BP flags further upstream output rises after 3% increase in 2023

BP on Feb. 6 forecast further increases in its upstream production in the first quarter and in 2024 as it reported a second year in a row of output rises in 2023, led by US shale and major projects.

While unveiling the results, new CEO Murray Auchincloss stressed the company's commitment to a transition to low-carbon energy, saying "2023 was a year of strong operational performance with real momentum in delivery right across the business ... As we look ahead, our destination remains unchanged – from IOC (integrated oil company) to IEA (integrated energy company)."

The results underline how BP has stabilized its oil and gas production as several of its peers face a decline in volumes. It follows an about-turn by former CEO Bernard Looney in February 2023 in which he withdrew plans for a 40% reduction in oil and gas output by 2030.

BP's upstream production, including from its LNG-focused gas and low carbon unit, rose 2.4% on the year in the fourth quarter to 2.32 million b/d of oil equivalent, with production in the gas and low carbon segment falling, while production in the core oil production and operations unit rose almost 9% to 1.42 million boe/d.

BP highlighted the performance of its BPX shale unit in the US, saying oil and gas production from the unit had surpassed 400,000 boe/d in November, up more than 25% from fourth-quarter 2022, with contributions from each of the basins where it is present.

BPX "remains on track to deliver 2025 volumes 30%-40% higher than 2022 levels," it said.

It also noted contributions from the North Sea Seagull project, which came on stream in October, and said it had taken a final investment decision on a three-well tie-back to the BP-operated Argos project in the US Gulf of Mexico, dubbed the Argos Southwest Extension. In addition, it has approved a three-well expansion at the Shell-operated Great White project in the Gulf of Mexico.

BP in October highlighted a commitment to increasing its US upstream output from around 600,000 boe/d in 2022 to 1 million boe/d by the end of the decade, a 7% annual growth rate. Auchincloss was expected to expand on his strategy at an investor presentation later.

Platts assessed the North Sea Dated Brent benchmark at $79.23/b on Feb. 5, up 15 cents on the day, S&P Global Commodity data showed.

Downstream weakness

In the downstream sector, BP noted weak refining margins in the fourth quarter, offset by lower turnaround and maintenance activity than a year earlier. It also noted weak results for oil trading compared with the year-earlier period.

Looking ahead, it said it expected a significantly lower maintenance impact in the first quarter compared with Q4 2023, offset by lower industry refining margins generally, with a greater impact on the company's actual refining realizations due to narrower differentials in heavy crude pricing; its flagship Whiting refinery in Indiana operates largely on a diet of heavy Canadian crude. The refinery spent a significant part of Q4 under maintenance.

BP reported lower profits overall, and a $4.6 billion financial impairment reflecting changed price assumptions, activity phasing and economic forecasts, it said.

It said it would maintain capital expenditure in 2024 and 2025 at $16 billion, down from actual capex of $16.3 billion in 2023, and compared with earlier medium-term guidance of $14 billion-$18 billion annually.