BP NYSE: BP executives highlighted what they described as a strong first quarter of 2026 performance, emphasizing operational reliability, higher upstream output in key areas, and steps to simplify the organization and strengthen the balance sheet. The company also outlined plans to reduce its corporate hybrid securities stack by more than $4 billion by the end of 2027, subject to market conditions.
Quarterly performance and operational update
Chief Executive Officer Meg O’Neill said BP delivered “another strong quarter…despite a lot of external volatility,” with underlying operations performing well. BP produced 2.3 million barrels of oil equivalent per day, which O’Neill said was supported by “continued high plant reliability, higher production in the Gulf of Mexico, and strong performance in BPX,” though partially offset by disruptions in the Middle East and divestment impacts.
In downstream, O’Neill said refining availability was above BP’s 96% target and throughput exceeded 1.5 million barrels per day, which she called the company’s highest quarterly figure in four years. She added that BP’s trading business remained focused on “capturing value through the cycle while operating within a clearly defined risk framework.”
Financially, O’Neill reported $3.2 billion of underlying net income, “significantly higher than the Q4,” and $8.9 billion of operating cash flow before a $6 billion working capital build. She noted net debt increased during the quarter, largely due to the working capital build, while reiterating confidence in BP’s net debt target.
Organizational changes and simplification efforts
O’Neill told analysts BP is moving back toward a more traditional upstream/downstream model. She framed the change as a way to reduce complexity and improve accountability, saying it is “all about changing ways of working and driving simplification… and speed in decision-making.” O’Neill said the organizational response had been “very positive.”
In response to questions about what simplification means in practice, O’Neill pointed to refining’s place in BP’s structure. She said having refining under production and operations had helped improve performance, citing reliability in both upstream and downstream “in that 96% range.” However, she said aligning refining with downstream better reflects its role in connecting supply, product mix, and customers, enabling “more efficient decision makings.”
When asked about potential additional ambition beyond targets already set through 2027, O’Neill said the existing targets remain in place and would represent “first quartile performance across the business,” while adding BP would continue benchmarking and challenging itself on cost efficiency and operational performance.
Balance sheet priorities, buybacks pause, and hybrids plan
Much of the Q&A focused on capital structure and deleveraging. O’Neill said BP is working to reduce the amount of cash going to liabilities, referencing net debt, hybrids, and “Deepwater Horizon obligations” that she said are “within sight just a few years down the track.” The goal, she said, is to free up cash for investment and shareholder returns.
Chief Financial Officer Kate Thomson reiterated that BP’s board decided in February to pause buybacks to accelerate balance sheet strengthening and progress toward its net debt target. Thomson said “accelerating the deleverage is incredibly important,” describing it as a platform for growth, lower financing costs, and “resilient distributions to shareholders.”
Thomson said BP’s confidence in its net debt delivery enabled the company to make “an economic decision around $4 billion of our hybrids,” specifically the two tranches coming up for redemption in 2026 and 2027. She also stressed BP would take a “holistic view” of financial obligations and make “economically driven decisions” as it rebuilds the balance sheet.
On mechanics, Thomson said BP expects S&P to permit the reduction under its corporate hybrid methodology and that BP expects to maintain equity treatment on the original $12 billion hybrid stack issued in June 2020. She also emphasized that “hybrids remain an important and permanent part of our capital structure,” while noting retiring hybrids ahead of redemption can be expensive depending on market conditions. Thomson said the “most economic way” is often to let them roll off as call windows arrive, adding that the first window opened in March and concludes in the second quarter.
Asked about net debt targets and capital framework, Thomson said BP’s primary focus remains delivering its $14 billion to $18 billion net debt objective, noting that closing of the Castrol transaction is expected “towards the back end of 2026.” She also reiterated a capital expenditure frame of $13 billion to $15 billion for the next two years, and said BP has tightened its 2026 range to $13 billion to $13.5 billion.
Exploration, portfolio focus, and production growth
O’Neill pointed to exploration and near-term tie-back opportunities as part of BP’s production outlook. She said BP has announced 14 discoveries since the start of 2025, highlighting that several are “short cycle” finds that can be tied back to existing infrastructure to help mitigate natural declines.
She also discussed Boomerang, describing it as “not every day that you discover an 8 billion barrel in place field,” while emphasizing the need for appraisal work. Later, responding to a question about whether there is a scenario without a Boomerang development, O’Neill said she reviewed seismic and well data with the team and outlined that appraisal will be critical to understanding reservoir performance and commercialization options. She said she was “very impressed” with the team and “excited” by the opportunity.
On reserve replacement, O’Neill said BP is focused on improving reserve bookings and set a target of 100% reserve replacement by 2027. Thomson added context on progress, citing 90% reserve replacement last year, with about 15% attributed to price; excluding price impacts, she said it was about 76%.
Addressing portfolio priorities and “core” regions, O’Neill called BP’s Americas position “world-class,” with future growth expected from the U.S. including the Paleogene and BPX. She also cited the Middle East and GTA as areas with “real high quality assets.” She said the company continues reviewing which assets are core long-term and which might be “of greater value in someone else’s hands,” pointing to the Castrol deal and the agreed sale of the Gelsenkirchen refinery.
Trading, LNG flexibility, and market volatility
Deputy CEO Carol Howle described BP’s supply, trading, and shipping operations as primarily intended to support BP’s assets rather than trading “for trading’s sake.” She said the core objective is to keep production flowing, supply refineries with the best feedstocks, and move refined products to wholesale, retail, and aviation markets. She characterized “pure trading” as “the icing on the cake,” subject to volatility and disciplined risk management.
On LNG, Howle said more than 90% of BP’s cargos are reoptimized prior to final delivery. She said the company is still growing its LNG portfolio, citing just under 27 million tons per annum in the strategic portfolio last year and around 15 million tons of “incremental merchant volumes.” Howle also described diversification of supply sources, including Trinidad, Mauritania and Senegal, the U.S., and Coral in Mozambique, which she said supports optimization amid disruptions.
Howle also addressed differences in oil and gas trading outcomes during the quarter, citing “structural tightness” related to conflict and the closure of the Strait of Hormuz. She said oil markets saw disruptions across crude and refined products, including reduced refinery runs in Asia and product shortages “across jet and diesel,” which BP sought to address by rewiring supply and demand through its global portfolio. For gas, she said volatility had not matched 2022 levels, while noting BP is monitoring factors such as EU storage levels during injection season and that continued Hormuz disruptions could increase shortages.
Separately, O’Neill discussed Middle East disruptions, saying BP’s Middle East production is about 400,000 barrels of oil equivalent per day and that historically about 100,000 barrels per day had been exported through the Strait of Hormuz, including barrels from Iraq and Abu Dhabi. She said questions on ramping up Iraq’s Rumaila field are best directed to the operator, though BP stands ready to support the Iraqi government and operator once shipping restrictions are lifted.
In closing remarks, O’Neill said BP’s priorities include accelerating strategic progress with a “tight focus on safe, reliable operations and capital discipline,” and maintaining a “rigorous focus on strengthening the balance sheet” to build a more resilient company.
About BP NYSE: BP
BP plc is a British multinational integrated energy company headquartered in London. Originating in the early 20th century as the Anglo-Persian Oil Company, BP has grown into one of the world's largest oil and gas companies, operating across exploration and production, refining and marketing, trading, and a range of low-carbon businesses.
The company's core activities include upstream exploration and production of crude oil and natural gas, midstream and trading operations, and downstream refining, marketing and supply of fuels, lubricants and petrochemicals.
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