BP shares fall as net zero plans trigger hit of up to $5bn
Oil giant BP has warned it will take a hit of up to $5bn in the final quarter of 2025 as the value of green energy projects withered.
The FTSE 100 firm said it expects a write-down of between $4bn and $5bn (£3.7bn), as it rethinks its strategy for transition assets and partnerships in the gas and low-carbon sector.
Shares in BP fell one per cent at the opening bell – a near £700m hit to BP’s market capitalisation.
BP noted the impact would be softened by $3.5bn in cash from selling off parts of the business, which should help its total debt drop to between $22bn and $23bn.
The multi-billion dollar write-down signals a significant shift in BP’s “Net Zero 2050” journey, as the company pivots away from its green investments to focus on more profitable oil and gas ventures.
The oil major has faced a headache in the last year over its green ambitions with pressure from activist investor Elliott Management to go further and faster with its strategic overhaul.
Elliott Management took up a £3.8bn stake in BP in February, becoming the oil major’s third-largest shareholder.
In April, BP faced a massive shareholder rebellion after nearly a quarter voted against the re-election of outgoing chair Helge Lund at the firm’s annual general meeting. as conflict ramped up over BP’s decision to cut back on climate goals.
The new write-downs mark the cost of BP clearing the books of older, expensive renewable projects that no longer meet BP’s stricter profit requirements.
“The logic behind BP’s about-turn on its green energy push is reaffirmed by impairments in a teaser ahead of quarterly results,” said Dan Coatsworth, head of markets at AJ Bell.
BP feels crunch of commodity prices
The company’s profit margins on making fuels like petrol – the difference between the cost of crude oil and the selling price of refined products – showed some strength with a $100m boost.
But these gains were offset by refinery maintenance and a temporary drop in production following a fire at its Whiting refinery.
On the production side, the amount of oil and gas pumped remained steady or “broadly flat,” as a dip in green energy and gas output was balanced by consistent oil production.
The actual prices BP received for its gas were squeezed by near $300m due to market price shifts, while oil profits were dragged down by up to $400m due to timing delays in pricing for its Gulf of Mexico and UAE operations.
Gas trading was described as “average” whilst oil trading was listed as “weak.”
BP appointed Meg O’Neill as its new chief executive in December 2025, replacing Murray Auchincloss after just two years in the post.
“We would argue that investors are keenly awaiting the arrival of new chief executive Meg O’Neill in second quarter of 2026 and will be keen to hear what her plans are to turn the business around,” said analysts at Panmure Liberum.
“As the Auchincloss epoch limps to an ignominious end, the actual performance is less of a concern – investors would not expect strong performance due to his weak leadership and misguided strategy –as it is the turnaround and strategic shifts expected under the new management team.
“We have no idea what Ms O’Neill will do first but cutting the costs is bound to be a high priority with the bloated headcount a quick way to make a mark.”