bp's first-quarter profit falls sharply from a year ago amid strategy reset
Discussing its reset strategy in February 2025, Murray Auchincloss, chief executive officer, said at the time that the company would reduce and reallocate capital expenditure to its "highest-returning businesses."
“We will grow upstream investment and production to allow us to produce high margin energy for years to come...and we will be very selective in our investment in the transition, including through innovative capital-light platforms,” he continued.
bp plc’s first-quarter 2025 net profits decreased from the year-ago level amid a strategic reset, a decline in crude oil prices, and weaker refining margins.
Profit attributable to bp shareholders for first-quarter 2025 was $700 million, a significant decrease from $2.3 billion in the same period of 2024, but an improvement when compared with the operator’s $2.0-billion loss in fourth-quarter 2024.
After adjusting for inventory holding gains and other items, underlying replacement cost (RC) profit (used as a proxy for net profit) stood at $1.4 billion, compared with $2.7 billion in first-quarter 2024 and $1.2 billion in fourth-quarter 2024.
In February, bp committed to reducing its investment in renewable energy while increasing its annual spending on its core oil and gas business.
The weaker year-over-year underlying RC profit primarily reflected lower refining margins, a weak gas marketing and trading result, and an average oil trading contribution, partly offset by a higher customers result.
Operating cash flow totaled $2.8 billion, down from $5.0 billion in first-quarter 2024, driven by lower earnings and a higher working capital build partly offset by a reduction in tax paid.
Capital expenditure was $3.6 billion, compared with $4.3 billion in the same quarter last year, largely reflecting lower investment in low-carbon energy projects.
Net debt rose to $27.0 billion at the end of first-quarter 2025, compared with $24.0 billion at the end of first-quarter 2024 and $23.0 billion at the end of fourth-quarter 2024, primarily due to lower operating cash flow and timing of divestment proceeds.
Segment performance
For Gas & Low Carbon Energy, the RC profit before interest and tax for first-quarter 2025 was $1.4 billion, compared with $1.3 billion from fourth-quarter 2024. However, underlying RC profit fell to $1.0 billion, down from $2.0 billion in fourth-quarter 2024. The decline was mainly due to a weak gas marketing and trading performance, lower production volumes (impacted by divestments), and higher non-cash and startup costs related to major projects.
For Oil Production & Operations, bp’s RC profit before interest and tax rose to $2.8 billion from $2.6 billion in the prior quarter. After adjustments, underlying RC profit remained steady at $2.9 billion, reflecting higher production volumes and realizations, offset by lower income from equity-accounted entities and the absence of several non-recurring benefits that had supported fourth-quarter 2024.
The Customers & Products segment swung back to profitability, delivering RC profit before interest and tax of $100 million, compared with a loss of $1.9 billion in fourth-quarter 2024. On an underlying basis, profit of $700 million was recorded, versus a loss of $300 million in the previous quarter.
The improvement was driven by lower costs, stronger midstream performance, a rebound in refining margins, and a lower impact from turnaround activities. The oil trading contribution was described as average.
