BP Plc (NYSE:BP) said it expects to recognise post-tax impairment charges of between $4 billion and $5 billion in the fourth quarter of 2025, largely tied to its gas and low-carbon energy businesses, after lower oil and gas prices pressured asset valuations. The update pushed the shares lower on Wednesday.
The group said the write-downs mainly affect its transition-related activities and will be excluded from underlying replacement cost profit. However, analysts at Jefferies said the charges could still weigh on gearing.
Jefferies labelled the announcement a “small -ve”, estimating it would reduce consensus net income of $1.83 billion by around 5%. The broker attributed the downgrade primarily to weaker-than-expected price realisations in gas and low-carbon energy.
BP said net debt is forecast to fall to a range of $22 billion to $23 billion by the end of the quarter, compared with $26.1 billion at the end of the third quarter, helped by divestment proceeds of about $3.5 billion. Full-year divestments are now expected to reach roughly $5.3 billion, exceeding previous guidance of $4 billion. Jefferies said the pace of deleveraging broadly matches expectations, though it is slightly above consensus assumptions.
Upstream production is expected to be broadly flat quarter on quarter, consistent with guidance and market expectations. Oil output is forecast to be unchanged, while gas and low-carbon energy production is expected to be lower. The figures include BP’s share of equity-accounted entities.
In oil production and operations, weaker price realisations and timing effects in the Gulf of America and the United Arab Emirates are expected to reduce underlying replacement cost EBIT by between $0.2 billion and $0.4 billion, which Jefferies said is marginally negative versus consensus.
Within gas and low-carbon energy, realisations are expected to cut underlying replacement cost EBIT by $0.1 billion to $0.3 billion, including the impact of non-Henry Hub gas prices. Gas marketing and trading performance is expected to be “average,” in line with the previous quarter, which Jefferies highlighted as the main area of downside in the update.
The customers and products segment is expected to reflect seasonally lower volumes, while fuel margins are forecast to be broadly flat. Realised refining margins are projected at around $0.1 billion, offset by higher turnaround activity and temporary capacity reductions following a fire at the Whiting refinery. Oil trading results are expected to remain weak, consistent with the third quarter, which Jefferies said the market had already anticipated.
BP said Brent crude averaged $63.73 per barrel in the fourth quarter, down from $69.13 in the prior quarter. Henry Hub gas prices averaged $3.55 per mmbtu, up from $3.07, while BP’s refining indicator margin slipped to $15.2 per barrel from $15.8.
The company also said its full-year 2025 underlying effective tax rate is now expected to be around 42%, above previous guidance of about 40%, mainly due to changes in the geographical mix of profits. Jefferies said this was not a major surprise but noted it adds modest pressure at the group level.