BP Stock Gains as Q1 Oil Trading Result Expected to be Strong

British oil and gas giant BP shares (LON: BP.) jumped over 1.5% early Tuesday after the company revealed it is poised to kick off the year 2024 on a high note, as it anticipates a rise in both production and trading activity, according to its latest trading statement. 

The firm anticipates increased production volumes across its oil, gas, and low-carbon segments compared to the end of 2023. For the first quarter of 2024, oil, gas, and low-carbon production is expected to increase despite a forecasted increase in just oil production for the full year.

In addition, oil trading is expected to be strong following a weak result in the fourth quarter of 2023.

In the gas and low carbon energy segment, realisations compared to the prior quarter are expected to have an adverse impact in the range of $200 million to $400 million based on declines in non-Henry Hub natural gas marker prices. Furthermore, there is expected to be an adverse impact of around $200 million as a result of the devaluation of the Egyptian Pound. 

Nevertheless, gas marketing and trading are expected to be strong following a strong result in the fourth quarter of 2023.

The company added that the customers and products segment is expected to be impacted by improving realised refining margins, which should result in a benefit in the range of $100 million to $200 million, a significantly lower level of turnaround activity than the prior quarter.

Net debt is expected to increase in the first quarter mainly due to a build-up of working capital, as well as the phasing of capex, divestment, and other proceeds.

In March, Piper Sandler raised its price target for BP to $40 from $38, keeping a Neutral rating on the shares. The firm cited supportive commodity prices and low-cost structures generating robust free cash flow, as well as downstream markets remaining tight and volume/CFO growth being strong, as part of the reason for the target increase.