Energy giant BP told investors on Tuesday that oil and gas production likely increased in the first three months of this year, but warned that prices for the commodities had dropped.
The oil major said that production is expected to have been “higher” than the last three months of 2023 when it reports its results on May 7.
Meanwhile, gas and low carbon energy production will be “slightly higher”, the business said.
But as oil and gas prices have dropped, the business nevertheless expects to take a financial hit.
The price of a barrel of Brent oil averaged 83.16 dollars in the first quarter of 2024, which is 1.18 lower than the last three months of 2023.
Meanwhile, the cost of Henry Hub gas was 2.25 dollars per million British thermal units, down from 2.88 dollars in the prior quarter.
BP warned shareholders to expect a 200-400 million dollar (£158-316 million) hit to its underlying replacement cost profit before interest and tax because of the fall in the gas price and some other issues.
Meanwhile, a weak Egyptian Pound is expected to cost the business around 200 million dollars on top of that.
On top of that, the company’s oil production unit expects to take a 300-600 million dollar (£237-474 million) hit.
This is partly due to production in the Gulf of Mexico and the United Arab Emirates being hit by price lags, BP said.
The gas trading division is expected to have continued an already strong performance while the “weak” performance at the oil trading arm is expected to transform into a “strong” one, BP said.
The news comes after rival oil producer Shell on Friday said that trading in its gas division has fallen from an “exceptional” end to the year. The division’s performance would remain “strong,” Shell said.
Like BP, Shell also expects to increase its production of oil and oil equivalents compared to the fourth quarter.
