BP, the global energy giant, has made a pivotal strategic decision to suspend its share buyback initiatives, instead redirecting these funds towards significantly reducing its outstanding debt. This move comes at a time when the company reported quarterly earnings that marginally surpassed expert predictions, yet its overall revenue did not meet the anticipated figures. The immediate market response saw BP's stock value decrease, highlighting the investment community's reaction to this unexpected shift in capital allocation priorities.
The company's latest financial disclosure revealed adjusted earnings of 60 cents per American Depositary Share, slightly exceeding the analyst consensus of 59 cents. However, total revenue reached $47.38 billion, an increase from the previous year's $45.75 billion for the same period, but still below the projected $49.36 billion. A net loss attributable to shareholders was reported at $3.42 billion, a widening from the $2.0 billion loss recorded a year prior. Despite these challenges, BP's underlying replacement cost profit saw an increase to $1.54 billion from $1.17 billion, and operating cash flow improved to $7.60 billion. Capital expenditures were $4.17 billion, with divestments contributing $3.6 billion, leaving the company with a net debt of $22.2 billion at the quarter's close.
Performance across BP's key segments showed varied results. The Oil Production & Operations division recorded a replacement cost profit of $1.7 billion before interest and tax, with an underlying profit of $2.0 billion after adjustments. This segment's performance was influenced by lower realizations and production mix. The Gas & Low Carbon Energy segment experienced a $2.2 billion replacement cost loss, primarily due to reduced realizations, though its underlying profit stood at $1.4 billion after significant adjustments. The Customers & Products segment posted $1.4 billion in replacement cost profit, with an underlying profit of $1.3 billion, impacted by seasonal volume reductions and weaker midstream performance.
Interim CEO Carol Howle emphasized the proactive measures being taken to enhance BP's portfolio and strengthen its financial standing. She specifically noted the ongoing $20 billion disposal program and the decision to halt share buybacks, committing all excess cash to bolstering the balance sheet. This strategic realignment is poised to enable long-term value creation, particularly through new opportunities in its upstream business, such as the Bumerangue discovery in Brazil, estimated to hold approximately 8 billion barrels of liquids.
Further strategic developments include BP's December 2025 divestment of a controlling interest in its Castrol lubricants business for $10.1 billion. Additionally, in January 2026, BP formed a 50:50 joint venture with Corteva, Inc. to produce crop-based oils for sustainable aviation fuel and renewable diesel. These initiatives reflect BP's commitment to portfolio optimization and investment in future energy solutions. The company also announced a quarterly dividend of 8.32 cents per ordinary share, but the board's decision to suspend share repurchases signifies a pivot from distributing 30%-40% of operating cash flow to shareholders, instead focusing on deleveraging.
Looking ahead to the first quarter of fiscal year 2026, BP anticipates upstream reported production to remain stable compared to the previous quarter. Customer-facing businesses are expected to see a seasonal decrease in volumes, and weaker industry refining margins are projected for Products, partially offset by reduced refinery turnaround activities. Capital expenditure is forecasted to be consistent with the fourth quarter of 2025. For the full year 2026, capital expenditure is estimated between $13 billion and $13.5 billion, with slight reductions in reported upstream production and broadly flat underlying upstream production. Notably, BP expects to make Gulf of America settlement payments totaling approximately $1.6 billion before tax. The company reiterated its objective to decrease net debt to a range of $14 billion to $18 billion by the close of 2027.