BP

BP PLC First Quarter 2026 Financial Summary

Business Context and Reporting Period

This Form 6-K reports the unaudited financial results for BP p.l.c. for the first quarter ended March 31, 2026. The reporting period reflects continued operational delivery amidst global conflict and complexity, with a focus on maintaining asset reliability and advancing strategic divestments.

Key Financial Metrics

Note: Underlying RC profit excludes inventory holding gains/losses and adjusting items. Net debt increased primarily due to lower operating cash flow and a $6.0 billion adjusted working capital build.

Material Changes vs. Prior Periods

• Profitability Surge: Reported profit swung from a $3.4 billion loss in 4Q25 to a $3.8 billion profit in 1Q26. This was driven by a $3.2 billion inventory holding gain (net of tax) and exceptional oil trading contributions.
• Underlying Performance: Underlying RC profit more than doubled from 4Q25 ($1.5 billion) to 1Q26 ($3.2 billion), reflecting stronger midstream performance and higher realized refining margins.
• Segment Results:
  • Customers & Products: Underlying RC profit before interest and tax rose to $3.2 billion (from $1.3 billion in 4Q25) due to higher refining margins and exceptional oil trading.
  • Gas & Low Carbon Energy: Underlying RC profit before interest and tax was $1.3 billion, up from a loss in 4Q25, driven by higher production offset by lower realizations.
  • Oil Production & Operations: Underlying RC profit before interest and tax remained flat at $2.0 billion compared to 4Q25, with North Sea divestment offset by higher realizations.
• Working Capital: A significant $6.0 billion adjusted working capital build occurred, driven by seasonal effects, rising prices, and longer shipping routes.

Guidance, Outlook, and Risks

• 2Q 2026 Outlook: Reported upstream production is expected to be lower due to seasonal maintenance in the Gulf of America and Middle East disruptions. Refining throughput is expected to be impacted by planned turnarounds.
• 2026 Guidance:
  • Production: Reported upstream production expected to be lower than 2025; underlying production expected to be broadly flat.
  • Capital Expenditure: Budget remains $13-13.5 billion, now evenly weighted through the year.
  • Divestments: Proceeds expected to be $9-10 billion, heavily weighted to the second half, including ~$6 billion from the Castrol transaction.
  • Balance Sheet: Target net debt of $14-18 billion by end-2027. Plans to reduce perpetual hybrid bond capital by ~$4.3 billion to ~$9 billion by end-2027.
• Risks and Contingencies:
  • Geopolitical: Ongoing conflict in the Middle East impacts supply, pricing, and PSA contracts. Volatility in oil and gas prices remains a key risk.
  • Operational: Disruptions in the Middle East and North Sea divestments affect production volumes.
  • Legal/Provisions: Gulf of America oil spill payables and provisions stand at $6.9 billion (net of deferred tax asset).

Investor Verification Checklist

• Inventory Gains: Verify the sustainability of the $3.2 billion inventory holding gain, which significantly boosted reported profit but is a non-cash, price-driven item.
• Working Capital Build: Assess the impact of the $6.0 billion working capital build on future cash flow availability and liquidity.
• Divestment Timing: Confirm the closing dates and regulatory approvals for the Gelsenkirchen refinery and Castrol divestments, which are critical to the 2026 cash flow and debt reduction targets.
• Hybrid Bond Reduction: Monitor the execution of the plan to redeem $4.3 billion of perpetual hybrid bonds to validate balance sheet strengthening claims.
• Refining Margins: Evaluate the durability of the "exceptional" oil trading contribution and higher refining margins against potential Middle East supply disruptions.