Citi said BP Plc's (LSE:BP.) fourth-quarter 2025 trading statement is broadly in line operationally, but noted near-term earnings headwind even as the balance sheet shows a meaningful step-down.
In Citi’s read-through, BP guided to flat production in the quarter. Trading was mixed, with gas trading characterised as average and oil trading seasonally weaker.
The key Citi takeaway, however, was guidance for higher tax in 4Q tied to a full-year 'true-up', which has led the broker to lower its quarterly EPS estimate.
On cash and leverage, Citi pointed to indications of about a US$3.5bn quarter-on-quarter reduction in net debt. The broker said that implies good cash conversion, potentially supported by some working-capital release alongside the benefit of asset sale proceeds.
Citi’s preliminary leverage estimate puts net debt to trailing cash flow from operations at 1.7x, a marked improvement versus peaks of 2.2x last year.
Even so, Citi said its base case remains that BP will cut share buybacks again when it reports 4Q results.
BP also guided to booking US$4–5bn of asset impairments in the quarter within gas and low carbon, with Citi suspecting the US landfill gas business may represent a significant portion.