduled in the second quarter.