BP p.l.c.
BP also reduced net debt by $8.4 billion to $13.87 billion and plans to use additional cash to settle its remaining Deepwater Horizon liabilities.
Higher earnings and cash flow pushed net debt below the company's target range.
BP plans to use excess cash flow to settle its remaining Deepwater Horizon liabilities, which have required payments of more than $1 billion every second quarter for approximately 10 years.
Operating cash flow increased by $4 billion quarter over quarter to $14.8 billion.
The company maintained its dividend at 8.66 cents per share and scheduled its strategy update for Dec. 15.
Production Update
BP maintained third-quarter upstream production at approximately 2.2 million barrels of oil equivalent per day (boe/d), supported by improved operational reliability.
Strong refining and trading results also contributed to the quarter's performance.
BP's portfolio sales include its Austrian mobility business, Gelsenkirchen refinery and Castrol, alongside ongoing divestments of Lightsource BP, UK North Sea assets and Archaea.
The company has also brought partners into projects in Brazil, the Gulf of Mexico and Iraq and signed agreements for offshore gas development in Venezuela.
Segment Performance
By segment, Gas & Low Carbon Energy underlying profit rose to $3.2 billion from $2.1 billion in the prior quarter, driven by stronger realizations and trading.
Oil Production & Operations profit edged down to $3.5 billion from $3.6 billion in the prior quarter due to lower liquids prices.
Customers & Products profit increased to $6.9 billion from $5 billion in the prior quarter, supported by stronger refining margins and lower maintenance costs, partly offset by weaker fuel margins and lower Castrol and midstream earnings.
Cost Savings
BP delivered $4 billion in structural savings since 2023. However, inflation of 2.5% added $1.5 billion to costs, acquired assets contributed $800 million and activity-related spending added another $700 million.
The company is targeting an absolute cost base of approximately $18 billion in 2027, with the Castrol and Gelsenkirchen exits expected to contribute to the reduction. BP expects to achieve the remaining two of its four cost targets before the end of 2027.
Fourth-Quarter Outlook
BP expects fourth-quarter trading performance to weaken as market volatility and liquidity decline. Crude tanker rates have remained elevated since early March, while LNG tanker rates have returned to pre-conflict levels.
The company also expects fourth-quarter results to reflect several headwinds, including a weather-related Gulf of Mexico production impact of 20,000 barrels per day (20 mbd), seasonal BPX declines, lower refinery throughput, softer prices and customer volumes, and the Castrol transaction closure.
Capital expenditure is expected to increase by $1 billion-$1.5 billion from the third quarter, while cash taxes may rise by approximately $800 million. Year-end financial obligations were estimated at $33 billion-$35 billion.
Exploration and Project Developments
In Brazil, BP reported oil shows at the Tupanamba well and is drilling toward a deeper pre-salt target. The rig could move to the Bumerangue prospect by the end of 2026, where appraisal work will include flowback testing.
BP is considering a second well and evaluating both an early production system and full-field development. Bumerangue has approximately 8 billion barrels of potential, including oil and rich gas condensate. Namibia remains another exploration opportunity.
BP made approximately 15 discoveries over the past 18 months, around 10 of them near existing infrastructure. The company is balancing these shorter-cycle opportunities with larger greenfield projects.
Caskida and Tiber in the Gulf of Mexico represent approximately $10 billion in investment. BP has delayed bringing in partners to secure better value, while partnerships across Brazil, Iraq, Kirkuk and the Gulf of Mexico are helping manage risk and capital exposure.
Regional conflict initially reduced production by approximately 100,000 barrels per day, although some output has since recovered. BP's Kirkuk operations are advancing, with an operating entity established, a rig deployed and the first well spudded. The company is also using improved reservoir-management technology to increase production.
BP recorded another $4 billion in impairments, mainly involving Lightsource BP and offshore wind.
Retail and LNG Market Trends
Higher fuel prices have softened retail demand as consumers reduce discretionary travel and adjust refueling habits. An analyst cited refined-product volume declines of 2% in the U.S. and 8% in Europe, although BP did not confirm these figures as its own. Management said its retail network remains resilient relative to regional markets.
BP's LNG portfolio remains well positioned, with European weather and China's restocking activity expected to influence fourth-quarter prices. European gas storage levels remain very low.
CEO Meg O'Neill also denied any board discussions about breaking up BP, reaffirming the company's integrated upstream, downstream and trading model.
BP Stock Price Activity: BP shares were down 0.32 % at $50 at the time of publication Friday.
