Shares of BP (LON: BP) are trading lower today despite the company’s first-quarter 2026 trading statement projecting an exceptional oil trading result.
The report, released this morning, outlines expectations for the quarter, acknowledging the impact of heightened volatility in crude oil, natural gas, and refined product prices stemming from the ongoing situation in the Middle East.
BP anticipates its first quarter underlying replacement cost (RC) profit before interest and tax to be influenced by several factors compared to the fourth quarter of 2025. Reported upstream production is expected to be broadly flat at 2,344 mboe/d, with gas & low carbon energy production slightly higher at 788 mboe/d and oil production & operations slightly lower at 1,555 mboe/d.
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Realizations in the Gas & low carbon energy segment are projected to be broadly flat, influenced by price lags and changes in non-Henry Hub natural gas marker prices. The gas marketing and trading result is expected to be average, mirroring the fourth quarter of 2025.
The Oil production & operations segment is expected to see a positive impact on realizations, in the range of +$0.1 to 0.2 billion, largely due to price lags affecting production in the Gulf of America and the UAE. Cash costs are projected to increase by $0.1 billion, while the depreciation, depletion & amortization (DD&A) charge remains broadly flat at $2.0 billion.
The Customers & products segment anticipates seasonally lower volumes and reduced retail fuel margins within the customers division, offset by stronger midstream performance. Products anticipates stronger realized refining margins in the range of +$0.1 to 0.2 billion and a lower impact from turnaround activity. Crucially, the oil trading result is expected to be exceptional, a stark contrast to the weak performance in the fourth quarter of 2025.
BP estimates its group underlying effective tax rate for the first quarter to be around 35%, reflecting higher results in products. Capital expenditure is expected to be broadly flat with the organic capital expenditure in the fourth quarter 2025 ($3.5 billion).
Net debt at the end of the first quarter is projected to be in the range of $25 to 27 billion, compared to $22.2 billion at the end of the fourth quarter 2025. This increase is primarily attributed to a significant working capital build in the range of $4 to 7 billion, largely due to the prevailing price environment.
Driver Breakdown:
- Oil Trading: Anticipated exceptional performance expected to boost overall results.
- Working Capital: Significant build due to price volatility impacting net debt.
- Refining Margins: Stronger realized margins provide a positive offset to other challenges.
BP’s full-year 2026 guidance, issued in the fourth quarter of 2025, remains largely unchanged. The company continues to expect slightly lower reported upstream production and broadly flat underlying upstream production. Capital expenditure is still projected in the range of $13-13.5 billion, weighted towards the first half of the year. The underlying effective tax rate is expected to be around 40%.
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