bp – equity proposition

bp is one of the world’s largest integrated energy companies, listed on the London Stock Exchange and ADRs on the New York Stock Exchange, with a market capitalisation of c £68bn and c $90bn, respectively. bp is pivoting back towards its traditional upstream oil and gas business, with a renewed focus on shareholder returns. It remains an integrated energy play with strong differentiating factors but a less aggressive tilt towards renewables, investing with discipline in the transition. bp offers oil and gas exposure for investor portfolios, with an attractive risk/reward profile, helping to offsetting some negative impacts of energy price spikes.

There are five key reasons why bp represents an interesting investment case:

1. bp has fundamentally reset its strategy, re-emphasising its higher-returning oil and gas business.
2. The company’s strategic reset in the near term is focusing on driving performance by improving its downstream operations and a self-help plan through a significant structural cost reduction programme, which should see a reduction in costs of $4–5bn by end-2027.
3. bp is focusing on capital discipline and cash returns.
4. The company trades at a discount to its peers.
5. The thematic tailwind of energy security continues to benefit bp.

If you would like to learn more about bp, please see our latest research here.