Latest news with #BP
Forbes
an hour ago
- Business
- Forbes
Is BP Stock A Bargain At $30?
BP plc stock (NYSE: BP) has increased by about 7% year-to-date, slightly surpassing the S&P 500's 2% increase. Currently trading at around $32 per share, the British oil giant appears relatively inexpensive based on valuation metrics – yet the underlying story is much more complex. Strategic changes, mixed financial results, and shifting energy goals require investors to examine BP with both caution and interest. Nevertheless, with energy prices presently on the rise, BP's significant upstream operations and renewed focus on oil and gas place it in a favorable position for a potential recovery. Also see What's Fueling Oil Prices?. Further discussion follows. If you're seeking upside with a smoother experience than holding an individual stock, consider the High Quality portfolio, which has achieved >91% returns since inception while outperforming the S&P. BP's Q1 results showcased the company's ongoing struggle between its traditional oil operations and its aspirations in low-carbon energy. The oil production and operations segment displayed resilience, with increased production volumes and realizations enhancing replacement cost profit before interest and tax. The Customers & Products segment also gained from improved realized margins. Conversely, the Gas & Low Carbon segment yielded a weaker performance, impacted by soft gas marketing and trading coupled with declining production. BP's overall Q1 underlying replacement cost profit was reported at $1.38 billion—significantly below analyst forecasts of $1.6 billion and sharply lower than $2.7 billion from the previous year. Looking ahead to 2025, BP anticipates reduced upstream production due to asset sales in Egypt and Trinidad. Refining and fuel margins are also under pressure, and a strengthening U.S. dollar continues to affect earnings, as most commodity sales are dollar-denominated. While BP has three new projects and six discoveries in progress, overall production is projected to decline this year. Earlier this year, the company shifted its focus back to hydrocarbons, cutting renewable investments from a planned $5 billion per year to just $1.5–$2 billion, while increasing oil and gas capital expenditures to $10 billion annually. The strategic overhaul also involves changes in its leadership—Giulia Chierchia, EVP of strategy and sustainability and a key advocate of BP's green transition, will be leaving in the coming months. Her departure further indicates a shift back to conventional energy priorities. From a valuation perspective, BP appears appealing. The stock is trading at a price-to-sales ratio of just 0.4x – approximately 20% to 30% beneath its five-year average. In contrast, major integrated oil companies like Exxon Mobil (NYSE: XOM), Chevron Corporation (NYSE: CVX), and Shell PLC (NYSE: SHEL) command significantly higher P/S multiples ranging from 0.7x to 1.3x. This discount signifies investor skepticism regarding BP's changing strategy, lackluster earnings, and structural challenges. However, it also presents an opportunity for upside if the company's execution stabilizes. Refer to our analysis BP Valuation for further insights into the factors influencing our price estimate for the stock. BP's strategy has experienced tumultuous changes in recent years. Back in 2020, the company garnered attention with an ambitious plan to reduce oil production by 40% while swiftly increasing investments in renewable energy. However, as oil prices surged and returns from renewables remained disappointing, investor pressure intensified, forcing BP to reassess its direction. Currently, the company is shifting its focus back to fossil fuels, with the aim of increasing oil and gas output to 2.5 million barrels of oil equivalent per day by 2030, compared to just under 2.4 million last year. This transition places BP on a different trajectory compared to its U.S. rivals. ExxonMobil, for example, is investing $140 billion in enhancing high-margin assets and reducing structural costs—targeting an additional $20 billion in earnings and $30 billion in free cash flow by 2030. Similarly, Chevron is anticipating $10 billion in extra free cash flow by 2026, focusing on operational efficiency and selective, return-oriented investments in lower-carbon initiatives involving carbon capture, hydrogen, and biofuels. Despite speculation regarding BP being a potential M&A target, a takeover seems improbable. The company carries substantial debt totaling $60 billion (as of Q1), a legacy of the Deepwater Horizon incident. This debt burden, coupled with regulatory scrutiny in the U.K., renders an acquisition less appealing for U.S. supermajors who value financial flexibility. Even with a reduction in its renewable focus, BP has not abandoned its clean energy aspirations entirely. Hydrogen remains a priority. BP intends to establish 5–7 hydrogen and carbon capture projects globally. This includes collaborations with Iberdrola on a 25-megawatt green hydrogen initiative in Spain and Cummins for a 100-megawatt electrolyzer in Germany, projected to generate 11,000 tons of green hydrogen annually by 2027. BP is also working on H2Teesside, which is planned to be one of the largest blue hydrogen facilities in the U.K. BP's strategic reset may not attract ESG-oriented investors, but for those with a value perspective, the stock's undervalued position presents an intriguing opportunity. With its price at $32, and trading at a notable discount compared to peers, BP suggests potential upside, assuming the company can effectively implement its more focused, oil-centric strategy. Trefis collaborates with Empirical Asset Management—a Boston-based wealth manager—whose asset allocation strategies produced positive returns during the 2008-09 period when the S&P lost over 40%. Empirical has integrated the Trefis HQ Portfolio into its asset management framework in order to provide clients with improved returns and lower risks compared to the benchmark index—a less volatile experience, evidenced by HQ Portfolio performance metrics.
Daily Mail
an hour ago
- Business
- Daily Mail
Oil prices eye $100 mark amid intensifying Israel-Iran conflict
Oil soared towards $80 a barrel yesterday as industry experts warned conflict in the Middle East could send it above $100. Brent – the global benchmark – reached a five-month high above $78 a barrel as Israel and Iran exchanged missile attacks. And if passage through the Strait of Hormuz – a shipping route in the Persian Gulf for 20 per cent of the world's oil – is cut off, the price could rocket higher. The Bank of England sounded the alarm yesterday over surging oil prices, which threaten to drive inflation higher, in its interest rates decision. But average rises are still less than a penny for petrol and diesel, the motoring association said. 'A spike in the oil price looks daunting but it is taking its time to filter through to drivers,' AA spokesman Luke Bosdet said. Analysts at Goldman Sachs predict Brent could reach $90 a barrel and Barclays claimed, in the 'worst-case scenario' of a wider war, it could pass $100. Shares in BP and Shell rose 1.7 per cent and 1.2 per cent respectively on hopes that higher oil prices will boost profits. Former BP chief executive Lord Browne (pictured) said the trajectory for prices 'depends [on] what happens in the Strait of Hormuz, but if we really do shut down global supply then the price will go up a lot'. 'A lot of the price is controlled by fear, fear that Iran will do something different... I think there'll be a lot of volatility short-term,' he told LBC. And Shell chief executive Wael Sawan (pictured) said: 'The escalation in tensions has added to what has already been significant uncertainty in the region. We're being very careful with, for example, our shipping in the region, just to make sure that we do not take any unnecessary risks.' At an industry conference in Tokyo, he said 'the Strait of Hormuz is the artery through which the world's energy flows and if that artery is blocked, for whatever reason, it'll have a huge impact on global trade.'
Yahoo
7 hours ago
- Business
- Yahoo
Why Big Oil Isn't Afraid of Peak Oil Demand
Big Oil firms expect global oil demand to stop growing at some point early next decade. But the decline will be very slow and gradual and will look more like a plateau than a downward spiral. The world's biggest international oil and gas companies have started to acknowledge that demand growth could slow or stop within a decade. But these firms keep pumping oil and gas more than they did earlier this decade as they expect that oil demand – regardless of a peak – isn't going the headline-grabbing surge in renewable energy capacity, solar and wind cannot replace fossil fuels in many industrial processes and production while demand for petrochemicals drives increased oil and gas consumption. The strategic shift of BP and Shell from early this decade to boost investments in renewables while scaling back oil production lasted only a couple of years. Europe's Big Oil found out firsthand that the renewables business isn't bringing the profits that the core oil and gas business is generating. Faced with the difficult task of rewarding shareholders with attractive yields and payouts and stopping the investor outflow from the industry, and with an energy crisis with soaring oil and gas prices, Shell and BP drastically scaled on their ambitions in renewables and shifted their focus on oil and gas again. Equinor of Norway, where electric vehicles hold an enormous market share and power comes from hydro and wind, also reduced investments in renewables, in order to boost returns for shareholders and adapt to an uneven energy transition. The Norwegian major, which dropped 'oil' from its name and rebranded to Equinor seven years ago with more renewables business in mind, acknowledged that market conditions in the clean energy sector have changed and the energy transition is going forward with an uncertain and uneven pace. At the same time, Equinor, which now produces a large part of the gas going to Europe via pipelines, expects to keep a high level of oil and gas production in Norway 'all the way to 2035.' 'What we are working on is to make sure that we are able to squeeze every molecule out of the Norwegian continental shelf,' chief executive Anders Opedal told the Financial Times. 'So we have to drill around 100 wells a year for the next decade.' Low returns from higher-cost renewables and the uncertain pace of the transition amid the push for security of supply have had European majors scale back plans and investments in renewables and look to grow low-cost lower-carbon oil and gas production. In the U.S., ExxonMobil and Chevron didn't have to pivot as they weren't deep into renewable energy even before the 2022-2023 energy crisis and soaring the International Energy Agency (IEA), which has just doubled down on its forecast of peak oil demand by the end of this decade, Big Oil companies don't see any peak by 2030. Some have put a peak at some point in the 2030s, but all say that oil and gas will remain essential for global economic growth and development in 2050. 'Under any credible scenario, oil and natural gas remain essential,' ExxonMobil says in its latest Global Outlook to 2050. The U.S. supermajor also believes that 'Lower-carbon technology needs policy support to grow rapidly but ultimately must be supported by market forces.' In 2050, more than 50% of global energy demand will still be met by oil and natural gas, Exxon reckons. 'The world will be different in 2050, but the need to provide the reliable, affordable energy that drives economic prosperity and better living standards, while reducing greenhouse gas emissions, will remain just as critical as it is today,' it says. Shell's CEO Wael Sawan has said that reducing global oil and gas production would be 'dangerous and irresponsible' as the world still needs those hydrocarbons. In its 2025 Energy Security Scenarios, Shell sees oil demand likely to grow by 3?5 million barrels per day (bpd) into the early 2030s, with a long but slow decline after that as petroleum remains an affordable and convenient fuel, particularly in transport, and an important feedstock for the petrochemical industry. In all three scenarios analyzed by Shell, upstream investment of around $600 billion a year 'will be required for decades to come as the rate of depletion of oil and gas fields is two to three times the potential future annual declines in demand.' In the most-discussed strategy reset this year, BP slashed spending on clean energy and boosted upstream investments. The UK-based supermajor will aim for 10 new major oil and gas projects to start up by the end of 2027, and a further 8–10 projects by the end of 2030. Production is also expected to grow: to 2.3–2.5 million barrels of oil equivalent per day (boed) in 2030, with capacity to increase to 2035. That's a stark departure from BP's previous strategy to lower oil and gas output by 2030. 'We will grow upstream investment and production to allow us to produce high margin energy for years to come,' CEO Murray Auchincloss said. Whenever peak oil demand occurs, it will not be a steep downhill in global consumption—it will be a long plateau with a soft decline afterward, Big Oil says. A steep drop could only occur if there is an aggressive political push toward net-zero emissions by 2050, Shell's head of scenario planning, Laszlo Varro, told FT. But such a push would be 'significantly outside society's current comfort zone.' By Tsvetana Paraskova for More Top Reads From this article on Erreur lors de la récupération des données Connectez-vous pour accéder à votre portefeuille Erreur lors de la récupération des données Erreur lors de la récupération des données Erreur lors de la récupération des données Erreur lors de la récupération des données
Daily Mail
15 hours ago
- Business
- Daily Mail
War in Middle East 'to push oil price to $100': Experts sound alarm as Israel and Iran trade blows
Oil soared towards $80 a barrel yesterday as industry experts warned conflict in the Middle East could send it above $100. Brent – the global benchmark – reached a five-month high above $78 a barrel as Israel and Iran exchanged missile attacks. And if passage through the Strait of Hormuz – a shipping route in the Persian Gulf for 20 per cent of the world's oil – is cut off, the price could rocket higher. The Bank of England sounded the alarm yesterday over surging oil prices, which threaten to drive inflation higher, in its interest rates decision. Rate-setters noted that prices had risen 'owing to an escalation of the conflict in the Middle East'. And the Bank's Monetary Policy Committee said it 'would remain vigilant about these developments and their potential impact on the UK economy'. It presents a headache for motorists as rising oil prices will feed through to the cost of fuel. A $2 increase usually adds 1p to the price of a litre, according to the AA. But average rises are still less than a penny for petrol and diesel, the motoring association said. 'A spike in the oil price looks daunting but it is taking its time to filter through to drivers,' AA spokesman Luke Bosdet said. Analysts at Goldman Sachs predict Brent could reach $90 a barrel and Barclays claimed, in the 'worst-case scenario' of a wider war, it could pass $100. Shares in BP and Shell rose 1.7 per cent and 1.2 per cent respectively on hopes that higher oil prices will boost profits. Former BP chief executive Lord Browne said the trajectory for prices 'depends [on] what happens in the Strait of Hormuz, but if we really do shut down global supply then the price will go up a lot'. 'A lot of the price is controlled by fear, fear that Iran will do something different... I think there'll be a lot of volatility short-term,' he told LBC. And Shell chief executive Wael Sawan said: 'The escalation in tensions has added to what has already been significant uncertainty in the region. 'We're being very careful with, for example, our shipping in the region, just to make sure that we do not take any unnecessary risks.' At an industry conference in Tokyo, he said 'the Strait of Hormuz is the artery through which the world's energy flows and if that artery is blocked, for whatever reason, it'll have a huge impact on global trade.' Sawan said that the rise in oil and gas prices has been 'moderate' as investors wait to see whether physical infrastructure might be damaged. The company is monitoring the possibility of US military action and has plans in place should things deteriorate, he said. Uncertainty over whether Donald Trump will intervene on behalf of Israel has raged after the US President told reporters this week: 'I may do it. I may not do it... nobody knows what I'm going to do.'
Bloomberg
21 hours ago
- Business
- Bloomberg
Windfall Levy Accounted for One Third of BP's 2024 UK Tax Bill
BP Plc paid £1.25 billion ($1.6 billion) in taxes to the UK government in 2024, with about a third of the payments a result of the country's windfall charge. The figure was disclosed in newly released tax report and accompanying UK economic impact report conducted by Oxford Economics, includes £411 million paid under the Energy Profits Levy. The surcharge was introduced in 2022 in response to surging oil and gas prices after Russia invaded Ukraine.
