BP flags $3 billion to $4.5 billion in impairments as refining margins climb

Impairments in the low-carbon business

BP expects to report $3 billion to $4.5 billion of impairments in its third-quarter results, relating to its gas and low-carbon energy segment, the company said on Tuesday, 13 October. It is the second time this year that the British firm has booked large write-downs in its low-carbon business, after flagging $4 billion to $5 billion of impairments in January. BP declined to comment further on the details of the impairment. Polish outlet pb.pl reported that, under pressure from shareholders, BP is revising the pace and returns of its renewable projects and pulling back from some less promising investments. The same outlet reported that BP shares rose 1.6% at the opening of the London stock exchange. The write-downs come as the company reviews the value of assets it booked at higher prices.

Refining and gas trading lift the quarter

The refining indicator margin for the quarter is due to be $46.7 per barrel, up from $29.6 per barrel in the second quarter, and BP expects realised refining margins of $1.9 billion to $2.1 billion. Reuters links the strength of the quarter to the US-Israeli war on Iran, which has disrupted global oil supplies, driven up prices and helped oil companies book stronger profits. BP expects its gas marketing and trading result to be significantly higher than in the previous quarter. Bloomberg attributes part of the trading gains to volatile trading sparked by the Iran war. Upstream production is expected to be between 2.19 million and 2.24 million barrels of oil equivalent per day, compared with about 2.2 million in the previous quarter, according to Reuters.

Net debt falls toward the 2027 target

BP expects net debt at the end of the third quarter to be between $13.5 billion and $14.5 billion, compared with $22.3 billion at the end of the second quarter. Bloomberg reports that BP has already reached its 2027 net debt target, which the company had previously set at $14 billion to $18 billion. The expected third-quarter range overlaps the bottom end of that earlier target range. Higher oil and gas prices and disposals helped reduce net debt, according to BP's update. Before the update, pb.pl reported, the company had expected net debt to reach the 14 to 18 billion dollar range only in the fourth quarter of 2027.

Strategy update and next steps

BP will present its updated corporate strategy in New York on 15 December, giving Chief Executive Meg O'Neill her first opportunity to outline her vision for the British energy company to investors. O'Neill has led BP since April and has so far made strengthening the balance sheet her priority, while working to simplify the portfolio and corporate structure, N-tv reports. Full third-quarter results are due on 30 October, pb.pl reports. The timeline below shows the sequence of impairment disclosures and upcoming reporting dates.