What’s New With BP Stock?

BP plc stock (NYSE: BP) is up around 7% year-to-date, slightly outpacing the S&P 500’s 2% gain. Trading at approximately $32 per share, the British oil major appears cheap on a relative valuation basis – but the underlying narrative is far more nuanced. Strategic shifts, mixed earnings, and evolving energy ambitions make BP a stock investors should look at with both caution and curiosity. That said, with energy prices currently trending higher, BP’s sizable upstream footprint and renewed emphasis on oil and gas position it well for a potential rebound. Also see What’s Fueling Oil Prices?. We discuss more below. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P and clocked >91% returns since inception.

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Mixed Results Amid Strategic Flux

BP’s Q1 performance reflected the company’s ongoing tug-of-war between its legacy oil business and ambitions in low-carbon energy. The oil production and operations segment showed resilience, with higher production volumes and realizations lifting replacement cost profit before interest and tax. Customers & Products also benefited from stronger realized margins. However, the Gas & Low Carbon segment delivered a weaker underlying result, hit by soft gas marketing and trading and declining production. BP’s overall Q1 underlying replacement cost profit came in at $1.38 billion—well below analyst expectations of $1.6 billion and down sharply from $2.7 billion a year earlier.

Lower Upstream Outlook

Looking ahead to 2025, BP expects lower upstream production due to asset divestments in Egypt and Trinidad. Refining and fuel margins also remain under pressure , and a strong U.S. dollar continues to weigh on earnings, given that most commodity sales are dollar-denominated. Although BP has three new start-ups and six discoveries in the pipeline, overall production is forecast to decline this year. The company’s pivot back toward hydrocarbons earlier this year included cutting its planned renewable investments from $5 billion annually to just $1.5–$2 billion, while boosting oil and gas capex to $10 billion per year.

The strategic shakeup also includes executive changes—Giulia Chierchia, EVP of strategy and sustainability and a key driver of BP’s green pivot, will depart in the coming months. Her exit further signals a return to traditional energy priorities.

Valuation: A Discount?

From a valuation standpoint, BP looks attractive. The stock trades at a price-to-sales ratio of just 0.4x – about 20% to 30% below its five-year average. In contrast, integrated oil majors like Exxon Mobil (NYSE: XOM), Chevron Corporation (NYSE: CVX), and Shell PLC (NYSE: SHEL) command far richer P/S multiples between 0.7x and 1.3x. The discount reflects investor caution over BP’s shifting strategy, weaker earnings, and structural headwinds. But it also creates room for upside if execution stabilizes. See our analysis BP Valuation for more details on what’s driving our price estimate for the stock.

Strategy Shift: Back to Black Gold

BP’s strategy has seen sharp swings in recent years. Back in 2020, the company made headlines with an ambitious plan to cut oil production by 40% and rapidly ramp up investments in renewable energy. But as oil prices rebounded and returns from renewables lagged, investor pressure mounted, prompting BP to rethink its approach.

Today, the company is pivoting back to fossil fuels, aiming to increase oil and gas output to 2.5 million barrels of oil equivalent per day by 2030, up from just under 2.4 million last year. That shift puts BP on a different path from its U.S. counterparts. ExxonMobil, for instance, is pouring $140 billion into optimizing high-margin assets and cutting structural costs—targeting $20 billion in added earnings and $30 billion in free cash flow by 2030. Chevron, too, is banking on operational efficiency, expecting $10 billion in additional free cash flow by 2026. Both are taking a more selective, return-focused approach to lower-carbon investments, with projects in carbon capture, hydrogen, and biofuels.

M&A Chatter Unlikely – For Now

Despite chatter about BP being a potential M&A target, a takeover appears unlikely. The company carries a hefty $60 billion (as of Q1) in debt, partly a legacy of the Deepwater Horizon disaster. That debt load, along with U.K. regulatory scrutiny, makes an acquisition unattractive for U.S. supermajors that prize financial flexibility.

Hydrogen Plays Still On the Table

Even with a pullback in renewables, BP hasn’t entirely shelved its clean energy ambitions. Hydrogen remains a focus. BP plans to develop 5–7 hydrogen and carbon capture projects worldwide. This includes partnerships with Iberdrola for a 25-megawatt green hydrogen project in Spain and Cummins for a 100-megawatt electrolyzer in Germany, expected to produce 11,000 tons of green hydrogen annually by 2027. BP is also developing H2Teesside, one of the U.K.’s largest planned blue hydrogen facilities.

The Bottom Line

BP’s strategic reset may not excite ESG-focused investors, but for those with a value mindset, the stock’s depressed valuation presents an intriguing setup. At $32 and trading at a significant discount to peers, BP offers potential upside, provided the company can execute on its more focused, oil-forward strategy. Trefis collaborates with Empirical Asset Management—a Boston area wealth manager—whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio into its asset allocation framework to provide clients with better returns and less risk compared to the benchmark index—a less turbulent ride, as shown in HQ Portfolio performance metrics.