bp sees debt increase in third quarter amid weak refining

(WO) — bp Plc expects its net debt to have risen in the third quarter due to lower refining margins and changes to the timing of asset sales.

The London-based company’s oil-products trading was weak in the period, and lower margins from processing crude will hit earnings by $400 million to $600 million, according to a statement on Friday. Overall production was little changed compared with the prior quarter.

The statement from bp adds to the weaker picture for the oil industry in the third quarter, with both ExxonMobil Corp. and Shell Plc flagging the potential for lower earnings from producing and refining crude. 

The period was dominated by doubts about the strength of demand from China and concerns that the market would return to surplus if OPEC+ went ahead with plans to revive idle supply — a move the group was eventually forced to delay by two months. Brent crude slumped by 17% in the third quarter, although it has since rebounded due to the conflict in the Middle East. 

bp also anticipates the “rephasing” of about $1 billion of divestment proceeds into the fourth quarter, out of a total of $2 billion to $3 billion for the second half, according to the statement. The company’s net debt has been trending lower in recent years — from $40 billion in 2020 to about $23 billion at the end of the second quarter — as high energy prices boosted profit.