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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 has been driven by a series of positive developments, including a 12.8% jump in share price over the past month, a 26.9% rise over the past year, and a 27.3% rally in the last 12 months. The company's strategic moves in renewable energy and ongoing share buybacks have been catching the market's attention, with analysts pointing to a lower discount rate and rising confidence in BP's strategy. Recent analyst upgrades and portfolio updates have also contributed to the positive narrative around the company, with fair value estimates rising from £4.72 to £4.78 per share. Additionally, BP's new upstream projects, major discoveries, and rising divestment proceeds have strengthened its outlook, driving the momentum ahead of its peers.

1.c. Company Highlights

2. BP's Strong 2025 Performance Driven by Operational Excellence

BP reported a robust financial performance for the full-year 2025, with an underlying replacement cost profit or net income of $7.5 billion, supported by operating cash flow of $24.5 billion. The company's adjusted free cash flow grew by around 55% in 2025 on a price-adjusted basis to $13 billion. The earnings per share (EPS) came in at $0.07328, slightly beating the estimated $0.07282. The company's return on average capital employed (ROACE) improved to around 14%, up from 12% in 2024, driven by its operational performance and cost management.

Publication Date: Feb -12

📋 Highlights
  • Profitability & Cash Flow:: Underlying replacement cost profit of $7.5 billion, driven by $24.5 billion operating cash flow and 55% adjusted free cash flow growth to $13 billion.
  • Capital Efficiency:: Return on average capital employed rose to 14% (from 12% in 2024), with $2.8 billion of $5.5–6.5 billion structural cost reductions achieved since 2025.
  • Debt Reduction:: Net debt fell to $22.2 billion (down $800 million YoY) and targets a $14–18 billion range by 2027, with $15 billion debt reduction plans.
  • Strategic Execution:: 7 major projects commissioned, 90% reserves replacement ratio, and 37% reduction in operational emissions vs. 2019 (vs. 20% target).

Financial Highlights and Guidance

BP's net debt was $22.2 billion at the end of 2025, $800 million lower than at the end of 2024. The company has made significant progress on its strategic plan, including starting up 7 major projects and achieving a reserves replacement ratio of 90%. BP's primary targets include adjusted free cash flow growth, return on capital employed, cost reductions, and strengthening the balance sheet. The company aims to deliver $5.5 billion to $6.5 billion of structural cost reductions by 2027 and targets a net debt range of $14 billion to $18 billion by the end of 2027.

Operational Performance and Future Plans

The company has a high-quality pipeline of major projects, including Kaskida and Tiber-Guadalupe in the Gulf of America, Shah Deniz Compression in Azerbaijan, and Tangguh UCC in Indonesia, expected to add 250,000 barrels of oil equivalent per day of higher-margin net peak production. BP's operational emissions in 2025 were 37% less than in 2019, exceeding their 20% target, and methane intensity fell to 0.04%, below the 2025 target of 0.2%. The company achieved record plant reliability of over 96% and well reliability of almost 98%.

Valuation and Dividend Yield

Analyzing BP's valuation metrics, the current P/E Ratio stands at 64.45, indicating that the market has high expectations for the company's future growth. The Dividend Yield is 5.2%, which is attractive for income-seeking investors. The EV/EBITDA ratio is 4.47, suggesting a relatively reasonable valuation compared to its earnings before interest, taxes, depreciation, and amortization. With a ROE of 2.82% and ROIC of 3.12%, BP is working on improving its profitability.

Growth Prospects and Investment Case

Gordon Birrell mentioned during the earnings call that there are reasons to believe in the company's short-term, medium-term, and long-term prospects, including a strong base, BPX growing to 650,000 barrels per day, and a large Paleogene opportunity. Analysts estimate next year's revenue growth at 7.1%, indicating a positive outlook for the company's top-line performance. With its strong operational performance, cost reduction efforts, and exciting growth prospects, BP is well-positioned to deliver value to its shareholders.

3. NewsRoom

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Assessing BP (LSE:BP.) Valuation After Recent Share Price Weakness And A Rich P/E Multiple

Jan -07

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BP (BP) Stock Sinks As Market Gains: Here's Why

Jan -06

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Energy & Utilities Roundup: Market Talk

Jan -06

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Transocean's New Deals in Brazil & Norway Add $168M to Firm Backlog

Jan -06

Source: zacks.com

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TechnipFMC Secures Major iEPCI Contract for BP's Tiber Field

Jan -06

Source: zacks.com

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Energy & Utilities Roundup: Market Talk

Jan -06

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Is BP (LSE:BP.) Offering Value After Mixed Returns And Conflicting Valuation Signals?

Jan -06

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Evercore ISI shifts oil stock ratings as SLB upgraded and peers cut

Jan -06

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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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Repsol

A-Score: 7.1/10

Value: 8.0

Growth: 5.6

Quality: 2.6

Yield: 8.8

Momentum: 9.5

Volatility: 8.3

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PKN ORLEN

A-Score: 7.1/10

Value: 8.9

Growth: 3.3

Quality: 5.0

Yield: 8.1

Momentum: 10.0

Volatility: 7.0

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Eni

A-Score: 7.0/10

Value: 7.3

Growth: 4.8

Quality: 3.4

Yield: 8.8

Momentum: 8.0

Volatility: 9.7

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Equinor

A-Score: 6.7/10

Value: 8.4

Growth: 6.0

Quality: 5.3

Yield: 7.5

Momentum: 5.5

Volatility: 7.3

1-Year Total Return ->

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BP

A-Score: 6.0/10

Value: 6.3

Growth: 2.9

Quality: 2.7

Yield: 8.1

Momentum: 8.5

Volatility: 7.7

1-Year Total Return ->

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Shell

A-Score: 5.8/10

Value: 7.6

Growth: 4.1

Quality: 4.7

Yield: 6.2

Momentum: 3.0

Volatility: 9.3

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

4.74$

Current Price

4.74$

Potential

-0.00%

Expected Cash-Flows