BP (NYSE:BP) detailed full-year 2025 and fourth-quarter results in a video update led by company executives, emphasizing operational execution, cash generation, and a shift in capital allocation priorities toward balance sheet strengthening. The company also addressed safety incidents in its U.S. retail business and outlined guidance for the first quarter and full year 2026.
Safety update
BP’s CFO Kate Thomson opened with safety, calling it the company’s top priority, and noted that four colleagues died in 2025 while working in BP’s U.S. retail business. Two of the deaths occurred in separate incidents in which employees were struck by passing vehicles while providing emergency roadside assistance.
Full-year 2025 performance and capital allocation
Thomson said 2025 marked “strong progress and delivery” against a reset strategy, with results achieved amid what she described as a weaker oil price environment.
- Total underlying replacement cost profit: $7.5 billion
- Operating cash flow: $24.5 billion, including a $2.9 billion adjusted working capital build
- Capital expenditure: down 10% versus 2024; organic CapEx of $13.6 billion
Including a fourth-quarter dividend of $0.0832 per ordinary share, BP said shareholder distributions were around 30% of 2025 operating cash flow.
However, Thomson said the board has decided to suspend the share buyback and fully allocate excess cash to accelerate strengthening the balance sheet. She added that the company has retired its previous guidance for shareholder distributions to be in the range of 30% to 40% of operating cash flow. Management framed the move as creating a “stronger and more resilient platform” to invest with discipline in oil and gas opportunities.
Operational progress, discoveries, and divestments
Operationally, BP reported starting up seven new major projects and achieving a record in upstream plant reliability, which supported broadly flat underlying production versus 2024 and exceeded guidance provided a year earlier. The company’s reserves replacement ratio was 90%, up from an average of around 50% over the prior two years.
BP also discussed the Boomerang discovery, describing it as the company’s largest in 25 years. Thomson said the initial estimate indicates around 8 billion barrels of liquids in place, while noting that at this stage there is a wide range of uncertainty. BP is putting plans in place for an appraisal program expected to start around the end of the year.
On portfolio actions, Thomson said BP concluded a strategic review of Castrol, reaching an agreement to sell a 65% shareholding. BP expects total net proceeds of around $6 billion and said the cash will be fully used to reduce net debt upon completion. Thomson added BP has completed and announced over $11 billion of divestments, more than halfway toward a $20 billion disposal program in one year.
The company also highlighted its supply, trading, and shipping business, saying it has delivered around a 4% uplift to BP’s returns on average over the last six years.
Cost reductions, balance sheet actions, and returns
BP reported progress against targets set at its capital markets update 12 months earlier. Thomson said adjusted free cash flow increased by around 55% in 2025 on a price-adjusted basis. Net debt ended 2025 $800 million lower than at the end of 2024.
During the year, BP also:
- Redeemed $1.2 billion of perpetual hybrid bonds
- Made $1.2 billion of pre-tax payments against its Gulf of America settlement liability
BP has delivered $2.8 billion of a $4 billion to $5 billion structural cost reduction target since the start of its program, and Thomson said that target has now been increased to $5.5 billion to $6.5 billion by 2027, reflecting the Castrol divestment decision.
Return on average capital employed was around 14% in 2025 on a price-adjusted basis, up from around 12% in 2024, according to Thomson.
Fourth-quarter results, impairments, and 2026 guidance
BP said fourth-quarter earnings were impacted by a weaker price environment versus the third quarter. Segment results cited in the update included:
- Gas & Low Carbon Energy: underlying result of $1.4 billion, down from $1.5 billion, reflecting lower realizations; gas marketing and trading was described as “average.”
- Oil Production & Operations: underlying result of $2.0 billion, down from $2.3 billion, reflecting lower realizations, production mix effects, and lower equity-accounted income, partly offset by lower exploration write-offs.
- Customers: underlying result of $900 million, down from $1.2 billion, reflecting seasonally lower volumes and weaker midstream performance; fuels margins were broadly flat.
- Products: underlying result of $500 million, broadly flat; stronger realized refining margins were offset by lower throughput due to higher turnaround activity and the temporary impact of an incident at the Whiting refinery; oil trading contribution was described as weak.
BP reported group underlying replacement cost profit before interest and tax of $4.4 billion. Underlying finance costs were around $1.2 billion, and the underlying effective tax rate was 43% for the quarter (42% for the full year). Non-controlling interest was around $300 million. Thomson also noted that the divestment of BP’s non-controlling interest in its U.S. onshore midstream assets at the end of 2025 is projected to drive a charge in the range of $100 million to $200 million per year.
Taken together, BP reported group underlying replacement cost profit of $1.5 billion. As previously guided in its trading statement, BP recognized impairments of around $4 billion after tax during the quarter. Along with an inventory holding loss and other adjusting items, BP reported a fourth-quarter IFRS loss of $3.4 billion.
Thomson said the impairment charges were related largely to transition businesses, including biogas and renewables, following a deliberate decision to manage the pace of growth and high-grade the portfolio to maximize returns. She described the impairments as non-cash adjustments but acknowledged that “every impairment reflects a prior capital outlay,” adding that BP is committed to improving capital allocation with a stricter focus on returns.
On cash flow and leverage, fourth-quarter operating cash flow was $7.6 billion, including about $900 million of adjusted working capital release. CapEx was $4.2 billion, including $600 million related to a deferred payment for the BP Bioenergy transaction completed in 2024; organic CapEx was $3.5 billion, down $700 million year over year. BP reported divestment and other proceeds of $3.6 billion in the quarter, taking the full-year total to $5.3 billion. Net debt declined to $22.2 billion.
For the first quarter of 2026, BP expects reported upstream production to be broadly flat, seasonally lower volumes in Customers, and lower industry refining margins partly offset by lower turnaround activity in Products. BP expects CapEx to be broadly flat to the fourth quarter of 2025.
For full-year 2026, BP expects reported upstream production to be slightly lower, with underlying production broadly flat. Thomson said oil production and operations is expected to be broadly flat, while gas and low carbon energy is expected to be lower. BP expects 2026 capital expenditure of $13.0 billion to $13.5 billion, weighted to the first half. Divestment proceeds are expected to be $9 billion to $10 billion, including around $6 billion from the announced Castrol transaction, with proceeds significantly weighted to the second half. BP expects net debt to increase through the first half of 2026 before falling significantly in the second half, subject to the macro environment and prices.
About BP (NYSE:BP)
BP plc is a British multinational integrated energy company headquartered in London. Originating in the early 20th century as the Anglo-Persian Oil Company, BP has grown into one of the world’s largest oil and gas companies, operating across exploration and production, refining and marketing, trading, and a range of low-carbon businesses.
The company’s core activities include upstream exploration and production of crude oil and natural gas, midstream and trading operations, and downstream refining, marketing and supply of fuels, lubricants and petrochemicals.
