BP plans to grow its upstream oil and gas business as it resets its strategy in an effort to increase cash flow and shareholder returns. While the reset is likely positive for its share price in the long run, investors don't seem immediately impressed. They appear to need some convincing that BP can meet its lofty financial targets and boost returns. Below is a selection of analysts' comments:

BP's Strategic Reset Might Not Immediately Please Investors

1126 GMT - BP has taken the right calls for the longer term but its strategic update might not immediately please investors, RBC Capital Markets analysts Biraj Borkhataria and Adnan Dhanani write. The updated strategy and guidance looks in line with expectations given BP had been giving hints about a change in direction over recent months, the analysts write. However, the cut to capital expenditure was less than many investors had expected and over the near term shareholder returns are now lower than peers, they add. The analysts continue to see a better 'risk-reward' profile elsewhere in the sector, they add. BP shares trade down 0.9% at 432.90 pence. (adam.whittaker@wsj.com)

BP's Strategy Reset Could Be Challenged by Sustainability-Focused Investors

1136 GMT - BP's retreat from renewables and doubling down on hydrocarbon assets will be shocking but not surprising to sustainability-focused investors, Lindsey Stewart at Morningstar Sustainalytics writes. Still, this won't be the end of the sustainability debate, Stewart writes. Several shareholders voted against the company's chair the last time BP reduced its commitment to energy-transition investment, and it could happen again this year, he writes. 48 investors have already requested a vote at its upcoming AGM on any rollback on climate investments and targets. Shares trade down 0.8% at 433.45 pence. (adam.whittaker@wsj.com)

BP's Strategy Update Should Eventually Boost Shares

1206 GMT - BP's new strategy appears more shareholder-friendly and should be positive for the stock over time, Berenberg analysts write in a note. The slightly negative reaction to the share price immediately after the announcement is not surprising given high expectations and strong performance leading up to the update, they write. BP's debt reduction targets appear a little light relative to the analysts' expectation, particularly as the company is ramping up divestments significantly, they write. The timing of BP's $20 billion divestment proceeds remains to be seen, they add. Targets for free cash flow and return on average capital employed appear ambitious and will require better operational delivery in addition to cost- and capex-cutting initiatives, the analysts add. Shares trade down 0.9% at 432.95 pence. (adam.whittaker@wsj.com)

BP Investors Need Convincing Its Strategy Reset Can Work

1258 GMT - BP's strategic reset contains lofty financial goals and the market reaction suggests investors need some convincing these can be achieved, head of equity research at Hargreaves Lansdown Derren Nathan writes. Investors don't seem that impressed by the suggestion of lower-than-expected buybacks in the short term, he adds. Restructuring its downstream operation, selling off the Gelsenkirchen refinery and potentially disposing of automotive lubricant-maker Castrol will make the company leaner, he writes. This should go some way toward satisfying activist shareholder Elliott Management which has reportedly called for divestments, Nathan writes. Shares trade down 0.8% at 433.30 pence.(adam.whittaker@wsj.com)

BP's New Strategy Looks Like Reset Investors Had Been Waiting for

1359 GMT - BP has delivered what looks like the fundamental reset investors have been waiting for, HSBC's Kim Fustier writes. Most of BP's numbers are in line with HSBC's forecasts, but guidance on buybacks is a little lower than expected and BP's net debt target, even after $20 billion of disposal proceeds, is higher than the bank had expected. It is good that BP's total capex guidance is lower than expected, Fustier adds. Shares trade down 1.5% at 430.70 pence.(adam.whittaker@wsj.com)

(END) Dow Jones Newswires

February 26, 2025 09:21 ET (14:21 GMT)

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