British oil and gas major BP expects to flag up to US$5 billion (AU$7.5 billion) in tax impairments in the fourth quarter of 2025, largely related to its energy transition business.
The company said the writedowns are attributable to the gas and low carbon energy segment but are excluded from underlying replacement cost profit.
BP announced the trading statement ahead of full results to be released on February 10.
The company expects reported upstream production in the fourth quarter to be broadly flat compared to the third quarter, with production broadly flat in oil production and operations and lower in gas and low carbon energy.
Lower realised prices are expected to impact results on both segments.
In the customers and products segment, BP expects results to be influenced by lower volumes and broadly flat fuels margins in the customers segment and by stronger realised refining margins offset by a higher impact from turnaround activity in the products segment. The oil trading results are expected to be weak.
BP continued to slash its debts, reducing net debt at the end of the fourth quarter to be in the range of US$22 billion to US$23 billion, compared with US$26 billion at the end of the September quarter.
The underlying effective tax rate for the full year is expected to be around 42 per cent, compared to the previous guidance of 40 per cent, due to changes in the geographical mix of profits.
