bp has announced a comprehensive reset of its strategy, aimed at enhancing shareholder value through significant capital reallocation and performance improvements. The new strategy focuses on growing free cash flow, returns, and long-term shareholder value.
bp plans to increase its investment in oil and gas to approximately $10 billion per year, with the goal of strengthening its portfolio and boosting production to 2.3-2.5 million barrels of oil equivalent per day by 2030. This growth is expected to generate an additional $2 billion in operating cash flow by 2027.
In the downstream sector, bp is set to reshape its portfolio to drive growth, focusing on advantageous and integrated positions. A key aspect of this strategy is the strategic review of its Castrol business. bp aims to enhance Castrol’s performance, targeting an additional $3.5-4 billion in operating cash flow by 2027. The company is committed to leveraging Castrol’s strong brand and market presence to drive innovation and capture new opportunities in the lubricants market.
bp will also invest selectively in biogas, biofuels, and electric vehicle (EV) charging, while forming capital-light partnerships in renewables. The company’s focus extends to hydrogen and carbon capture and storage (CCS) technologies. bp plans to invest $1.5-2 billion annually in transition businesses, which is over $5 billion lower than previous guidance.
bp’s updated financial framework includes reducing annual capital expenditure to $13-15 billion by 2027 and targeting structural cost reductions of $4-5 billion by the end of 2027. The company plans to divest $20 billion worth of assets by 2027, including potential proceeds from Lightsource bp and the strategic review of Castrol. bp aims to reduce net debt to $14-18 billion by the end of 2027 and provide resilient shareholder distributions, with guidance of 30-40% of operating cash flow.
bp is targeting over 20% compound annual growth in adjusted free cash flow to 2027 and aims to achieve returns on average capital employed of over 16% by 2027. The company’s chief executive officer, Murray Auchincloss, emphasized the unwavering focus on growing long-term shareholder value.
“This is a reset bp, with an unwavering focus on growing long-term shareholder value,” said Auchincloss. “We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency.”
