BP expects its net debt to fall sharply to between $13.5 billion and $14.5 billion by the end of the third quarter, roughly half the $22.3 billion recorded at the close of the second quarter, the oil major said in a trading update on Tuesday.
The reduction reflects a working capital release of up to $1 billion, capital expenditure of around $3 billion and higher income taxes paid of around $1 billion, alongside the redemption of $1 billion of hybrid securities on 30 September.
Refining margins are expected to be the standout positive, with BP flagging stronger realised margins in the range of $1.9 billion to $2.1 billion above the prior quarter level.
Refining throughput is guided at 1.375 to 1.405 million barrels per day, down from 1.467 million in the second quarter, reflecting the completion of the Gelsenkirchen divestment on 31 July and lower planned maintenance activity.
Upstream production for the third quarter is expected at 2.19 to 2.24 million barrels of oil equivalent per day.
That's roughly in line with the 2.2 million recorded in the second quarter, with seasonal maintenance recovery partly offset by BP's reduced equity interest in Latin America.
Gas and low carbon energy realizations are expected to deliver a positive impact of $0.1 billion to $0.3 billion versus the prior quarter, with the gas marketing and trading result expected to be significantly higher.
The customers division is expected to deliver a significantly lower result, driven by weaker fuels margins and higher base oil prices in Castrol.
The group underlying effective tax rate for the quarter is expected to be around 30%, reflecting the geographical mix of profits.
BP also flagged post-tax impairment charges of $3 billion to $4.5 billion in the quarter, primarily relating to transition businesses in the gas and low carbon energy segment, which will be excluded from underlying profit.
Full third quarter results are scheduled for 30 October, with a strategy and outlook update planned for 15 December in New York.
