BP Shares Dip on Trading Update Despite Upstream Production Boost

BP shares (LON:BP) are trading slightly lower following the release of its third quarter 2025 trading statement, despite positive indicators in upstream production. The statement, which provides a snapshot of BP's expectations for the quarter, reveals a mixed bag of results, leading to market uncertainty.

The headline from the trading statement is an anticipated increase in reported upstream production compared to the prior quarter. This growth is attributed to higher gas production within bpx energy, alongside increased output in both oil production & operations and gas & low carbon energy segments. However, this positive news is tempered by other factors influencing BP's overall performance.

In the gas & low carbon energy segment, realizations are expected to negatively impact results by around $0.1 billion, primarily due to changes in non-Henry Hub natural gas marker prices. The gas marketing and trading result is projected to be average. The oil production & operations segment anticipates broadly flat realizations compared to the previous quarter, factoring in price lags in the Gulf of America and the UAE. Exploration write-offs are estimated to be $0.1 billion higher.

The customers & products segment presents a more complex picture. Seasonally higher volumes are expected to be offset by flat fuels margins. On the products side, stronger realized refining margins, projected to be in the range of $0.3 to $0.4 billion, and a significant reduction in turnaround activity are anticipated. However, these gains are partially offset by seasonal effects of environmental compliance costs and the impact of an unplanned outage at the Whiting refinery due to adverse weather. The oil trading result is expected to be weak.

BP anticipates including post-tax adjusting items related to asset impairments in the range of $0.2 to $0.5 billion in its third-quarter results, affecting all segments. These items will be excluded from underlying replacement cost profit. Net debt is expected to remain broadly flat at around $26 billion, inclusive of the redemption of $1.2 billion perpetual hybrid bonds, higher income taxes paid of around $1 billion and a working capital release.

Key drivers for the quarter include increased upstream production fueled by bpx energy, stronger realized refining margins boosting the customers & products segment, and the impact of post-tax adjusting items related to asset impairments on reported earnings.

The mixed nature of this trading statement introduces uncertainty into the market. While increased upstream production and stronger refining margins are encouraging, negative impacts from gas realizations, exploration write-offs, and refinery outages could weigh on overall profitability. The anticipated asset impairments further contribute to the cautious sentiment.

The broader economic environment played a role, with Brent crude averaging $69.13/bbl in Q3 2025, up from $67.88/bbl in Q2 2025. US gas Henry Hub prices averaged $3.07/mmBtu, down from $3.44/mmBtu. The BP RIM averaged $15.8/bbl compared to $11.9/bbl in the prior quarter.

This trading statement presents a mixed outlook for BP. While certain segments show promise, the presence of several offsetting factors warrants caution. Markets will be closely watching BP's official Q3 results on November 4th for further clarity.