BP p.l.c. (NYSE: BP) saw its stock slipping in premarket activity on Wednesday after the multinational oil and gas company issued a detailed trading update in advance of its scheduled fourth-quarter 2025 financial results, due out on February 10, 2026. The update provided insight into BP's operational and financial outlook for the quarter, highlighting several factors influencing the company’s near-term performance and investor sentiment.
In terms of upstream production, BP anticipates volumes to remain largely consistent with the third quarter of 2025. Specifically, output from oil production and related operations is expected to hold steady quarter over quarter. However, this stability is juxtaposed against reduced gas production levels and a decline in low-carbon energy volumes within the company's portfolio. Thus, the overall upstream segment's physical output reflects a balancing act between stable oil operations and softer performance in gas and renewables.
From a pricing perspective, BP forecasts unfavorable shifts that will dampen financial results relative to the prior quarter. Within the gas and low-carbon segment, price realizations are projected to drag earnings by approximately $0.1 billion to $0.3 billion. This contraction is linked specifically to movements in non-Henry Hub natural gas benchmarks, which have shifted adversely. Meanwhile, the company expects the performance of its gas marketing and trading operations to align with average activity levels, providing some measure of steadiness within this segment.
Further pricing pressures are anticipated in BP's oil production and operations category. The company signals an expected reduction in results by roughly $0.2 billion to $0.4 billion relative to the third quarter. This decline is predominantly attributed to lag effects impacting realized prices on BP’s production in strategic regions, including the Gulf of America and the United Arab Emirates. These dynamics reflect the complex relationship between market prices and BP’s contractual or hedged price structures over time.
Looking at the customers and products segment, BP projects a reflection of typical seasonal patterns, with lower sales volumes expected alongside stable margins for fuel products. The refining sector's profitability is anticipated to see mixed influences: although refining indicator margins (RIM) should contribute about $0.1 billion in gains, these will be offset by increased turnaround activities and temporary operational capacity reductions, notably at the Whiting refinery. Additionally, weak performance in oil trading is forecasted to weigh on segment results this quarter.
Financially, the company signals the presence of significant post-tax adjusting charges in its forthcoming quarterly results. Specifically, BP expects impairment charges ranging approximately between $4 billion and $5 billion, predominantly related to assets within its transition-focused businesses and equity-accounted entities. These impairment charges are mainly concentrated in the gas and low-carbon energy segment, reflecting ongoing reassessment of asset valuations amid evolving market and regulatory conditions.
BP also provided an update on its net debt position, estimating a reduction to between $22 billion and $23 billion at quarter-end, improved from $26.1 billion recorded at the end of the third quarter. This deleveraging is attributed to approximately $3.5 billion in divestment proceeds received during the quarter, coupled with total divestment proceeds for the full year amounting to roughly $5.3 billion. The company’s focus on portfolio streamlining and capital discipline appears evident in these capital management efforts.
Crude oil price conditions during the quarter illustrate a softening backdrop. Brent crude averaged $63.73 per barrel in Q4 2025, a notable decline from $69.13 per barrel seen in the prior quarter. Conversely, U.S. Henry Hub natural gas prices averaged $3.55 per mmBtu in the fourth quarter, representing an increase from $3.07 per mmBtu in the third quarter. BP’s refining indicator margin also edged slightly lower, averaging $15.2 per barrel compared to $15.8 in the preceding period.
In strategic initiatives, BP revealed the formation of a 50:50 joint venture with Corteva, Inc. (NYSE: CTVA), aiming to produce crop-based oils derived from canola, mustard, and sunflower. These oils will be utilized in the manufacture of sustainable aviation fuel (SAF) and renewable diesel (RD), underscoring BP’s ongoing commitment to expanding its low-carbon energy offerings and advancing sustainable fuel technologies.
Additionally, last month BP completed the sale of a 65% stake in its Castrol lubricants business for approximately $10.1 billion. The transaction is expected to provide the company with around $6 billion in net proceeds, reflecting its move to streamline its asset portfolio and concentrate more on core energy operations.
Trading data indicates that BP shares declined by about 1.10%, with premarket prices around $34.97 per share on Wednesday. This movement reflects investor caution in response to the multiple headwinds and impairment charges outlined in the update ahead of the upcoming earnings release.
Key Points
- BP anticipates largely stable upstream oil production in Q4 2025, with declines in gas and low-carbon volumes partially offsetting output.
- Price realizations in gas and oil segments are expected to reduce quarter-over-quarter results by up to $0.3 billion and $0.4 billion respectively, due to benchmark movements and lag effects.
- Post-tax impairment charges of $4–$5 billion are forecasted, primarily associated with transition-focused businesses in the gas and low-carbon segment.
- Net debt is projected to decrease to approximately $22–$23 billion at quarter-end, supported by substantial divestment proceeds during the quarter and full year.
Risks and Uncertainties
- Continued volatility in global oil and gas prices may impact price realizations and operating results beyond current projections.
- Impairment charges related to transition assets introduce potential balance sheet risks and reflect challenges in the low-carbon business segment.
- Operational disruptions such as refinery turnarounds and temporary capacity reductions at key facilities like Whiting could constrain production and financial performance.
- Uncertainties in market demand, especially in the customers and products segment amid seasonal volume declines, pose challenges to revenue stability.