By Adam Whittaker
BP flagged a write-down of up to $5 billion in its gas and low-carbon energy segment and warned its oil-trading performance would be weak, as the latest energy major to forecast an earnings hit to cap a tough year for the industry.
The London-based energy company is in the early stages of a turnaround intended to reverse falling profits and boost a share price that fell under pressure after its strategic misstep into low-carbon energy.
The company has changed course on its strategy and is investing heavily in its traditional fossil-fuel business while making efforts to cut net debt, as activist hedge fund Elliott Investment Management took a stake and pushed for changes. It recently appointed Meg O'Neill, an outsider considered a fossil-fuel champion, as its next boss.
BP on Wednesday said an impairment of between $4 billion to $5 billion it expects to book for the fourth quarter is primarily due to a write-down in its gas and low-carbon energy segment. The unit houses its wind and solar divisions, as well as gas and hydrogen projects.
The company has reined in investments in businesses geared toward the energy transition, walked away from some projects, and abandoned Covid-19-era renewables targets.
BP also warned that a weak fourth-quarter oil-trading performance would drag on earnings, echoing British peer Shell's forecast last week. A weaker contribution from oil-trading divisions is set to compound a challenging period for oil majors as prices have continued to slide. Previously, U.S. peer Exxon Mobil said earnings would be hurt by falling oil and gas prices.
This would be BP's second consecutive quarter of a weak contribution from its oil-trading division.
Oil companies' fourth-quarter earnings are expected to be hit by lower prices and higher costs, UBS analysts wrote. Higher volumes and refining margins should give some upward support, they added.
BP said it expects an up to $400 million hit in its oil segment from price lags on production, and highlighted a weaker products performance due to reduced capacity after a fire at its Whiting refinery in northwest Indiana.
Despite a challenging oil market, BP is continuing to make progress cutting net debt and strengthening its balance sheet as part of its strategy reset.
Net debt at the end of the quarter is expected to be in the range of $22 billion to $23 billion, compared with $26.1 billion at the end of the third quarter, it said. At the lower point of the range, this is a roughly 18% fall from its peak earlier last year and doesn't include the around $6 billion it is set to receive from the sale of a majority stake in its Castrol lubricants business, which it announced in December.
The company is targeting asset sales of $20 billion by 2027.
As its strategy has changed, so too has management, with those closely associated with the expensive push into renewables having left the company.
In December, BP said O'Neill--an oil-and-gas veteran who most recently led Australia's Woodside Energy--was to run the business, replacing Murray Auchincloss. She joins Chairman Albert Manifold, who took over as chairman in October and is leading the push to simplify the business.
As part of its transformation, it is pushing ahead with oil-and-gas projects in the Gulf of Mexico--which the U.S. now calls Gulf of America--as well as the Bumerangue block offshore Brazil, which is its largest discovery in 25 years.
The company said it expects upstream production to be broadly flat compared with the prior quarter, as it benefits from seven project startups last year.
Write to Adam Whittaker at adam.whittaker@wsj.com
(END) Dow Jones Newswires
January 14, 2026 04:16 ET (09:16 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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