BP p.l.c. BP (BP) shares rose Tuesday after the energy giant released its second-quarter trading update, which pointed to stronger realized pricing, higher refining margins, and lower net debt — even as upstream production took a step back.

The company said it expects sequential declines in upstream and segment production, primarily due to seasonal maintenance in the Gulf of America and disruptions in the Middle East.

Second-Quarter Outlook

BP expects upstream production of 2.17 million to 2.22 million barrels of oil equivalent per day (mboe/d), down from 2.34 mboe/d in the first quarter.

Gas & Low Carbon Energy production is projected at 750,000 to 770,000 boe/d, compared with 798,000 boe/d in the prior quarter. Oil Production & Operations output is expected at 1.42 million to 1.45 million boe/d, down from 1.54 million boe/d in the first quarter.

The company expects realized pricing to increase earnings by $500 million to $700 million in Gas & Low Carbon Energy and by $1.8 billion to $2.1 billion in Oil Production & Operations, reflecting higher commodity prices and production price lags.

BP said its Customers & Products business is expected to improve sequentially, supported by seasonal volume growth, stronger fuel margins and stable integrated midstream performance.

Refining margins are expected to provide a $1.2 billion to $1.4 billion earnings benefit. Refinery throughput is projected at 1.45 million to 1.48 million barrels per day, reflecting increased turnaround activity and lower volumes at the Whiting refinery following an April third-party disruption.

The company expects second-quarter net debt to decline to $22 billion to $23 billion, from $25.3 billion at the end of the first quarter, after a $2.9 billion redemption of perpetual hybrid bonds and a $1.1 billion Gulf of America settlement payment.

BP also expects to record about $1.0 billion in post-tax impairment charges during the quarter, primarily related to transition assets within its Gas & Low Carbon Energy business.

Commodity Prices

Brent crude averaged $103.85 per barrel during the second quarter, up from $81.13 per barrel in the first quarter.

U.S. Henry Hub natural gas prices averaged $2.90 per mmBtu, down from $5.05 per mmBtu in the prior quarter.

BP's Refining Marker Indicator averaged $29.6 per barrel in the second quarter, compared with $16.9 per barrel in the first quarter.

Earnings And Analyst Outlook

BP is scheduled to report second-quarter earnings on Aug. 4.

Wall Street expects earnings of $1.41 per share, up from 90 cents a year earlier. Revenue is projected to increase to $58.78 billion from $46.63 billion.

The stock carries a consensus Hold rating with an average price forecast of $48.55. Recent analyst actions include:

• Argus Research upgraded the stock to Buy with a $50 price forecast on May 11.
• RBC Capital upgraded BP to Outperform on May 11.
• Scotiabank reiterated Sector Outperform and raised its price forecast to $58 on April 22.

MarketDash Edge Ratings

According to MarketDash Edge, BP has a Momentum score of 61.84, a Value score of 87.78 and a Growth score of 8.03.

The ratings suggest the stock offers strong value characteristics but relatively weak growth, while momentum continues to improve.

ETF Exposure

BP is a significant holding in several exchange-traded funds, including:

• State Street SPDR S&P Global Natural Resources ETF (GNR)
• iShares MSCI United Kingdom ETF (EWU)
• WisdomTree International Hedged Quality Dividend Growth Fund (IHDG)

Large inflows or outflows in these funds can influence demand for BP shares.

BP Price Action: BP shares were trading higher by 1.32% at $41.37 at the time of publication on Tuesday.