A reset bp
bp today introduced a fundamentally reset strategy, with significant capital reallocation, and plans to drive improved performance, aimed at growing free cash flow, returns and long-term shareholder value.
Strategy fundamentally reset: reducing and reallocating capital expenditure, significantly reducing costs and driving improved performance – to grow cash flow and returns – supporting a stronger balance sheet and resilient distributions.
Growing upstream: increasing oil & gas investment to ~$10bn p.a.; strengthening portfolio; growing production to 2.3–2.5mmboed in 2030; additional ~$2bn operating cash flow in 2027.
Focusing downstream: reshaping portfolio to drive growth; high-grading and focusing on advantaged and integrated positions; announced strategic review of Castrol; driving improved performance; additional $3.5–4bn operating cash flow in 2027.
Disciplined investment in the transition: selective investment in biogas, biofuels and EV charging; capital-light partnerships in renewables; focused investment in hydrogen/CCS; investment in transition businesses of $1.5–2bn p.a., over $5bn p.a. lower than previous guidance.
Updated financial frame: reducing annual capex to $13–15bn to 2027; targeting significantly higher structural cost reductions of $4–5bn by end 2027; $20bn divestments by 2027, including potential proceeds from Lightsource bp and strategic review of Castrol; reducing net debt, targeting $14–18bn by end 2027; resilient shareholder distributions, guidance of 30–40% of operating cash flow.
Growing free cash flow and returns: targeting >20% compound annual growth in adjusted free cash flow to 2027, and returns on average capital employed of >16% by 2027.
“This is a reset bp, with an unwavering focus on growing long-term shareholder value.”Murray Auchincloss, chief executive officer, bp
This strategy will see bp grow its upstream oil and gas business, focus its downstream business, and invest with increasing discipline into the transition. It builds on bp’s distinct strengths and competitive advantages as an integrated energy company – with a world-class portfolio with top tier oil and gas businesses in attractive basins and leading integrated positions and brands across value chains, all underpinned by trading, technology, and partnerships.
Chief executive Murray Auchincloss said: “Today we have fundamentally reset bp’s strategy. We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency. This is all in service of sustainably growing cash flow and returns.
“We will grow upstream investment and production to allow us to produce high margin energy for years to come”Murray Auchincloss, chief executive officer, bp
“We will grow upstream investment and production to allow us to produce high margin energy for years to come. We will focus our downstream on markets where we have leading integrated positions. And we will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a reset bp, with an unwavering focus on growing long-term shareholder value.”
Helge Lund, bp’s chair, added: “The board believes that this is an important strategic reset for bp and is confident that it, together with rigorous performance management, will deliver improved performance and sustainable value for bp’s shareholders. Over the past 12 months, we have worked closely with Murray and his team as they have developed the new direction, ensuring it reflects the significant changes we have seen in energy markets and our purpose of delivering energy to the world today and tomorrow. This new direction places free cash flow growth, returns and value at its heart.”
Financial highlights
Together these are expected to strengthen bp’s balance sheet, increase efficiency and support higher returns.
Reducing capital expenditure: total capex of $13–15bn p.a. to 2027 – $1–3bn lower than in 2024; expected to be ~$15bn in 2025.
Reallocating capital expenditure to higher-growth: increasing oil & gas investment to ~$10bn p.a.; transition investment1 $1.5–2bn p.a., >$5bn p.a. lower than previous guidance.
Reducing costs: significantly increasing target to $4–5bn of structural cost reductions2 by end 2027.
New divestments: targeting $20bn announced by end 2027; proceeds from strategic review of Castrol and bringing partner into Lightsource bp to be dedicated to strengthening balance sheet.
Reducing net debt: over time, targeting a range of $14–18bn by end 2027.
Distributions: guidance of 30–40% of operating cash flow to shareholders, over time, through share buybacks3 and a resilient dividend – which is expected to increase by at least 4% per ordinary share a year, subject to board discretion4. Share buybacks are expected to be announced at time of quarterly results. Subject to board approval, bp expects the share buyback for 1Q 2025 to be $0.75-1.0bn.
bp mostly produces, trades and sells oil and gas, alongside transition activities such as EV charging, bioenergy and renewables that are a much smaller but key part of our business.
Primary targets
bp is introducing four primary targets the delivery of which will underpin growth in the value of bp:
Subject to board approval, these targets will form part of the basis for internal performance management and remuneration measures through to 2027. All previous aims and targets have now been retired.7
Growing free cash flow5
with compound annual growth of greater than 20%, 2024–2027.6
Reducing net debt
targeting $14–18bn by end 2027.
Increasing cost reduction target
with structural cost reductions of $4–5bn by end-2027.
Generating higher returns
with group return on average capital employed above 16% in 2027.6
Reset strategy highlights:
Growing upstream:Increasing investment in oil and gas: ~$10bn p.a. through 2027, with expected returns >15%.
Strengthening portfolio: access to discovered resources, reloading exploration hopper.
10 new major projects to start up by end 2027, and a further 8–10 by end 2030.
Growing production8, expected to grow to 2.3–2.5mmboed in 2030 with capacity to increase to 2035.
Reserves replacement ratio10 of ~100% by end 2027.
Disciplined expansion in biogas.
Structural cost reductions of ~$1.5bn expected to be safely delivered by end 2027.
Growing cash flow: upstream cash flow8,9 expected to increase by ~$2bn by 2027.
Focusing downstream:Focusing portfolio around bp’s core integrated positions.
Focusing investment to ~$3bn by 2027.
Strategic review of Castrol announced.
High-grading mobility network, marketing Gelsenkirchen refinery, selective investment in EV charging and biofuels growth markets.
Taking clear actions to improve performance
Expect to safely deliver ~$2.0bn structural cost reductions across downstream portfolio.
Focused customers growth from bp’s most advantaged and integrated businesses.
Expect to consistently improve refining availability to 96%.
Realising value and growth from acquisitions of bp bioenergy and TravelCenters of America
Expected returns of >15%.
Growing cash flow: downstream operating cash flow8,11 expected to increase by $3.5–4bn by 2027
Disciplined investment in the transition:
Focused on returns, fewer higher-returning opportunities, accessing growth more efficiently,
Focused investment in biogas, biofuels and EV charging: driven by returns – high grading projects, leveraging existing infrastructure, focusing on fewer key markets.
Capital-light in low carbon energy: growing top tier offshore wind and solar platforms in capital light way for bp; limited further projects in hydrogen and carbon capture; delivering trading upside and optionality for future growth.
Reducing costs: annual structural cost reduction of >$0.5bn in low carbon energy by 2027.
Significantly lower capex into transition businesses: total capex in transition businesses3 $1.5–2bn p.a. – over $5bn p.a. lower than previous guidance – with average of less than $0.8bn p.a. in low carbon energy.
Focused sustainability aims:bp has reduced scope 1 and scope 2 emissions within its operational control by ~38% against its 2019 baseline – beyond its target of 20% in 2025 – and embedded sustainability into several key areas and management processes.
bp’s 2030 aim is now reduction of these operational emissions in a range of 45–50% against the 2019 baseline.
bp is now focusing its sustainability aims on those most relevant to the long-term success of its businesses and to its net zero ambition.
Five refreshed sustainability aims: net zero operations; net zero sales; people; biodiversity; and water. Some previous aims are embedded into existing management systems and processes.