BP plc BP, a leading integrated energy company, is shifting its focus from production volumes to maximizing value through disciplined capital allocation and enhanced cash flow resilience. The company is projected to achieve an 11.4% earnings growth next year, marking a recovery from the expected 23.4% decline this year.
What's Favoring BP Stock?
West Texas Intermediate crude price is trading close to the $70 per barrel mark, proving highly advantageous for BP’s exploration and production endeavors. The energy giant boasts a robust pipeline of significant upstream projects, either operational or set to commence activities this year and beyond.
Furthermore, BP is at the forefront of the energy transition movement, aiming to achieve net-zero emissions by 2050 or sooner. The integrated company is committed to expanding its renewable energy capacity to 20 gigawatts by 2025.
The company, carrying a Zacks Rank #3 (Hold),demonstrates robust involvement in refining and marketing sectors, offering resilience during business disruptions and periods of depressed oil prices. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Risks to BP’s Business
BP is actively divesting certain upstream assets, such as those in Egypt and Trinidad. Although these moves enhance portfolio optimization, they also temporarily reduce production volumes.
Also, having a strong presence in the upstream energy space, the company’s exploration and production operations are exposed to volatility in oil and natural gas prices. Major exploration and production players that are also exposed to commodity price volatility are ConocoPhillips COP, Diamondback Energy, Inc. FANG and Matador Resources Company MTDR.
ConocoPhillips has secured a solid production outlook thanks to its decades of drilling inventories across its low-cost and diversified upstream asset base. The resource base represents the company’s strong footprint in prolific acres in the United States, comprising Eagle Ford shale, the Permian Basin and Bakken shale.
Diamondback Energy, a leading pure-play Permian operator, has reported ongoing enhancements in the average productivity per well in the Midland Basin. Thus, the exploration and production company will likely continue witnessing increased production volumes.
Matador Resources is a well-known exploration and production company with a strong footprint in the prolific Wolfcamp and Bone Spring plays in the oil-rich Delaware Basin.
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