BP p.l.c. has issued a trading statement ahead of its February 10 earnings release, indicating a weaker earnings outlook for the fourth quarter of 2025. The company cited softer oil and gas realizations, weak trading performance, and significant impairments related to its energy transition as key factors.
Reported upstream production in the quarter is expected to remain broadly flat compared to the previous quarter. Stable oil output is offset by lower gas and low-carbon production. However, lower commodity realizations across upstream segments are anticipated to reduce underlying replacement cost profit.
In gas and low-carbon energy, realizations are projected to cut underlying profit by $100 million to $300 million quarter-on-quarter, reflecting shifts in global gas pricing benchmarks beyond Henry Hub. Gas marketing and trading results are expected to be average, providing little relief.
Oil production and operations face a larger impact, with realizations likely to reduce profit by $200 million to $400 million. This is partly due to price lags affecting production in the Gulf of America and the UAE. Brent crude averaged $63.73 per barrel during the quarter, down from $69.13 per barrel in the third quarter.
Downstream performance shows mixed results. BP stated that its customers business will experience seasonally lower volumes, while fuel margins are expected to be broadly flat. In products, stronger realized refining margins, contributing around $100 million, will be offset by heavier turnaround activity and temporary capacity loss following a fire at BP's Whiting refinery in the U.S. Midwest. Oil trading results are forecast to be weak.
The most material impact comes from impairments. BP expects to record post-tax adjusting charges of $4 billion to $5 billion in the fourth quarter, primarily linked to its energy transition businesses and equity-accounted entities. These charges will be excluded from underlying RC profit but highlight financial pressures in parts of BP's low-carbon portfolio amid changing assumptions and market conditions.
Despite earnings challenges, BP reported significant balance sheet progress. Net debt at the end of the fourth quarter is expected to fall to $22 billion–$23 billion, down from $26.1 billion at the end of the third quarter. The reduction reflects roughly $3.5 billion of divestment proceeds during the quarter, bringing full-year asset sales to about $5.3 billion, exceeding earlier guidance of more than $4 billion.
For the full year, BP updated its tax guidance, now expecting an underlying effective tax rate of around 42%, up from prior guidance of roughly 40%, mainly due to changes in the geographical mix of profits.
BP will publish its full fourth-quarter and full-year 2025 results on February 10, 2026.