bp: share falls after disappointing trading update

(CercleFinance.com) - bp plunged into the red on Tuesday's trading on the London Stock Exchange following a Q2 trading update, during which the energy group cited pressure on margins and disclosed provisions.


This morning, the British oil company now says it expects production in its upstream activities to be broadly stable compared with Q1.

While production in its oil division is expected to be virtually unchanged quarter-on-quarter, gas and low-carbon energy production is expected to decline slightly.

bp states that, above all, it anticipates a "significant" drop in refining margins in Q2, which should knock off $500m to $700m from its quarterly results.

The group explains that it suffered from lower margins on its distillate products, but also from narrow price differentials on heavy crude in North America.

Finally, bp explains that it plans to book an impairment provision of between one and two billion dollars for the reduction in production capacity at its Gelsenkirchen refinery in Germany, a project already announced in March.

By 9am, the stock was down by more than 3%, posting the biggest decline on the FTSE 100 index (+0.2%).

In recent days, it had already suffered from the disappointment caused by Shell and ExxonMobil's interim results, which point to a difficult earnings season for the oil sector.

Since the start of the year, bp shares have slipped back into the red, and are now down 1.4%.


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