BP p.l.c. (NYSE:BP) shares rose in premarket trading Tuesday after the energy major reported first-quarter results that topped revenue expectations.

Earnings and Financials

The company posted adjusted earnings of $1.24 per American depositary share, up from 53 cents in the year-ago period.

Revenue increased to $52.26 billion from $46.91 billion a year earlier, surpassing analyst estimates of $45.66 billion.

Profit attributable to shareholders climbed to $3.84 billion, compared with $687 million in the prior-year quarter. Underlying replacement cost (RC) profit rose to $3.20 billion from $1.38 billion.

Compared with the fourth quarter of 2025, the underlying result reflects “exceptional oil trading” contribution and stronger midstream performance.

A Reuters report said BP’s first-quarter profit surged to its highest level since 2023, more than doubling from a year earlier and coming in about 20% above expectations, as the Iran war lifted its oil trading performance. The report added that war-driven oil price spikes have created a supply squeeze, enabling European energy majors to generate billions in additional profits.

Operating cash flow totaled $2.86 billion, slightly higher than $2.83 billion a year ago. Capital expenditures were $3.29 billion, while divestments and other proceeds reached $248 million. Net debt stood at $25.3 billion at quarter-end.

BP declared a quarterly dividend of 8.32 cents per ordinary share and said it expects to increase the dividend by at least 4% annually.

Segment Performance

The oil production and operations segment reported RC profit before interest and tax of $1.7 billion. After adjusting for a $0.3 billion adverse impact, underlying profit was $2.0 billion, broadly stable sequentially, reflecting divestments in the North Sea.

The gas and low carbon energy segment generated $1.1 billion in RC profit before interest and tax. Adjusted underlying profit was $1.3 billion after $0.3 billion in adjustments.

The customers and products segment posted RC profit before interest and tax of $2.5 billion. Underlying profit reached $3.2 billion after $0.8 billion in adjustments, with results reflecting seasonally lower volumes and weaker retail fuel margins.

Management Commentary

Chief Executive Officer Meg O’Neill said the company delivered another quarter of strong operational and financial performance while advancing toward its 2027 targets.

“Overall, our business continues to run well. This was another quarter of strong operational and financial delivery, and we made further progress towards our 2027 targets,” O’Neill said, citing high plant reliability, strong refining availability and increased production in the Gulf of America and at bpx Energy.

Strategic Updates

BP said it has agreed to divest its Gelsenkirchen refinery. Upon completion, the company expects its structural cost reduction target to increase by $1 billion to a range of $6.5 billion to $7.5 billion by 2027.

Subject to market conditions, BP plans to reduce corporate hybrid bond financing by about $4.3 billion to around $9 billion by the end of 2027. It also intends to redeem 2.5 billion euros of perpetual hybrid bonds in the second quarter without replacement.

Second-Quarter Guidance

BP expects upstream production to decline sequentially in the second quarter, primarily due to seasonal maintenance in the Gulf of America and disruptions in the Middle East. The company also warned that heightened oil and gas price volatility could weigh on production-sharing agreement (PSA)-linked contracts.

In the customers segment, seasonally stronger volumes are expected to be more than offset by weaker midstream performance, including the reversal of timing benefits recorded in the first quarter. Volumes and fuel margins are likely to remain sensitive to ongoing developments in the Middle East.

Within the products segment, refining throughput is projected to decline due to increased planned turnaround activity. Output at the Whiting refinery is also expected to be lower following a previously disclosed third-party disruption. Refining margins are likely to remain under pressure from higher supply costs and geopolitical uncertainty in the Middle East.

Separately, BP said it plans to reduce hybrid capital in the second quarter by redeeming 2.5 billion euros of perpetual hybrid bonds without replacement.

2026 and Long-Term Outlook

BP now expects reported upstream production to decline in 2026, reflecting continued disruptions in the Middle East. However, underlying upstream output is projected to remain broadly flat compared with 2025 levels.

Within this, oil production and operations are expected to remain stable, while gas and low-carbon energy output is forecast to decline.

In the customers segment, BP continues to expect improved cash flow, supported by structurally lower operating costs driven by efficiency measures. These gains are likely to be partially offset by the earnings impact of completed and announced divestments.

Reported earnings are also expected to benefit from lower depreciation, primarily due to assets held for sale accounting related to Castrol. Fuel margins, however, will remain sensitive to fluctuations in cost of supply.

In the products segment, BP expects a significantly lower level of turnaround activity compared with prior periods.

For 2026, the company reaffirmed capital expenditure guidance in the range of $13 billion to $13.5 billion. BP also reiterated its target to reduce net debt to between $14 billion and $18 billion by the end of 2027.

BP Price Action: BP shares were up 4.08% at $47.84 during premarket trading on Tuesday. The stock is trading near its 52-week high of $48.27, according to Benzinga Pro data.

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