Source: Sharecast
BP's Q2 statement, published on 14 July, indicated an earnings beat driven by strong refining and marketing margins and a further standout contribution from oil trading. Berenberg said cash generation also looked solid, even with a working‑capital build, and noted good progress on deleveraging, with net debt before leases guided to fall to $22bn to $23bn, down $2.8bn quarter‑on‑quarter.
Downstream performance was described as "strong", with refining margins jumping to $29.60 per barrell from $16.9/bbl in Q1, adding $1.2bn to $1.4bn to earnings. Throughput was guided 4% lower due to turnarounds and an incident at BP's Whiting refinery, while oil trading was set to be slightly higher quarter‑on‑quarter. Berenberg said its updated estimates put it 60% ahead of consensus for the division.
Upstream results, however, were more mixed. Gas and low carbon energy was set to benefit from higher commodity prices, with realisations adding $500m to $700m, though production was expected to be 5% below Q1. Oil production and operations would also gain from higher oil prices, with realisations adding $1.8bn to $2.1bn, but exploration write‑offs were guided to come in at $500m , up from near zero in Q1. Production was expected to be 7% lower due to the Iran conflict.
The German bank lifted its earnings forecasts by 9% for FY26 and 1% for FY27 on stronger refining, but said the upstream drag justified trimming the price target to 590p. Berenberg also maintained its 'buy' rating.
Reporting by Iain Gilbert at Sharecast.com