BP (NYSE:BP) executives used the company’s full-year 2025 results call to frame the year as a “turnaround,” pointing to stronger operational performance, higher cash generation on a price-adjusted basis, and a renewed emphasis on balance sheet repair after the board suspended share buybacks.
Interim Chief Executive Officer Carol Howle, who is leading the company ahead of the arrival of a new CEO in early April, said BP “hadn’t been performing as strongly as we should have been,” prompting “urgent and focused intervention.” Management emphasized progress against a 12-quarter plan launched a year earlier, while acknowledging “we’ve got more to do to accelerate the delivery.”
Operational performance, projects, and emissions
Gordon Birrell, executive vice president for production and operations, added that five of the seven major project start-ups were ahead of schedule, and BP has started up about 150,000 barrels of oil equivalent per day (boe/d) of the 250,000 boe/d net peak production it expects online by 2027. He cited GTA in Mauritania and Senegal, Cypre in Trinidad, and Murlach in the North Sea among recent projects.
On emissions, Birrell said provisional data showed operational emissions in 2025 were 37% below 2019 levels—well beyond BP’s 20% target—and methane intensity fell to 0.04%, below the company’s 2025 target of 0.2%.
Safety update
Howle reiterated that safety is BP’s “number one priority,” and described four fatalities in 2025 involving colleagues in the company’s U.S. retail business. Two colleagues were struck by passing vehicles while providing emergency roadside assistance. BP responded by permanently stopping roadside assistance next to active traffic lanes, a decision Howle said was made “solely to protect the safety of our people.”
On process safety, she said combined Tier 1 and Tier 2 events were down by about one-third year-over-year, while adding that BP still has “more to do” and must learn from every incident.
Financial results, cash flow, and impairments
Chief Financial Officer Kate Thomson reported underlying replacement cost profit (net income) of $7.5 billion for 2025 “against the backdrop of a weaker price environment.” Operating cash flow totaled $24.5 billion, which included an adjusted working capital build of $2.9 billion. Full-year capital expenditure was $14.5 billion, including organic CapEx of $13.6 billion.
Thomson said BP recognized about $4 billion after-tax impairments in the fourth quarter, largely tied to “transition businesses, including biogas and renewables,” as BP took “decisive action” to manage growth pace and “high-grade” the portfolio. While the impairments are non-cash, she noted they reflect prior capital outlays and said the company is committed to improving capital allocation discipline.
BP’s adjusted free cash flow was about $13 billion in 2025 on both a reported and price-adjusted basis, with management emphasizing that on a price-adjusted basis this represented about 55% growth versus 2024. Return on average capital employed rose to about 14% in 2025 on a price-adjusted basis, up from about 12% in 2024, and management reiterated confidence in reaching a price-adjusted return target above 16% in 2027.
Costs, divestments, and balance sheet priorities
Management said BP delivered $2.8 billion of structural cost reductions since the start of its program, including around $2 billion in 2025. Thomson said the company increased its 2027 structural cost reduction target to $5.5 billion to $6.5 billion, reflecting expected cost reductions associated with the Castrol transaction. She said the $2.8 billion delivered to date was split about half from supply chain and third-party optimization, with the remaining half evenly split between organizational optimization and portfolio.
Howle said BP has completed and announced more than $11 billion of a $20 billion divestment program in one year. The company concluded its strategic review of Castrol by agreeing to sell a 65% stake while retaining 35%, which management presented as a way to realize value while keeping exposure to future growth. In Q&A, Thomson described the deal as an enterprise value of $10.1 billion and said the multiples were “at least as good as, if not better, than other precedent transactions.”
Net debt ended 2025 at $22.2 billion, down $800 million from the end of 2024. BP reiterated a target net debt range of $14 billion to $18 billion by the end of 2027 and said it has “visibility” to moving into that range with expected Castrol closing. Thomson also highlighted broader financial obligations—hybrids, leases, and Gulf of Mexico settlement liabilities—totaling about $58 billion at the end of 2025.
Several analyst questions centered on BP’s decision to suspend buybacks. Management repeatedly framed the move as a matter of financial discipline and strengthening the balance sheet to support future organic growth options. Thomson said reinstating buybacks is not automatically tied to reaching the $14 billion to $18 billion net debt target and would require a “holistic view of the balance sheet,” including the capital needs of the growth portfolio.
- Dividend policy: Thomson said the dividend remains BP’s first financial priority, with expectations for at least 4% annual increases. BP announced a dividend per ordinary share of $0.0832.
- CapEx outlook: BP tightened its 2026 CapEx range to $13 billion to $13.5 billion, with spending slightly weighted to the first half.
- Divestment outlook: BP received $5.3 billion of divestment proceeds in 2025 and expects $3 billion to $4 billion more in 2026, weighted to the second half, with the remaining program underpinned by anticipated Castrol proceeds and additional assets being high-graded.
Upstream resource base and Brazil’s Bumerangue discovery
Birrell said BP is working toward a 100% reserve replacement ratio by the end of 2027 and reported a 2025 organic reserve replacement ratio of 90%, aided by operational delivery and some benefit from higher prices. He also pointed to exploration momentum, citing 12 discoveries in 2025 in areas including the Gulf of Mexico, Namibia, and Brazil.
Birrell provided an update on Bumerangue in Brazil, which he called BP’s largest find in 25 years. He said in situ analysis is “materially complete,” with an initial estimate of about 8 billion barrels of liquids in place, roughly split between oil and condensate, while cautioning that there remains a wide uncertainty range at this stage. BP is working on design concepts, including a potential early production system, and plans an appraisal program expected to start around the end of the year, using Transocean’s Deepwater Mykonos rig after drilling the Tupinambá prospect in a neighboring block.
In Q&A, Birrell said BP is “in no rush to take a partner” in Bumerangue and will only do so if it adds value, while declining to provide a recoverable estimate until uncertainty is reduced. He also said Bumerangue will compete for capital alongside other opportunities, including Namibia discoveries and projects in the Gulf of Mexico and Azerbaijan, under disciplined investment criteria.
Management also reiterated the value of BP’s supply, trading, and shipping operations, which Howle said have delivered an average uplift of about 4% to BP’s returns over the past six years.
About BP (NYSE:BP)
BP plc is a British multinational integrated energy company headquartered in London. Originating in the early 20th century as the Anglo-Persian Oil Company, BP has grown into one of the world’s largest oil and gas companies, operating across exploration and production, refining and marketing, trading, and a range of low-carbon businesses.
The company’s core activities include upstream exploration and production of crude oil and natural gas, midstream and trading operations, and downstream refining, marketing and supply of fuels, lubricants and petrochemicals.
