Global energy giant BP has unveiled plans to slash $2 billion in costs from its operations by the conclusion of 2026, following a lackluster performance in the first quarter of the year that fell short of market expectations.
The company reported an underlying replacement cost (RC) profit of $2.7 billion for the quarter, a decline from the $3 billion recorded in the previous quarter. The dip in profits was attributed in part to plummeting gas prices and an unforeseen disruption at a refinery in the United States.
In the gas and low carbon energy segment, BP's RC profit before interest and tax plummeted to $1 billion, down from $2.2 billion in the preceding quarter.
In response to the financial challenges, BP has set its sights on achieving at least $2 billion in cash cost savings by 2026 compared to 2023 levels. The cost-saving initiatives will encompass various facets of the company's operations, including portfolio optimization, digital transformation, supply chain streamlining, and the establishment of global capability hubs. However, it is anticipated that some of these measures may entail associated restructuring charges.
Emphasizing the company's commitment to shareholder value, BP's chief executive Murray Auchincloss affirmed plans to sustain the momentum of share buybacks, with an intended acquisition of $3.5 billion worth of shares in the first half of the year.
Auchincloss highlighted BP's strategic shift towards a more pragmatic approach to clean energy targets, emphasizing the pursuit of initiatives that can “create a higher value company for shareholders by moving towards net zero without wasting money.”
