Energy giant BP (BP.) updated its Q1 guidance to include the effects of the Middle East conflict and hailed an ‘exceptional’ quarter for oil trading. Otherwise, the company made no major changes to its divisional forecasts although it raised its net debt estimate.
Strong start to FY26
BP said it expected its trading business would post exceptional profits this quarter after a weak Q4. The company, like its rival Shell (SHEL), is highly active in trading crude oil and petroleum products.
With the price of a barrel of Brent crude having more than doubled at one stage in Q1, BP is set to make windfall profits. Moreover, refining margins jumped to $16.90/barrel from $15.20 in Q4 which will boost results at the Products division.
Overall, oil and gas production is expected to be flat on the same quarter last year. Meanwhile, net debt will rise from $22 billion to between $25 billion and $27 billion as working capital needs increase.
BP is due to report its full Q1 earnings on 28 April, five days after its AGM. These will be the first results presided over by new CEO Meg O’Neill, the firm’s fifth boss in six years.
BP’s choice of wording is unfortunate: while in accounting parlance ‘exceptional’ means non-recurring, it suggests the firm is raking it in. At a time when household energy bills are soaring, it’s the kind of phrase which is bound to attract negative publicity.
Also, windfall profits tend to attract windfall taxes as there is little political risk in being ‘tough’ on big business. BP shares have barely budged on today’s update, which is understandable given they are already up 33% year-to-date.
It will be interesting to see what kind of reception the new CEO gets at the upcoming AGM. Previous shareholder meetings have been quite fiery, with investors and protestors taking management to task on a range of issues.
Read the press release here: https://www.bp.com/en/global/corporate/investors.html
