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1. Company Snapshot

1.a. Company Description

BP p.l.c. engages in the energy business worldwide.It operates through Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments.It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power, and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture and storage.


The company is also involved in the convenience and mobility business, which manages the sale of fuels to retail customers, convenience products, aviation fuels, and Castrol lubricants; and refining and trading of oil products, as well as operation of electric vehicle charging facilities.In addition, it produces and refines oil and gas; and invests in upstream, downstream, and alternative energy companies, as well as in advanced mobility, bio and low carbon products, carbon management, digital transformation, and power and storage areas.The company was founded in 1908 and is headquartered in London, the United Kingdom.

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1.b. Last Insights on BP

BP's recent performance was driven by a strong second-quarter earnings beat, with adjusted earnings of 90 cents per American depositary share surpassing the consensus estimate of 67 cents. The energy company's total revenue dropped to $46.63 billion, falling short of analyst projections, but the GAAP profit attributable to shareholders was $1.63 billion, reversing a year-over-year decline. The company's customers and products business saw a 33% increase in profit, driven by strong oil trading results, higher volumes, and a 20% rise in earnings at its Castrol lubricants unit. Additionally, BP announced a $750 million share buyback, a positive event that reduces the number of outstanding shares and benefits shareholders. The company also increased its dividend and initiated a new cost review aiming for best-in-class efficiency, demonstrating its commitment to improving profitability.

1.c. Company Highlights

2. BP's Q3 2025 Earnings: Strong Operational Performance and Strategic Progress

BP's third-quarter 2025 results show a strong financial performance, with underlying pretax earnings of $5.3 billion and underlying net income of $2.2 billion. The company's operating cash flow was $7.8 billion, supporting its growth target of 20% CAGR in adjusted free cash flow from 2025 to 2027. The actual EPS came out at $0.109, beating analysts' estimates of $0.0975. The company's financial performance was driven by its upstream segment, with production increasing 3% quarter-over-quarter, and plant reliability at 97%, leading to upgraded full-year production guidance.

Publication Date: Nov -06

📋 Highlights
  • Strong Financial Performance:: Underlying pretax earnings of $5.3 billion and operating cash flow of $7.8 billion, supporting 20% CAGR target in adjusted free cash flow (2025–2027).
  • Major Exploration Discovery:: Bumerangue in Brazil with 1,000-meter column (100m oil, 900m rich gas condensate), the largest discovery in 25 years.
  • Strategic Capital Discipline:: Organic CapEx on track below $14 billion, with $5 billion divestment progress and $3.5 billion remaining to meet $20 billion target.
  • AI-Driven Operational Gains:: 98% drilling kit detection rate and 45% waste reduction in service stations via partnerships with Palantir and Databricks.
  • Production Growth Momentum:: Upgraded 2025 guidance with 3% QoQ upstream production increase, 97% plant reliability, and BPX drilling efficiency improvements (30% completions, 15% drilling productivity).

Operational Highlights

The company has made significant strategic progress, starting up six new oil and gas major projects in 2025, with four ahead of schedule, and making 12 exploration discoveries, including the significant Bumerangue discovery in Brazil. BPX is performing well, with a 30% productivity improvement in completions and a 15% improvement in drilling. The company's CapEx profile for BPX is expected to remain around $2.5 billion per year, with the opportunity to flex up or down as needed.

Valuation Metrics

BP's current valuation metrics indicate a relatively attractive dividend yield of 5.35% and a free cash flow yield of 9.32%. The company's P/E ratio is 154.11, indicating a potentially overvalued stock. However, the EV/EBITDA ratio is 4.62, suggesting a more reasonable valuation. The ROE and ROIC are relatively low at 1.07% and 1.63%, respectively, which may indicate room for improvement in the company's profitability.

Exploration and Production

BP's exploration team has had a successful year, with 12 out of 14 discoveries, thanks to the convergence of seismic technology and AI. The company has made discoveries in Egypt, Trinidad, Brazil, and Namibia, with the Namibian block looking particularly promising. BP spends around $600 million a year on exploration and aims to maintain quality through choice, rather than increasing capital expenditure.

Divestment Program

BP has announced $5 billion of its $20 billion divestment program, with $1.7 billion in proceeds received and $3.5 billion to come. The company is making progress on the Castrol, Gelsenkirchen, and Lightsource transactions and expects to update on these deals as the commercial processes progress.

Balance Sheet

BP pays attention to its gearing ratio, considering both net debt to capital and equity basis. The company has an absolute net debt target and aims to maintain a strong balance sheet. BP has set a target to reduce net debt to $14 billion to $18 billion by the end of 2027, representing a $10 billion reduction from 2026.

3. NewsRoom

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Sector Update: Energy Stocks Edge Higher Late Afternoon

Dec -04

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Sector Update: Energy Stocks Advance Thursday Afternoon

Dec -04

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Valaris Limited (VAL): A Bull Case Theory

Dec -04

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HSBC appoints Brendan Nelson as group chairman

Dec -03

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TravelCenters of America adds new cardless payment

Dec -03

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BP Abandons H2Teesside Carbon Capture & Hydrogen Scheme Amid AI Push

Dec -02

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BP Pulls Out of Hydrogen Project in Northern England

Dec -02

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Is There Now an Opportunity in BP After Share Buyback and 27% Rally?

Dec -02

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.30%)

6. Segments

Customers & Products

Expected Growth: 3.3%

This segment is expected to grow in line with the global economy, driven by increasing demand for energy and low-carbon solutions.

Gas & Low Carbon Energy

Expected Growth: 3.3%

This segment is expected to grow rapidly as the world transitions to a lower-carbon economy, driven by government policies and increasing consumer preference for cleaner energy.

Oil Production & Operations

Expected Growth: 3.3%

This segment is expected to grow in line with the global economy, driven by increasing demand for energy, although it may be impacted by volatility in oil prices.

Other Businesses and Corporate

Expected Growth: 3.3%

This segment is expected to grow in line with the global economy, driven by increasing demand for energy and the growth of the group's other businesses.

Consolidation Adjustment and Eliminations

Expected Growth: 3.3%

This segment is not expected to grow significantly, as it is primarily an accounting adjustment.

7. Detailed Products

Petrol

BP's petrol is a refined product used to power vehicles, providing a high-energy density fuel for transportation.

Diesel

BP's diesel is a refined product used to power vehicles, providing a high-energy density fuel for transportation, particularly for heavy-duty vehicles and equipment.

Jet Fuel

BP's jet fuel is a specialized kerosene-based fuel used to power aircraft, providing a high-energy density fuel for aviation.

Lubricants

BP's lubricants are a range of oils and greases used to reduce friction and wear in engines, gears, and other machinery.

Petrochemicals

BP's petrochemicals are used to manufacture a wide range of products, including plastics, fibers, and other materials.

LPG (Liquefied Petroleum Gas)

BP's LPG is a clean-burning fuel used for cooking, heating, and powering vehicles.

Wind and Solar Energy

BP's wind and solar energy solutions provide renewable energy sources for power generation.

Electric Vehicle Charging

BP's electric vehicle charging solutions provide convenient and fast charging for electric vehicles.

8. BP p.l.c.'s Porter Forces

Forces Ranking

Threat Of Substitutes

BP p.l.c. faces moderate threat from substitutes due to the availability of alternative energy sources such as solar, wind, and hydroelectric power.

Bargaining Power Of Customers

BP p.l.c. has a large and diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

BP p.l.c. relies on a diverse range of suppliers, which reduces the bargaining power of individual suppliers, but the company still faces some pressure from suppliers of critical components.

Threat Of New Entrants

The oil and gas industry has high barriers to entry, including significant capital requirements and regulatory hurdles, which reduces the threat of new entrants.

Intensity Of Rivalry

The oil and gas industry is highly competitive, with many established players competing for market share, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 47.30%
Debt Cost 6.63%
Equity Weight 52.70%
Equity Cost 6.63%
WACC 6.63%
Leverage 89.74%

11. Quality Control: BP p.l.c. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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PKN ORLEN

A-Score: 6.7/10

Value: 8.7

Growth: 3.3

Quality: 4.6

Yield: 8.1

Momentum: 9.0

Volatility: 6.7

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Repsol

A-Score: 6.7/10

Value: 7.1

Growth: 5.6

Quality: 2.5

Yield: 8.8

Momentum: 8.0

Volatility: 8.3

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Eni

A-Score: 6.4/10

Value: 7.5

Growth: 4.8

Quality: 3.2

Yield: 8.8

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Volatility: 9.3

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Shell

A-Score: 6.0/10

Value: 6.9

Growth: 4.1

Quality: 4.5

Yield: 6.2

Momentum: 5.5

Volatility: 9.0

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Equinor

A-Score: 5.8/10

Value: 8.3

Growth: 6.0

Quality: 5.0

Yield: 7.5

Momentum: 1.5

Volatility: 6.3

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BP

A-Score: 5.7/10

Value: 6.2

Growth: 2.9

Quality: 2.7

Yield: 8.8

Momentum: 6.0

Volatility: 7.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

4.53$

Current Price

4.53$

Potential

-0.00%

Expected Cash-Flows