What’s Happening With BP Stock?
BP plc stock (NYSE: BP) is up roughly 15% year-to-date, slightly outpacing the S&P 500’s 12% gain. The stock has grabbed attention recently with a major oil discovery at the Bumerangue prospect offshore Brazil—its largest in about 25 years, estimated at 2–2.5 billion barrels. Additionally, a preliminary deal with Egypt’s EGAS could see five deepwater gas wells developed in the Mediterranean, tied into existing infrastructure.
Trading around $34 per share, BP’s headline performance looks attractive, but the underlying story is more nuanced. Strategic pivots, mixed earnings, and evolving energy ambitions suggest the stock calls for both caution and curiosity. With energy prices trending higher, BP’s sizable oil and gas operations—and renewed focus on upstream production—could provide a foundation for a potential rebound. We dive deeper into the details below.
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Q2 2025 Results: Mixed but Resilient
BP posted Q2 underlying profit of $2.4 billion, down year-on-year but above expectations, as strong trading and fuels margins offset weaker upstream realizations. Segment results were mixed: Gas & Low Carbon Energy rose on stronger trading and volumes, Oil Production & Operations fell on weaker realizations and higher depreciation, and Customers & Products grew on fuel margins and oil trading.
Looking ahead, upstream production is expected to dip slightly, while downstream benefits from seasonal demand and fewer turnarounds. BP maintains at least 4% annual dividend growth and plans to distribute 30–40% of operating cash flow, signaling a continued focus on shareholder returns.
Valuation: A Discount?
BP trades at roughly 0.5x price-to-sales (P/S). Historically, the stock’s P/S ratio has ranged between 0.24x and 0.80x, meaning BP is trading below its recent norm—but not at an extreme discount.
Compared with peers, BP looks even cheaper. Exxon Mobil (NYSE: XOM), Chevron Corporation (NYSE: CVX), and Shell PLC (NYSE: SHEL) trade at P/S multiples between 0.7x and 1.5x. The lower multiple shows investor caution around BP’s strategic shifts and mixed earnings. But if the company executes upstream projects, divestments, and disciplined cash returns effectively, the stock could see meaningful upside. Still, commodity price swings and regulatory risks remain important factors to watch.
Strategic Pivot: Oil & Gas Takes Center Stage
BP is dialing back renewables and doubling down on oil and gas, responding to shareholder pressure for higher cash returns. U.S. onshore wind assets have been sold, and about $5 billion trimmed from the clean-energy pipeline. Activist investor Elliott Management has pushed for stronger free cash flow, cost discipline, and more aggressive capital returns. BP is streamlining operations—cutting workforce, divesting lower-return assets, and focusing on upstream production.
This marks a sharp turnaround from 2020, when BP aimed to cut oil output by 40% and accelerate renewables. As oil prices rebounded and renewable returns lagged, the company pivoted back to fossil fuels. BP now targets 2.5 million barrels of oil equivalent per day by 2030, up from just under 2.4 million. Meanwhile, peers like Exxon and Chevron pursue high-margin oil while selectively investing in carbon capture, hydrogen, and biofuels—balancing returns with the energy transition.
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.
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