bp reports highest quarterly profit in 18 years on refining margins

Refining carries the quarter

The unit that includes oil refining and trading supplied more than half of that profit, bp said [3].

For investors, the profit line matters less than what it did to the balance sheet. bp cut net debt by about a third during the quarter, Business Chief reported, landing inside a target range the company had set for the end of 2027 [2]. What is still unknown is when share buybacks, suspended earlier this year to speed debt reduction, will resume. Meg O'Neill declined in London to give a date [2].

bp had flagged the direction in its 13 October trading statement. It guided that stronger refining margins would add around $1.9bn to $2.1bn, with oil trading broadly flat [2]. The backdrop was unusual. The conflict between the US and Iran had effectively closed the Strait of Hormuz, pushing Brent crude above $100 a barrel [2]. It traded at around $107 on the day of the statement, Business Chief reported [2]. Bloomberg said the refining windfall sped up bp's efforts to fix its balance sheet and pay down debt [3].

bp no longer calls itself a supermajor, a label O'Neill retired in August as a matter of prudence, Business Chief reported [2].

A balance sheet repaired ahead of schedule

bp's 13 October trading statement said it expected net debt of between $13.5bn and $14.5bn at the end of the third quarter, down from $22.3bn only three months earlier [2]. That figure already sits inside the $14bn to $18bn range the company had targeted for the end of 2027 [2]. The central promise of the turnaround has arrived more than a year ahead of schedule, according to Business Chief [2].

O'Neill has not flattered the company she took over. "We have not been careful stewards of shareholder capital," she said at the Energy Intelligence Forum in London in October, describing bp as the business in its sector "that has been the most levered for more than a decade" [2].

The second quarter had already moved in the same direction: bp cut the combined total of net debt, hybrid bonds, leases and Gulf of America settlement liabilities by $6.9bn [1].

Elliott Management took a stake in bp in February 2025 and has pressed for a stronger balance sheet and lower costs, Business Chief reported [2].

Operations are the weak spot

Upstream plant reliability fell to 92.4% in the second quarter from 95.7% in the first, bp said, while production declined to 2.2 MMboed from 2.3 MMboed [1]. The company attributed both to planned maintenance and disruptions related to the conflict in the Middle East [1]. The third-quarter announcement focused on profit and debt [3].

"We have not delivered consistently; we have written off too much value; and our costs and liabilities are not resilient enough in a low price environment," O'Neill said in August [1].

Financially, the second quarter was stronger. Underlying replacement cost profit was $5.7bn, up from $3.2bn in the first quarter, and operating cash flow rose to $10.9bn [1]. O'Neill used that release to set out five priorities: strengthening the balance sheet, simplifying the portfolio, investing with greater capital discipline, improving operational performance and embedding accountability [1].

Divestments do the simplifying

Klesch Group completed its purchase of bp's 265,000 b/d Gelsenkirchen refinery and related German assets on 3 August [4]. About 1,700 employees at the refinery and the associated businesses transferred to Klesch, and the parties did not disclose financial terms [4]. bp said it expects the sale to lower underlying operating expenses by about $1bn, including relief from pension obligations and other liabilities tied to the site [4].

Five refineries remain, including Whiting at 440,000 b/d and Europoort-Rotterdam at 400,000 b/d [4]. Klesch now owns three European refineries, among them Heide at 90,400 b/d and Kalundborg at 110,000 b/d [4].

The German sale is one of several moves. bp has announced plans to market its UK North Sea business, agreed to sell its Austrian retail business, announced plans to divest Archaea Energy in the United States, reached an agreement to bring partners into the Kirkuk redevelopment in Iraq, and exited the Bay du Nord project offshore Canada [1].

What happens next

O'Neill presents her first full strategy for bp to investors in New York on 15 December [2]. She has not yet set longer-term targets beyond the plan she inherited, which mostly runs through 2027 [2].

Elliott will be watching New York for evidence that the discipline holds beyond a single strong quarter, Business Chief reported [2].