British energy giant BP said on Tuesday that weak refining margins and oil trading were likely to dent its second-quarter profit, sending its shares down 3% in morning trading.
While its refining margins will take a hit of $500 million to $700 million, the London-based company also expects to record $1 billion to $2 billion in charges in the second quarter, mainly tied to its review of Gelsenkirchen refinery in Germany.
Last week, rival Shell had said it would take an impairment charge of up to $2 billion relating to the sale of its Singapore refinery and the pause of construction at one of Europe’s largest biofuel plants in the Netherlands.
BP’s earnings snapshot comes after US oil major Exxon Mobil signalled on Monday that lower refining margins and natural gas prices would hurt its second-quarter profit.
BP, which is set to post its quarterly results on July 30, said its upstream production in the second quarter is expected to be broadly flat compared with the prior three months.
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Oil and gas production stood at 2.38 million barrels of oil equivalent per day (boepd) in the first quarter, thanks to field start-ups in Azerbaijan and the United States.
Investors expect BP’s second-quarter underlying replacement cost profit, the company’s definition of net income, to come in at $3.13 billion, according to LSEG data.
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