BP Expects Net Debt to Fall to $13.5 Billion Despite Third-Quarter Impairments
Key Facts
BP expects net debt to fall to between $13.5 billion and $14.5 billion at the end of the third quarter, from $22.3 billion at the end of the second quarter, alongside expected impairment charges of between $3.0 billion and $4.5 billion. The estimates are part of a trading statement the company issued ahead of publishing its full results on October 30, 2026. It also expects total net debt, hybrid bonds, leases and Gulf of America decommissioning obligations to decline by about $9.0 billion to $10.0 billion from the previous quarter. The company’s update combines potential accounting pressure on assets with an expected improvement in balance-sheet metrics. BP said the figures remain subject to completion of financial reporting and actual results may differ.
BP said the reduction in defined liabilities includes the redemption of $1.0 billion in hybrid securities on September 30, as well as a working-capital release of between zero and $1.0 billion. It estimated capital expenditure at about $3.0 billion for the quarter. This means the debt-reduction estimate takes into account these cash flows and the financing items identified by the company in its statement. BP did not provide a final figure for the quarter in the update, but gave an expected range for net debt and the total obligations cited. Results scheduled for October 30 will allow these estimates to be compared with final figures.
For production, the company expects upstream output of between 2.190 million and 2.240 million barrels of oil equivalent a day, compared with 2.201 million in the second quarter. It said a recovery from seasonal maintenance would be partly offset by a lower share in Latin America. It estimated gas and low-carbon energy production at between 775,000 and 795,000 barrels of oil equivalent a day, and oil production and operations at between 1.415 million and 1.445 million barrels of oil equivalent a day. These ranges set out the expected production components alongside the two operational factors cited by the company. The trading statement did not provide a final production estimate before the quarter is complete.
In refining, BP estimated its refining margin indicator at $46.7 a barrel in the third quarter, compared with $29.6 in the second quarter and $15.8 in the same period a year earlier. The indicator measures a simplified weighted average of the crude mix and product yield the company considers representative of its refineries. BP said actual margins may vary depending on each refinery’s mix, so the indicator is not equivalent to a uniform realized margin across the company. The increase from the previous two periods provides context for expectations in the refining segment, while actual results remain subject to operational performance and product mix. The statement did not give a single figure for realized margins.
BP expects the result in its customers division to be much lower than in the previous quarter, citing weaker fuel margins and higher base-oil prices at Castrol. At the same time, it pointed to an expected improvement in its refining margin indicator, highlighting differing trends across the group’s businesses during the quarter. The available estimates do not include a quantitative figure for the customers division’s result or the separate impact of each factor. The company’s strategy reset in February 2025 set annual investment in oil and gas at about $10 billion. That strategy places oil and gas production in the context of BP’s announced capital-allocation decisions.
The company expects an underlying effective tax rate of about 30% in the third quarter, reflecting the geographic distribution of earnings. It said it would update its full-year tax-rate guidance as part of its quarterly results. BP is scheduled to publish its results on October 30, 2026, when it will also provide updated full-year guidance. It then plans to present a strategy and outlook update in New York on December 15. The company said this would be an opportunity to set out the next stage of its plan to make BP “simpler, stronger and more valuable.”
After the outlook announcement on October 13, BP shares rose 3.7% at 16:02 GMT, reaching their highest level since April 2010, according to Reuters. The shares outperformed the European energy companies index, which rose 0.8% in the same session. In subsequent daily closes, the stock was at 49.44 on October 19, 49.39 on October 20, 49.85 on October 21, 50.05 on October 22, and then 51.32 on October 23, according to EL7 data. The closing-price data did not specify the currency of these values. On October 13, EL7 had published an earlier report on BP’s expectation of up to $4.5 billion in third-quarter asset write-downs.