BP's Fourth-Quarter Earnings Drop to Four-Year Low

BP p.l.c. (BP), the British multinational oil and gas company, reported a significant decline in its fourth-quarter earnings, reaching a four-year low. The company's underlying replacement cost (RC) profit for the quarter ended December 31, 2024, was $2.26 billion, a 31.1% drop from the same period in 2023. This decline was primarily attributed to weaker refining margins, poor oil trading performance, and lower liquid realisations, although higher gas realisations partially offset these negative impacts.



BP's total revenues and other income during the three months under review were $48.33 billion, down 10.5% from $54.01 billion in the third quarter of 2023. The company maintained its upstream production at 2.4 million barrels of oil equivalent per day and a refining availability of 95.6%. However, capital expenditure for the quarter increased to $4.54 billion from $3.60 billion in the prior quarter.



The company's capital markets update presentation, initially scheduled for February 26 in London, has been postponed to a later date. The fourth quarter and full year 2024 results date remains unchanged and is expected to be published at 0700 GMT on February 11.

BP's updated guidance for the fourth quarter of 2024 indicates that upstream production is expected to be lower compared to the prior quarter, with production lower in oil production & operations and in gas & low carbon energy. Realisations in the gas & low carbon energy segment are expected to have a favourable impact in the range of $0.1 - 0.2 billion, while the oil production & operations segment is expected to have an unfavourable impact in the range of $0.2 - 0.4 billion. Net debt at the end of the quarter is expected to be lower compared to the prior quarter, including proceeds from divestments, issuance of perpetual hybrid bonds, and acquired net debt from recent transactions.

The company's updated full-year guidance for 2024 indicates that the underlying effective tax rate is now expected to be around 42% compared to the previous guidance of around 40%. Other businesses & corporate underlying annual charge is expected to be around $0.6 billion for 2024 compared to the previous range of $0.3 - 0.4 billion due to foreign exchange losses.



BP's stock price has been volatile in recent months, with a year-to-date decrease of almost 20% and a drop of nearly 30% since April 2024. This trend is consistent across British energy companies due to the softness in oil & gas prices. The company's strategic decisions and financial performance could be influenced by potential changes in leadership or policy outcomes, particularly in the context of the energy transition and regulatory environment.

BP's strategic decisions and financial performance could be influenced by potential changes in leadership or policy outcomes, particularly in the context of the energy transition and regulatory environment. The recent involvement of activist investor Elliott Management in BP could lead to changes in strategic decisions and financial performance. Elliott Management is known for pushing for transformational change in the companies it invests in. Their involvement could result in new initiatives, cost-cutting measures, or other strategic shifts that impact BP's financial performance.

In conclusion, BP's fourth-quarter earnings drop to a four-year low, primarily due to weaker refining margins, poor oil trading performance, and lower liquid realisations. The company's strategic decisions and financial performance could be influenced by potential changes in leadership or policy outcomes, particularly in the context of the energy transition and regulatory environment.