BP plc (NYSE:BP) Share prices fell on Tuesday after the energy group halted share buybacks to prioritize reducing debt. This signaled a sharper balance sheet reset, even as quarterly profits narrowly exceeded expectations and revenues fell short of forecasts.
Details
The energy company posted adjusted earnings of 60 cents per U.S. depository share, slightly higher than the consensus estimate of 59 cents.
Total revenue rose to $47.38 billion from $45.75 billion in the same quarter last year, falling short of analyst expectations of $49.36 billion.
The company reported a loss attributable to shareholders of $3.42 billion, compared to a loss of $2.0 billion a year earlier.
Underlying replacement cost (RC) profit for the quarter totaled $1.54 billion, compared to $1.17 billion a year ago.
Operating cash flow was $7.60 billion, compared to $7.43 billion in the year-ago quarter.
Capital expenditures totaled $4.17 billion, and divestitures and other proceeds totaled $3.6 billion.
BP ended the quarter with net debt of $22.2 billion.
Segment performance
The Oil production and operations The segment posted a replacement cost gain before interest and taxes of $1.7 billion. After adjusting for $200 million of net negative impact from adjustment items, the segment’s underlying profit decreased to $2.0 billion. The results reflect lower realizations, impact on the production mix and a lower share of the net profit of entities accounted for using the equity method.
The Gas and low-carbon energy segment generated $2.2 billion in RC loss before interest and taxes, due to lower realizations. After $3.6 billion in adjustments, underlying profit reached $1.4 billion.
The Customers & Products segment recorded $1.4 billion in RC earnings before interest and taxes. On an underlying basis, profit was $1.3 billion, after adjustment for $100 million. The segment was impacted by seasonally lower volumes and weak midstream performance.
Management commentary
Carol HowleyInterim Chief Executive Officer, said: “We are also taking decisive action to level up our portfolio and strengthen our business, including the execution of our $20 billion divestiture program and the decision to suspend share repurchases and fully allocate excess cash to our balance sheet.”
Key development
In December 2025, BP strategically streamlined its portfolio by selling a controlling stake in its company Castrol lubricants business for $10.1 billion.
Shareholder appreciation
The company declared a quarterly dividend of 8.32 cents per common share.
To support the balance sheet strengthening, the board has suspended share buybacks and will use excess cash to deleverage, withdrawing previous guidance for distributing 30 to 40% of operating cash flow to shareholders.
Outlook for the first quarter of FY26
For the first quarter of 2026, BP expects upstream reported production to be broadly in line with fourth quarter 2025 levels.
Customer-facing businesses are expected to see seasonally lower volumes than in the previous quarter.
In Products, weaker industry refining margins are expected, although these are expected to be partially offset by reduced turnaround activities at refineries.
Capital expenditures are expected to remain largely unchanged compared to the fourth quarter of 2025.
2026 and long-term prospects
For 2026, the company expects capital expenditures of $13 billion to $13.5 billion and expects reported upstream production to be slightly lower and underlying upstream production to be largely flat compared to 2025.
Within this framework, BP expects underlying production from oil production and operations to be broadly stable in 2026 and production from gas and low-carbon energy to be lower.
Notably, the company expects approximately $1.6 billion in Gulf settlement payments for the year, including approximately $0.4 billion in the first quarter and approximately $1.1 billion in the second quarter.
The company reaffirmed its target to reduce net debt to $14-18 billion by the end of 2027.
BP Price Action: BP shares fell 5.10% to $37.22 in premarket trading on Tuesday, according to data from Benzinga Pro.
Photo by svf74 via Shutterstock
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