How BP (BP p.l.c.) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a global energy major like BP makes money is essential for investors and anyone interested in the business of integrated oil and gas. In this post, we break down BP's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick BP Overview

BP operates as a vertically integrated energy company, spanning oil and gas exploration, production, refining, marketing, and a growing portfolio in low-carbon energy. Revenue comes primarily from the sale of refined petroleum products, natural gas, and increasingly, low-carbon energy solutions. The business is structured into segments: Customers & Products (downstream fuels and retail), Gas & Low Carbon Energy (upstream gas, renewables), and Other activities.

Revenue Breakdown

• Total Revenue (Q3 2025): $48.1B (+1.9% YoY)
  • Customers & Products Revenue: $38.6B (80.3% of total)
  • Gas & Low Carbon Energy Revenue: $9.3B (19.4% of total, +14.8% YoY)
  • Other: $157M (<1% of total)
• Growth is powered by robust performance in Gas & Low Carbon Energy, reflecting BP’s strategic shift toward cleaner energy and higher gas prices.

Gross Profit and Margins

• Gross Profit: $8.59B (17.8% gross margin)
  • Cost of Revenue: $39.5B (-0.5% YoY)
  • BP maintains moderate margins due to the scale of its refining and trading operations, with some uplift from higher-margin low-carbon and gas businesses.
• Most costs come from feedstock (crude oil, natural gas), refining operations, and logistics.

Operating Income and Expenses

• Operating Income: $4.19B (+30.1% YoY, 8.7% margin)
• Operating Expenses: $4.40B (-41.6% YoY)
  • R&D: Not separately disclosed for Q3 2025
  • SG&A: $4.40B (+11.9% YoY, 9.1% of revenue) — covers administrative, marketing, and corporate costs
  • BP continues to control costs and invest in operational efficiency, while expanding its low-carbon and gas businesses.

Net Income

• Pre-Tax Income: $3.22B (+130.1% YoY, 6.7% margin)
• Income Tax: $1.72B (53.4% effective tax rate)
• Net Income: $1.15B (+460.2% YoY, 2.4% net margin)
• BP converts a moderate portion of sales into profit, reflecting the capital intensity of the energy sector and the impact of a high effective tax rate.

What Drives BP's Money Machine?

• Customers & Products: Over 80% of revenue comes from downstream fuels, lubricants, and retail operations, making this BP’s core cash engine.
• Gas & Low Carbon Energy: This segment delivered $9.3B in revenue (+14.8% YoY), driven by higher gas prices and increased renewables output.
• Strategic Investment: BP is channeling capital into renewables, hydrogen, and bioenergy, aiming to diversify away from fossil fuels.
• Future Growth Areas: Low-carbon energy and hydrogen are key focus areas for future growth, though these segments are not yet as profitable as legacy oil and gas.

Visualizing BP's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant costs and a high tax burden, 2.4% of revenue drops to the bottom line.

Key Takeaways

• BP’s money comes overwhelmingly from downstream fuels and products, with a growing contribution from gas and low-carbon energy.
• High gross and net margins illustrate the power of BP’s integrated business model, though margins remain moderate due to industry pressures.
• Heavy investment in low-carbon energy, balanced by efficiency in operating costs.
• Ongoing growth is driven by gas market strength and BP’s strategic energy transition.

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FAQ About BP's Income Statement

1. What is the main source of BP's revenue in 2025?

BP generates over 80% of its revenue from Customers & Products, which includes downstream fuels, lubricants, and retail operations. Gas & Low Carbon Energy is the second-largest source, contributing nearly 20%.

2. How profitable is BP in Q3 2025?

BP reported net income of $1.15B in Q3 2025, with a net margin of approximately 2.4%, reflecting moderate profitability driven by strong gas markets and disciplined cost control.

3. What are the largest expense categories for BP?

The biggest expenses on BP’s income statement are cost of revenue (primarily feedstock and refining costs) and operating expenses, particularly Sales, General & Administrative (SG&A) costs, which reached $4.40B in Q3 2025 as BP prioritizes efficiency and growth in new energy.

4. Why does Gas & Low Carbon Energy operate at a lower margin?

Gas & Low Carbon Energy, despite generating $9.3B in revenue, faces higher upfront investment and lower short-term margins as BP aggressively invests in renewables and hydrogen, aiming for long-term growth—even if the division is less profitable today.

5. How does BP's effective tax rate compare to previous years?

BP’s effective tax rate in Q3 2025 was 53.4%, higher than many prior periods. This high rate is primarily due to geographic mix of earnings, windfall taxes in certain jurisdictions, and limited tax benefits from share-based compensation.