Should I buy more BP shares after the energy giant beats Q3 earnings expectations?
If you own BP (LSE:BP.) shares like me, you’ll probably have taken an interest in the oil and gas producerâs third quarter (Q3 2025) results released this morning (4 November).
In some respects, there should be no major surprises. Thatâs because the group always releases a pre-trading statement update â two or three weeks in advance — that gives a high-level overview of what to expect. The key numbers are the realised prices for the oil and gas that it sells. Its margin is also important.
As a rule of thumb, a $1 movement in Brent crude affects the groupâs pre-tax replacement cost operating profit (its preferred measure of earnings) by $340 (up or down). A $0.10 change in the Henry Hub gas price will affect its bottom line by $40m. And for every $1 variation in the refining indicator margin, the groupâs result will be impacted by $550m.
Given the scale of BPâs operations, itâs clear that relatively small changes in these can have a large impact on its profit. However, all of these are largely outside the company’s control. Thatâs one of the reasons why shares in the sector can be risky.
What did the results show?
Compared to the previous quarter, BP reported a 6.1% fall in underlying replacement cost profit to $2.21bn. However, this was 9.4% better than analysts were predicting.
On a per share basis, the drop was 5.2%, which is a sign that the groupâs recent share buyback programmes are working. Another $750m of purchases was announced today.
But Iâm particularly interested in whether there are signs that the groupâs new strategy is working. Under pressure from some of its larger shareholders, BP announced a change of approach in February, to try and improve cash flow and reduce debt. Alongside disposing of some non-core assets, the group said â much to the horror of environmentalists â that it would increase its investment in hydrocarbons at the expense of low carbon technologies. Cutting overheads was also said to be a top priority.
However, distribution and administrative expenses were $29m more during Q3 2025. In fact, they were equivalent to 13.7% of sales and other operating income. By comparison, Shellâs ratio was 4.8%.
And although operating cash flow was $1.52bn (24.2%) higher quarter-on-quarter, at September, net debt was $1.79bn (7.4%) more than a year ago.
My verdict
To be honest, I think itâs a little too early to tell whether the announced changes are having an impact. The groupâs chief executive says itâs making âgood progressâ and âmoving at paceâ. Importantly, he says the groupâs demonstrating that it âcan and will do better for our investorsâ.
But Iâm a long-term investor so Iâm happy to wait for further evidence of a turnaround. And bank its above-average dividend in the meantime. Despite this, I donât want to buy any more shares at the moment. I think holding too much of one particular stock would be a bad idea.
However, I still think it could be one for others to consider. If BP can become more efficient then its cash position should improve relative to its peers. And if it can demonstrate this to the satisfaction of investors, I believe its share price will respond positively.
The post Should I buy more BP shares after the energy giant beats Q3 earnings expectations? appeared first on The Motley Fool UK.
Should you invest £1,000 in BP p.l.c. right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BP p.l.c. made the list?
More reading
- I asked ChatGPT what FTSE 100 shares I should buy. It said…
- Here’s how much passive income investors have made with BP shares since 2020
- Can the BP share price survive the coming oil glut?
- The BP share price would have turned £5,000 into this much in 5 years…
- 3 FTSE 100 stalwarts to consider ahead of possible ISA changes
James Beard has positions in Bp P.l.c. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
