BP p.l.c. (BP) shares slipped in premarket trading Wednesday after the energy giant delivered a sobering preview of its fourth-quarter results ahead of the official February 10, 2026 earnings release. The update paints a picture of a company navigating choppy waters in traditional energy markets while absorbing heavy losses from its climate-focused investments.

Production Steady, But Prices Tell a Different Story

BP expects upstream production for the fourth quarter to hold roughly flat compared to Q3, with stable oil production balanced out by weaker volumes in gas and low-carbon energy. That might sound reassuring, but the price environment is doing no favors.

Brent crude averaged $63.73 per barrel during Q4 2025, down from $69.13 in the previous quarter. That decline, combined with price lag effects on BP's production in the Gulf of America and the U.A.E., is expected to shave approximately $200 million to $400 million off results in the oil production and operations segment alone.

The gas and low-carbon segment faces its own headwinds. Price realizations tied to shifts in non-Henry Hub natural gas benchmarks are projected to reduce results by another $100 million to $300 million quarter-over-quarter. Interestingly, the U.S. Henry Hub natural gas price actually improved, averaging $3.55 per mmBtu in Q4 versus $3.07 in Q3, but that wasn't enough to offset broader weakness.

Gas marketing and trading performance is expected to land at average levels, which in context feels like a small victory. Meanwhile, BP's refining indicator margin clocked in at $15.2 per barrel for the quarter, slightly down from $15.8 in Q3.

The Low-Carbon Problem

Here's where things get uncomfortable. BP is staring down post-tax impairment charges of roughly $4 billion to $5 billion for the fourth quarter, with the bulk of those losses concentrated in transition-focused businesses and equity-accounted entities. Translation: the company's big bets on renewable energy and low-carbon ventures aren't panning out as hoped.

These charges stem largely from the gas and low-carbon energy segment, underscoring the financial challenges of pivoting a massive oil company toward cleaner energy sources while maintaining profitability.

Balance Sheet Gets Some Relief

It's not all grim news. Net debt is projected to land between $22 billion and $23 billion by quarter-end, a notable improvement from $26.1 billion in Q3. The debt reduction reflects approximately $3.5 billion in divestment proceeds during the quarter and about $5.3 billion for the full year.

The crown jewel of those asset sales was December's disposal of a 65% stake in BP's Castrol lubricants business for roughly $10.1 billion. That transaction alone is expected to generate around $6 billion in net proceeds for the company, providing breathing room as it absorbs losses elsewhere.

Doubling Down on Renewables

Despite the impairment pain, BP isn't backing away from its energy transition strategy. Earlier this month, the company announced a 50:50 joint venture with Corteva, Inc. (CTVA) to produce crop-based oils from canola, mustard, and sunflower for sustainable aviation fuel and renewable diesel production. It's a long-term bet that sustainable fuels will eventually find their market, even if current economics remain challenging.

In the customers and products segment, BP expects results to reflect seasonally lower volumes and stable fuel margins. The company anticipates roughly $100 million in refining margin gains, but those will be offset by higher turnaround activity, temporary capacity reductions at the Whiting refinery, and weak oil trading performance.

BP Price Action: BP shares traded down 1.10% at $34.97 during premarket activity on Wednesday.