(Sharecast News) - Analysts at Berenberg cut their target price on BP to 590p from 600p on Wednesday, saying the energy giant's latest trading update pointed to weaker upstream performance and higher exploration write‑offs, despite another exceptional quarter from the downstream business.
BP's Q2 statement, published on 14 July, indicated an earnings beat driven by strong refining and marketing margins and a further standout contribution from oil trading. Berenberg said cash generation also looked solid, even with a working‑capital build, and noted good progress on deleveraging, with net debt before leases guided to fall to $22bn to $23bn, down $2.8bn quarter‑on‑quarter.

Downstream performance was described as "strong", with refining margins jumping to $29.60 per barrell from $16.9/bbl in Q1, adding $1.2bn to $1.4bn to earnings. Throughput was guided 4% lower due to turnarounds and an incident at BP's Whiting refinery, while oil trading was set to be slightly higher quarter‑on‑quarter. Berenberg said its updated estimates put it 60% ahead of consensus for the division.

Upstream results, however, were more mixed. Gas and low carbon energy was set to benefit from higher commodity prices, with realisations adding $500m to $700m, though production was expected to be 5% below Q1. Oil production and operations would also gain from higher oil prices, with realisations adding $1.8bn to $2.1bn, but exploration write‑offs were guided to come in at $500m , up from near zero in Q1. Production was expected to be 7% lower due to the Iran conflict.

The German bank lifted its earnings forecasts by 9% for FY26 and 1% for FY27 on stronger refining, but said the upstream drag justified trimming the price target to 590p. Berenberg also maintained its 'buy' rating.





Reporting by Iain Gilbert at Sharecast.com

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