BP

Business Context and Reporting Period

Company: BP p.l.c.
Filing Type: Form 6-K (Report of Foreign Issuer)
Reporting Period: First Quarter 2026 (1Q26)
Date of Filing: April 14, 2026
Context: This trading statement provides updated estimates and expectations for 1Q26 performance. Actual group results are scheduled for publication on April 28, 2026. The outlook reflects heightened volatility in crude oil, natural gas, and refined products prices driven by the ongoing situation in the Middle East.

Key Financial Metrics and Operating Data

Material Changes vs. Prior Period

• Net Debt Increase: Net debt is expected to rise to a range of $25–$27 billion from $22.2 billion in 4Q25. This increase is primarily driven by a significant working capital build of $4–$7 billion due to the volatile price environment.
• Production Mix: While total upstream production remains flat, oil production is expected to be slightly lower due to price impacts on entitlement volumes (PSA/TSC), while gas and low carbon energy production is slightly higher.
• Realizations and Margins:
  • Oil: Realizations are expected to impact results by +$0.1 to $0.2 billion compared to the prior quarter, largely due to price lags in the Gulf of America and UAE.
  • Gas: Realizations are expected to be broadly flat, with gas marketing and trading results averaging the prior quarter's performance.
  • Refining: Stronger realized refining margins (+$0.1 to $0.2 billion) and lower turnaround activity are expected. Oil trading results are projected to be exceptional compared to the weak results in 4Q25.
• Costs: Cash costs in oil production are expected to be $0.1 billion higher than the prior quarter. Depreciation, depletion, and amortization (DD&A) are expected to be broadly flat at $2.0 billion.

Guidance, Outlook, and Risks

Management Commentary and Outlook

Management notes that market conditions are increasing the dislocation between marker prices and actual prices realized, as well as the impact of price lags. The underlying effective tax rate is expected to be around 35%, reflecting higher results in the products segment. Full-year 2026 capital expenditure guidance remains $13–$13.5 billion, weighted to the first half. Divestment proceeds are expected to be $9–$10 billion, significantly weighted to the second half, including approximately $6 billion from the Castrol transaction.

Risks and Contingencies

• Geopolitical Volatility: The ongoing situation in the Middle East is driving volatility in commodity prices, impacting trading results and working capital.
• Price Lags: Significant price lags in key production regions (Gulf of America, UAE) create a mismatch between current market prices and realized revenues.
• Working Capital: A substantial build in working capital ($4–$7 billion) is anticipated due to the price environment, impacting net debt levels.
• Forward-Looking Uncertainty: Actual results may vary materially from estimates due to complex government share calculations, hedging activity, and operational issues.

Investor Verification Checklist

• Working Capital Build: Verify the magnitude of the $4–$7 billion working capital increase and its specific drivers within the volatile price environment.
• Price Lag Impact: Confirm the actual financial impact of price lags on realized revenues versus marker prices in the Gulf of America and UAE.
• Net Debt Trajectory: Monitor the final net debt figure against the $25–$27 billion guidance range to assess liquidity management.
• Oil Trading Results: Validate the "exceptional" oil trading result compared to the "weak" prior quarter, given the heightened market volatility.
• Castrol Divestment: Track the timing and proceeds of the Castrol transaction, which is a key component of the $9–$10 billion divestment guidance.