11th Feb 2025 08:47
(Alliance News) - BP PLC on Tuesday said it would "fundamentally reset" its strategy, after reporting weaker fourth quarter earnings, although it stayed tight-lipped on the detail.
The oil major has come under pressure, most recently from activist investor Elliott Investment Management, to shake-up the business. There has been speculation BP will lower its investment in low carbon energy and increase spend in the traditional oil and gas business.
While BP declined to give too much away ahead of the February 26 Capital Markets Day, it did say that as part of the update it intends to "review elements of our financial guidance, including our expectations for 2025 share buybacks and capital expenditure".
In the fourth quarter, BP maintained its pace of quarterly buybacks at USD1.75 billion, which it intends to execute ahead of first quarter results.
Chief Executive Murray Auchincloss said it will be a "new direction" for BP, one which he will share at the Capital Markets update.
"Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns."
Shares in BP fell 0.2% to 465.05 pence each in London on Tuesday.
The comments came as the London-based oil major reported pretax replacement cost profit of USD764 million for the final-quarter, tumbling 79% from USD3.57 billion a year prior. Underlying RC profit fell 61% to USD1.17 billion from USD2.99 billion.
For the full-year, pretax RC profit declined 59% to USD11.79 billion from USD28.58 billion and underlying RC profit fell 36% to USD8.92 billion from USD13.84 billion.
BP said the underlying result reflects weaker realized refining margins, higher impact from turnaround activity, seasonally lower customer volumes and fuels margins and higher other business costs.
Fourth-quarter revenue was down 8.6% year-on-year to USD48.09 billion from USD52.59 billion. For the whole of 2024, it declined 8.6% also to USD194.63 billion from USD213.03 billion.
Statutory pretax profit was 71% lower for the whole of 2024 at USD6.78 billion. For the final-quarter alone, it swung to loss of USD503 million from profit of USD1.10 billion.
BP announced an 8.0 cents per share fourth-quarter dividend, up 10% from 7.27 cents a year prior. Its 2024 dividend amounted to 30.54 cents, up 10% from 27.76 cents.
Operating cash flow of USD7.4 billion, which includes a working capital release of USD1.3 billion, was around USD0.7 billion higher than the previous quarter, BP said.
Chief Financial Officer Kate Thomson said the firm is making "strong progress" on its target to deliver at least USD2 billion of savings by the end of 2026 relative to 2023, achieving USD0.8 billion to date.
"Our focus on capital discipline and strengthening the balance sheet continues into 2025," she added.
Looking to the first-quarter of the new year, BP said: "BP expects first quarter 2025 reported upstream production to be lower compared with the fourth-quarter 2024 primarily due to the already announced divestments in Egypt and Trinidad, which completed towards the end of the fourth quarter and base decline in both regions, totalling around 90 thousand barrels of oil equivalent per day.
"In its customers business, BP expects seasonally lower volumes compared to the fourth quarter. In addition, bp expects fuels margins to remain sensitive to movements in cost of supply and earnings delivery to remain sensitive to the relative strength of the US dollar."
For 2025 as a whole, BP expects reported upstream production to be lower and underlying upstream production to be slightly lower compared with 2024.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.