BP's Q2 Results to Be Hit by Low Prices Despite Higher Production

BP plc BP expects higher oil and gas production for the second quarter of 2025 following its renewed approach to fossil fuels to increase profits, per Reuters.

The company expects upstream production for the April to June period to exceed its earlier forecasts. This marks an improvement compared to production levels in the preceding quarter. BP’s upstream production involves its oil production and operations, as well as gas and low-carbon energy production.

Decline in Prices Expected to Impact Q2 Results

The company claimed that lower prices received for its oil production were expected to negatively impact results by as much as $800 million. Crude oil prices fell in the quarter as the Organization of the Petroleum Exporting Countries and allies such as Russia started to unwind self-imposed production cuts of 2.17 million barrels per day in April.

BP said crude oil prices averaged $67.88 per barrel in the second quarter compared with $75.73 a barrel in the previous quarter. U.S. gas prices averaged $3.44 a million British thermal unit in the quarter, down from $3.65. BP said that its gas trading results are expected to be at average levels.

BP has projected an increase in average refining margins for the second quarter to $21.1 per barrel from $15.2 in the prior three-month period. The company expects its customers and products segment to benefit from this improvement, anticipating a gain of $300-$500 million from the previous quarter's reported number despite elevated maintenance activity at its facilities.

BP anticipates ending the quarter with net debt slightly below the $27 billion it reported in the previous quarter.

Subpar Performance by Competitors

Earlier this week, rival Shell plc SHEL informed that it expects quarterly earnings to be negatively impacted by weaker trading in its integrated gas division and losses at chemicals and products operations. Shell’s integrated gas division has lowered its production guidance from the 890,000-950,000 barrels of oil equivalent per day (Boe/d) issued with its first-quarter results to 900,000-940,000 Boe/d.

Shell’s chemical division is expected to generate a loss in the second quarter. The chemical utilization rate in the second quarter is likely to be 68-72%, suggesting a significant decline from the 81% reported in the first quarter of 2025. The company mentioned that unplanned maintenance at its Monaca plant affected chemical utilization in the to-be-reported quarter. Trading results from its Chemicals & Products division, and the Renewables and Energy Solutions unit are expected to be weaker than in the first quarter of 2025.

BP Stock’s Price Performance

Shares of BP have gained 17.1% in the past three months compared with the industry’s 12.2% growth.

BP’s Zacks Rank & Key Picks

BP currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector may consider the following companies that presently carry a Zacks Rank #2 (Buy) each. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The Williams Companies, Inc. WMB is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing and transporting natural gas and natural gas liquids. Williams boasts a pipeline system of more than 33,000 miles and is one of the largest domestic transporters of natural gas.

Williams received a credit rating upgrade from S&P to BBB+ in the first quarter, while Moody’s assigned a positive outlook, both reflecting the company’s improved financial stability. Williams maintains a disciplined leverage target of 3.5X to 4.0X, ending the quarter at 3.65X.

A strong operating cash flow of $1.4 billion (up 16% year over year) and a dividend coverage ratio of 2.37X on an AFFO basis provide ample financial flexibility to support growth initiatives while continuing to return capital to shareholders.

Oceaneering International OII delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. The company is a leading provider of offshore equipment and technology solutions to the energy industry. OII’s proven ability to deliver innovative, integrated solutions supports ongoing client retention and business opportunities, ensuring steady revenue growth.

In terms of financial strength, the company ended the first quarter with $382 million in cash and no borrowings under its secured revolving credit facility. It also reported $1.2 billion in order intake in the quarter, highlighting a strong and diversified backlog.

Oceaneering’s consolidated first-quarter 2025 adjusted EBITDA margin expanded to 15% from 12.4% a year ago, signaling meaningful operating leverage. Management reaffirmed its 2025 EBITDA guidance of $380-$430 million, reflecting confidence in the trajectory of its business segments despite macro uncertainties.

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