BP reaffirms $13-13.5bn 2026 capex as Q1 profit jumps to $3.8bn

BP reaffirms $13-13.5bn 2026 capex as Q1 profit jumps to $3.8bn BP held its spending plan and pegged divestment proceeds at $9-10bn for 2026, even as price volatility clouds the geographic mix of group earnings. BP told investors on Wednesday (2026-06-03) that first-quarter profit attributable to shareholders reached $3.8 billion, up from $0.7 billion in the same period of 2025, as the company reiterated a 2026 capital expenditure budget of $13-13.5 billion now spread evenly through the year.⁷ That matters because BP is trying to convince the market it can fund a heavy capital programme, shrink its hybrid debt and still hand back cash, all while oil and gas prices swing. The company expects divestment and other proceeds of $9-10 billion in 2026, roughly $6 billion of that from the announced Castrol transaction, with the bulk weighted to the second half.⁷ The headline profit jump flatters the underlying picture. Adjusting items carried a net adverse pre-tax impact of $2.0 billion in the quarter, against $0.4 billion a year earlier, driven in part by fair value accounting on BP's hybrid bonds that swung from a favourable effect in early 2025 to a drag this year.⁷ Cash generation was steady rather than spectacular. Operating cash flow came in at $2.9 billion for the quarter, barely above the $2.8 billion of a year earlier, which leaves little headroom once capital spending and debt actions are layered in.⁷ The debt story is where BP is asking for patience. The company is targeting a $4.3 billion reduction in perpetual hybrid bonds, achieved by redeeming, without replacement, €2.5 billion of bonds with a first call date in March 2026 and £1.25 billion callable in March 2027.⁷ After those redemptions, BP intends to keep the remaining $9 billion of perpetual hybrids as a permanent part of its capital framework, out of a notional $13.3 billion stack that includes a $12.0 billion core and $1.3 billion issued in 2024.⁷ BP also flagged that its expected full-year tax rate, guided at around 40%, is sensitive to the volatility of the price environment and how that shifts the geographic mix of group profits and losses. The underlying effective rate was 32% in the first quarter, down sharply from 50% a year earlier.⁷ For an energy desk, the read-through is less about BP's quarter and more about how integrated majors are positioning into an uncertain second half. Shell, reporting earlier (2026-05-14), posted adjusted earnings of just under $7 billion and over $17 billion of cash flow from operations excluding working capital, dwarfing BP's run-rate and underlining the gap the smaller major is trying to close.⁵ The macro setting is doing BP few favours. The EIA said disruptions to crude oil production in the Middle East had increased significantly since its April outlook, assessing that Iraq, Saudi Arabia, Kuwait, the UAE, Qatar and Bahrain had collectively shut in 10.5 million barrels per day, a supply shock that cuts both ways for a company with upstream barrels and a trading arm.⁶ US gas, by contrast, looks well supplied. EIA data showed Lower 48 marketed production averaged 117.2 billion cubic feet per day in the first quarter, a 4% increase on the same period of 2025, with the agency expecting output to keep climbing through its forecast.² That supply weight is visible in storage. Working gas inventories are now 141 billion cubic feet above a year ago, roughly 8% higher, even after a recent weekly draw of 52 Bcf that came in well below the five-year average withdrawal of 168 Bcf.¹ The deal pipeline that BP relies on to hit its divestment target is also cooling. Enverus Intelligence Research recorded $38 billion of US upstream M&A in the first quarter before, in its words, volatility paused the market, a slowdown that could complicate asset sales for any major leaning on disposals to fund buybacks.^3,4 What to watch is whether BP can deliver the second-half divestment skew it is promising, with Castrol the largest single piece, against a transaction backdrop that data providers say has already stalled once this year.^7,3 The other open question is the tax line. With guidance pinned near 40% but admitted to be hostage to price swings and earnings geography, a sharp move in crude or a shift in where BP books its profits could reshape full-year cash returns faster than the capex plan suggests.⁷