ii view: BP’s new CEO off to running start

Photo: Ian Waldie/Getty Images.

First-quarter results to 31 March

• Adjusted profits up 107% from Q4 to $3.2 billion
• Net debt down 6% year-over-year to $25.3 billion
• Quarterly dividend unchanged from Q4 at 8.32 US cents per share

Chief executive Meg O Neill said:

“I join at a time when our industry is operating in an environment of conflict and complexity, playing a vital role in keeping energy flowing.

“Overall, our business continues to run well. This was another quarter of strong operational and financial delivery, and we made further progress towards our 2027 targets.”

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ii round-up:

Under new CEO Meg O'Neill, BP (LSE:BP.) today announced first-quarter numbers containing few if any surprises. 

Adjusted profits more than doubled from both the prior fourth quarter and the year ago period to $3.2 billion (£2.4 billion), significantly aided by oil trading activities and higher energy prices in the wake of the Middle East war. Analysts had forecast profits of around $2.64 billion.

Shares in the FTSE 100 giant rose 3% in UK trading having come into this latest news up by close to a third so far in 2026. That’s similar to rival TotalEnergies SE (EURONEXT:TTE) but ahead of a one-fifth increase for Shell (LSE:SHEL). The price of oil is up by almost two-thirds year-to-date while the FTSE 100 index is up by close to 4%.

BP is currently pushing a simplification programme to return the group largely to its former upstream and downstream operations. The group’s Castrol lubricant oil business was previously sold, which has helped a further reduction in net debt.  

Group net debt fell 6% year-over-year to $25.3 billion. Given a focus on debt, the oil major’s share buyback programme remains paused. 

A dividend of 8.32 US cents per share is unchanged from the prior fourth quarter, although up 4% from a year ago and in line with current policy. 

Broker UBS reiterated its ‘buy’ stance on the shares. Second-quarter results are scheduled for 4 August. 

ii view:

Commencing operations in 1901, BP operates in more than 60 countries. Oil production and operations generated most profits at close to half during the group’s last financial year. That was followed by gas and low carbon energy at around a third, with customer and products or the downstream forecourt retailing business the balance of almost a fifth.   

For investors, sales of assets such as Castrol now leave a reduced diversity of assets and profit generating centres. A war in the Middle East could further impact operations, with production for 2026 now expected to be affected given disruption caused by the conflict. A refocus back towards higher profit-making fossil fuels and away from renewables likely does not please all investors, while changes in strategy and a push to reduce net debt previously saw the share buyback programme suspended.

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To the upside, a concentration on higher profit-making businesses is now being made, with the new CEO expected to further reinvigorate strategy later this year. More than ten exploration discovery successes during 2025 look to underline an emphasis on operational improvement. A push towards a simpler business and resultant disposals continue to see group net debt decline, with a target of around $16 billion being pursued by late 2027, while shareholder returns remain important given the ongoing payment of attractive dividends.

On balance, and while the extremes of energy prices from pandemic to conflict cannot be forgotten, a forecast dividend yield of over 4% will likely keep income and growth investors interested. 

Positives: 

• Focus on increased efficiency
• Attractive dividend yield (not guaranteed)

Negatives:

• Climate change concerns persist
• Uncertain economic outlook

The average rating of stock market analysts:

Strong hold