BP Capital Markets Day: Analyst Takeaways

BP (LON: BP.) outlined its updated strategy at its Capital Markets Day (CMD) in London last week on February 26, with analysts highlighting a focus back to traditional oil and gas operations, alongside cost-cutting and debt reduction measures.

Goldman Sachs noted that BP’s capital expenditure (capex) plans have been reduced to $13-15 billion annually until 2027, down from a previous $14-18 billion forecast through 2030. 

The company is also reallocating spending towards upstream production, with $10 billion per year earmarked for oil and gas projects by 2027—up from $8.5 billion—while investment in transition businesses is set to fall significantly. 

BP expects production to rise to 2.3-2.5 million barrels of oil equivalent per day (mmboed) by 2030, compared to 2.36 mmboed in 2024, driven by 10 new major projects by 2027 and up to 10 more by 2030.

The company also aims to reduce net debt to $14-18 billion by 2027 from $23 billion at the end of 2024, supported by $20 billion in planned divestments, including potential proceeds from Lightsource bp and a strategic review of Castrol lubricants.

Barclays described BP’s approach as a “Back to Petroleum” strategy, noting that cost reductions of $4-5 billion by 2027 and upstream growth should drive more than 20% free cash flow (FCF) growth annually until 2027. 

“BP's re-set strategy refocuses the group on what it does best – delivering oil and gas,” said the bank.

However, it cautioned that BP’s balance sheet gearing may rise initially before falling with asset sales.

Barclays and Goldman Sachs maintained Overweight/Buy ratings on the stock.