BP accelerates debt reduction ahead of 2027 target

BP has confirmed it is on track to reduce its net debt earlier than previously anticipated, driven by strong performance in gas sales and trading alongside asset disposals. The energy major stated in its latest market update that it maintains a strict focus on strengthening its balance sheet, a strategy that has yielded significant results despite ongoing disruption in the Middle East. The company reported that its net debt at the end of the third quarter is expected to fall within the range of 13.5 to 14.5 billion dollars. This represents a substantial decrease from the 22.3 billion dollars recorded in the prior quarter, positioning the firm well ahead of its previous target of 14 to 18 billion dollars by the end of 2027.

Chief Executive Meg O’Neill has identified deleveraging as the company’s top priority, acknowledging that BP has historically carried high levels of leverage compared to its sector peers. Speaking at the Energy Intelligence Forum in London, she noted that previous leadership had not always been careful stewards of shareholder capital. O’Neill emphasised the necessity of tackling the portfolio to operate effectively in a low price environment, stating that reducing debt is essential to making BP a financially stronger and more resilient organisation. She highlighted that this journey is critical for the long-term stability of the business, particularly as it navigates current market conditions.

Despite the positive progress on debt, the update confirmed that BP will take a further write-down of between three and 4.5 billion dollars on its low carbon business. This division includes stakes in key projects such as the East Coast Cluster of carbon capture and hydrogen investments in Humber and Teesside. The company has indicated it will sell its 50 per cent stake in the flagship Net Zero Teesside gas and carbon capture plant. The firm has also received improved views from analysts, with Wells Fargo uprating shares to overweight and Evercore adding BP to its tactical outperform list. Evercore estimates BP will reach net debt of three billion dollars by the end of 2026, potentially aided by the sale of its Archea Biogas business and EV charging firm Lightsource.

BP has previously stated its intention to raise 20 billion dollars through asset sales. O’Neill revealed that plans to sell its UK North Sea business are receiving significant interest. In its third quarter update, the company expects its gas marketing and trading result to be significantly higher than in the previous quarter. Upstream production is forecast to be between 2.19 and 2.24 million barrels of oil equivalent per day, a slight increase from the approximately 2.2 million barrels recorded previously. BP is scheduled to confirm its full group results for the third quarter of 2026 on 30 October.