BP: Righting The Ship

Feb. 27, 2025 8:45 AM ETBP p.l.c. (BP) Stock, BPAQF StockBP, BPAQF6 Comments
Gary Gambino
6.33K Followers
(13min)

Summary

  • BP's strategy reset focuses on increasing oil and gas production, reducing low-return green investments, and improving cost efficiency to enhance shareholder returns and reduce debt.
  • The company plans to cut capital expenditures, target mid-teen ROI projects, and divest non-core assets like Castrol to strengthen its balance sheet.
  • BP aims for 20% annual free cash flow growth through 2027, driven by new upstream projects and cost reductions.
  • Despite improvements, BP remains fairly valued compared to European peers and cheaper than US majors, warranting a Hold rating with an 11.9% annual return expectation.
Aerial view of a large crude oil tanker traveling over open ocean

SHansche/iStock via Getty Images

Course Correcting After Five Years Of Rough Seas

Five years ago, BP (NYSE:BP) announced a major strategy change. The company intended to become an "integrated energy company" rather than an "international oil company". This meant that by 2025, BP would be investing only 60% of its

This article was written by

6.33K Followers
I retired early after 22 years in the energy industry with roles in engineering, planning, and financial analysis. I have managed my own portfolio since 1998 and have met my goal to match the S+P 500 return over the long term with lower volatility and higher income. I mostly write on positions I already hold or am considering changing. I prefer to hold positions for the long-term unless there is a compelling reason to sell. I look for investment opportunities without regard to asset class, market cap, sector, or yield. I would rather maximize total return over time by buying when price is low relative to intrinsic value.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of BP either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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