BP p.l.c. (NYSE:BP) stock fell on Tuesday after the energy major froze stock buybacks to prioritize debt reduction, signaling a sharper balance-sheet reset even as quarterly earnings narrowly beat expectations and revenue missed forecasts.
Details
The energy company posted adjusted earnings of 60 cents per American depositary share, slightly topping 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 projections of $49.36 billion.
The company reported a loss attributable to shareholders of $3.42 billion, versus a loss of $2.0 billion a year ago quarter.
Underlying replacement cost (RC) profit for the quarter totaled $1.54 billion, compared with $1.17 billion a year ago.
Operating cash flow was $7.60 billion, up from $7.43 billion in the prior year quarter.
Capital expenditures totaled $4.17 billion, and divestments and other proceeds were $3.6 billion.
BP ended the quarter with $22.2 billion in net debt.
Segment Performance
The Oil Production & Operations segment recorded replacement cost profit before interest and tax of $1.7 billion. After adjusting for $200 million in net adverse impact of adjusting items, the segment’s underlying profit fell to $2.0 billion. Results reflect lower realizations, production mix impact, and a lower share of net income of equity-accounted entities.
The Gas & Low Carbon Energy segment generated $2.2 billion in RC loss before interest and tax, reflecting lower realizations. After $3.6 billion in adjustments, the underlying profit reached $1.4 billion.
The Customers & Products segment posted $1.4 billion in RC profit before interest and tax. On an underlying basis, profit reached $1.3 billion after adjusting for $100 million. The segment was impacted by seasonally lower volumes and weak midstream performance.
Management Commentary
Carol Howle, Interim chief executive officer, stated, “We are also taking decisive action to high-grade our portfolio and strengthen our company, including the execution of our $20bn disposal programme and the decision to suspend the share buyback and fully allocate excess cash to our balance sheet.”
“These decisions position us to progress long-term value growth through the distinctive opportunity set we are creating in our upstream business, including the Bumerangue discovery in Brazil, where our initial estimates indicate around 8 billion barrels of liquids in place. We look forward to Meg O’Neill joining as CEO in April as we accelerate our progress to build a simpler, stronger, and more valuable bp for the future.”
Key Development
In December 2025, BP strategically streamlined its portfolio by selling a controlling stake in its Castrol lubricants business for $10.1 billion.
In January 2026, the company disclosed a 50:50 joint venture with Corteva, Inc. (NYSE:CTVA) to produce crop-based oils from canola, mustard, and sunflower for sustainable aviation fuel (SAF) and renewable diesel (RD).
Shareholders Appreciation
The company disclosed a quarterly dividend of 8.32 cents per ordinary share.
To support balance sheet strengthening, the board has suspended share repurchases and will direct excess cash toward deleveraging, withdrawing prior guidance of distributing 30%–40% of operating cash flow to shareholders.
First Quarter FY26 Outlook
For first quarter of 2026, BP expects upstream reported production to be broadly in line with fourth-quarter 2025 levels.
Customer-facing businesses are projected to see seasonally lower volumes versus the prior quarter.
In Products, weaker industry refining margins are anticipated, although these are expected to be partially offset by reduced refinery turnaround activity.
Capital expenditure is forecast to remain broadly unchanged compared with the fourth quarter of 2025.
2026 & Long Term Outlook
For 2026, the company expects capital expenditure of $13 billion–$13.5 billion and anticipates reported upstream production to be slightly lower and underlying upstream production to be broadly flat compared with 2025.
Within this, BP projects underlying production from oil production & operations to be broadly flat and production from gas & low carbon energy to be lower in 2026.
Notably, the company expects Gulf of America settlement payments of around $1.6 billion pre-tax for the year, including about $0.4 billion to be paid in the first quarter and roughly $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 were down 5.10% at $37.22 during premarket trading on Tuesday, according to Benzinga Pro data.
Photo by svf74 via Shutterstock
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