BP said today it expects its huge oil trading desk to post "exceptional" results for the first quarter, signalling a windfall from the spike in oil prices triggered by the US-Israeli war against Iran.
The company also said in a quarterly trading statement that its net debt would rise to between $25 billion and $27 billion from just over $22 billion in the previous quarter because of movements in working capital, an accounting measure of liquidity based on current assets minus liabilities.
This broadly echoed the first-quarter outlook from European rival Shell, which also flagged strong results in oil trading, an area where European majors are more active than US competitors.
Global benchmark Brent crude soared to multi-year highs near $120 a barrel after US-Israeli strikes on Iran began in late February, followed by Tehran's closure of the vital Strait of Hormuz shipping route and attacks on Gulf neighbours.
Brent averaged around $78 a barrel during the January-to-March quarter, compared with $63 in the fourth quarter and $75 a barrel during the same time last year, according to Reuters calculations.
BP's overall oil and gas production is expected to be broadly flat on the quarter, it said.
Refining margins rose to $16.9 a barrel in the first quarter from $15.2 in the previous three months, it said, adding this would help boost results in its refined products business by $100m to $200m.
Energy companies typically do not reveal full results of their trading divisions.
BP is due to report first-quarter results on April 28.
Meg O'Neill became the company's fifth CEO since 2020 this month, pledging to continue with a one-year-old revamp to redirect billions of spending from low-carbon projects into oil and gas to increase profitability.
She will face shareholders at the company's annual general meeting on April 23 after influential proxy advisers and some shareholders have supported votes against the board's wishes.
Meanwhile, BP said yesterday it had agreed to buy an operating interest in three offshore exploration blocks in Namibia from Canada-based Eco Atlantic Oil & Gas as it ramps up its upstream portfolio.
BP will pay Eco Atlantic $2.7m in cash for the 60% interest in the three petroleum exploration licences, the Canadian firm said.
The oil major has turned its focus back to oil and gas after an ill-fated foray into renewables, pledging to dispose $20 billion worth of assets and cut its debt to between $14 billion-$18 billion by the end of 2027.
BP has been under pressure to publish more information to prove its strategy of shifting spending from low-carbon to oil and gas projects will boost shareholder value.
The deal marks BP's entry as an operator in the southern African country, a global oil and gas exploration hot spot which hopes to produce its first oil by 2030.
The blocks are located in the Walvis Basin, a vast area north of the prolific Orange Basin where all of Namibia's offshore discoveries have been made by oil majors including Shell and TotalEnergies.
Eco Atlantic will remain a partner in the blocks along with Namibia's national oil company NAMCOR, BP said.
