BP's Q1 2025 Earnings Call: Unpacking Key Contradictions on Share Count, Divestments, and Dividend Strategy

Share count reduction and reinvention of BP share option plans, divestment target and strategic direction, dividend policy and market conditions, capital expenditure flexibility, dividend and shareholder payout strategy are the key contradictions discussed in BP's latest 2025Q1 earnings call.



Operational Performance and Growth Strategy:
- BP reported strong operational performance with 96% refining availability and over 95% upstream plant reliability, supporting record operating efficiency.
- The company successfully started three major projects in Trinidad, Egypt, and Mauritania, adding 100 mbd of capacity towards a targeted 250 mbd by 2027.
- This performance is attributed to BP's reset strategy, focusing on operational excellence and strategic growth in upstream projects.

Financial Results and Cash Flow:
- BP's underlying pretax earnings met consensus, with a weak performance in gas and low carbon energy due to gas trading.
- The company has a $1.5 billion intervention around cash flow for 2025, amidst a working capital build and volatile macroeconomic conditions.
- These adjustments are part of the company's approach to manage financial performance amidst uncertainty, emphasizing cash flow and balance sheet optimization.

Divestment and Strategic Review:
- BP aims for $3 billion to $4 billion in divestments for 2025, with $1.5 billion already completed, and significant interest in Castrol.
- The strategic review includes focusing on cost reductions, with $500 million reduction in Q1, and optimizing investment plans.
- Divestment proceeds are expected to weigh towards the second half, contributing to balance sheet management and strategic refocusing.

Cost Management and Efficiency:
- BP achieved $500 million reduction in operating costs quarter-on-quarter, with an emphasis on customer business and corporate functions.
- The company is focused on reducing third-party supply chain costs, with 3,000 contractors leaving and further roles being reviewed.
- Efforts are driven by a focus on cost efficiency and leveraging technology for data-driven decision-making, supporting overall operational effectiveness.