BP is a global energy company with operations in 65 countries. The hydrocarbons production was 2.3mboe/day in 1Q23. The company had LNG portfolio of 19MTPA in 2022. The renewables pipeline was 38.8GW in 1Q23. BP operates 20,700 retail sites. The number of EV points will be increased to 100,000 globally by 2030. The company expands both fossil and renewable energy sources to secure the future production. BP had a 19.75% stake in Rosneft and booked $2.7bn of profit before interest and tax in 2021, while non-cash adjustable loss of $24,033mn was reported in 1Q23 following the decision to dispose the stake. BP reported $5.0bn underlying earnings in 1Q23 and net debt of $21.2bn. The oil price above $60/bbl will likely drive the buybak program. The latest announced buyback program is for $1.75bn.
BP is a global energy company based in the UK. The company's segments include gas & low carbon energy, oil production & operations, and customers & products. The gas & low carbon energy segment comprises its gas and low carbon businesses. Its gas business includes regions with upstream activities that produce natural gas, integrated gas and power, and gas and power trading. Its low carbon business includes solar, offshore, and onshore wind, hydrogen, and carbon capture and storage (CCS) and its share in bp Bunge Bioenergia. The oil production & operations segment comprises regions with upstream activities that produce crude oil. The customers & products segment comprises customer-focused business spanning convenience and mobility, which includes convenience and retail fuels, electric vehicle (EV) charging, as well as Castrol, aviation, and midstream.
The global energy market remains under the influence of several factors: the Ukraine-Russia conflict resulted in the decrease of the energy products supply from Russia to Europe; the Chinese economy's slow recovery post-COVID; high inflation; and interest rates hike. The EIA Oil 2023 medium-term market report forecasts that based on current government policies and market trends, global oil demand will rise by 6% between 2022 and 2028 to reach 105.7 million barrels per day (mb/d) – supported by robust demand from the petrochemical and aviation sectors. Despite this cumulative increase, annual demand growth is expected to shrivel from 2.4 mb/d this year to just 0.4 mb/d in 2028, putting a peak in demand in sight.
- BP is a global energy player, with global operations in over 65 countries
- BP operates in several segments: gas & low carbon energy including gas production and marketing, renewables, and hydrogen expansion; oil production & operations, refining, and bioenergy; customers & products. In customers&products the company aims to double adj EBITDA by 2030 via acceleration of EV charging, via Castrol, aviation, B2B, and midstream businesses selective growth
- BP's business provides sustainable cash flow to maintain investments in fossil maintenance and renewables development. The payback is less than 10 years for upstream oil and refining, and less than 15 years for upstream gas
- BP focuses on shareholder return maintaining a buyback program and stable dividend payout
- BP has a large retail business benefiting from both product diversification and integration of operations from exploration and production to retail distribution
- BP may have exposure to potentially declining oil demand and a weakening oil price environment due to climate change politics and projects the fossil output decline to 1.5mboe/d from 2.2mn boe/d by 2030
- BP may meet high capex needs due to the transformation of the business in favor of renewables
- Divestment of Rosneft will negatively affect BP cash flows with the loss of 15- 20% of pre-tax profit compared to 2021
- High volatility of hydrocarbon demand and prices due to the Ukraine-Russia war and pandemic may remain until 2H23
- Supply chain disruptions in the EV segment and solar panels
- Weakening macro globally with lower demand for hydrocarbons, higher inflation, and slow growth projected
- Geopolitical risks affect the oil market. The sale of BP's stake in Rosneft depends on the Ukraine-Russia war developments
- Cost inflation accelerated which may result in long payback periods for new investments
- The transition to a low-carbon economy will imply developments in policy, law, regulation, technology, and markets. As a result, the company may see a reduction in revenue, profitability, and payback periods for its investments
- The company has to invest in reserves and resources to maintain its production of hydrocarbons, which will depend on the company's ability to find an economically reliable resource base
| Company | RIC | Market Capitalization, $mn | Last reporting year | P/E Fwd 1Y | P/E Fwd 2Y | EV/EBITDA 1Y fwd | EV/EBITDA 2Y fwd | EV/Revenues 1y fwd | EV/Revenues 2y fwd |
|---|---|---|---|---|---|---|---|---|---|
| BP PLC | BP.L | 102,753 | 2022-12-31 | 5.8 | 6.0 | 3.0 | 3.2 | 0.6 | 0.6 |
| TotalEnergies SE | TTEF.PA | 147,108 | 2022-12-31 | 5.5 | 5.9 | 3.3 | 3.6 | 0.7 | 0.7 |
| Eni SpA | ENI.MI | 47,953 | 2022-12-31 | 4.9 | 5.5 | 2.7 | 2.9 | 0.6 | 0.6 |
| Equinor ASA | EQNR.OL | 97,087 | 2022-12-31 | 7.0 | 7.0 | 1.4 | 1.5 | 0.6 | 0.6 |
| Shell PLC | SHEL.L | 202,172 | 2022-12-31 | 6.7 | 6.9 | 3.5 | 3.8 | 0.7 | 0.7 |
| Repsol SA | REP.MC | 19,889 | 2022-12-31 | 3.9 | 5.0 | 2.3 | 2.5 | 0.4 | 0.4 |
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 240,208 | 298,756 | 159,307 | 105,944 | 157,739 | 241,392 | 237,656 | 227,406 | 230,146 |
| Growth | 24% | -47% | -33% | 49% | 53% | -2% | -4% | 1% | |
| EBITDA | 25,375 | 33,046 | 33,737 | 19,987 | 37,147 | 60,362 | 47,468 | 44,671 | 43,254 |
| EBITDA margin | 10.6% | 11.1% | 21.2% | 18.9% | 23.5% | 25.0% | 20.0% | 19.6% | 18.8% |
| Net income | 3,389 | 9,383 | 4,026 | -20,305 | 7,565 | -2,487 | 17,886 | 16,528 | 15,289 |
| Net margin | 1.4% | 3.1% | 2.5% | -19.2% | 4.8% | -1.0% | 7.5% | 7.3% | 6.6% |
| Net debt | 39,007 | 44,459 | 56,481 | 52,399 | 43,566 | 31,586 | 31,586 | 31,586 | 31,586 |
| MktCap | 125,680 | 70,510 | 90,599 | 90,599 | 78,714 | 73,742 | 73,747 |
Historical Multiples
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|---|
| EV/Revenue | 1.1 | 1.2 | 0.9 | 0.5 | 0.4 | 0.5 | 0.5 |
| EV/EBITDA | 5.4 | 14.2 | 5.0 | 2.2 | 2.3 | 2.4 | 2.6 |
| P/E | 31.2 | -3.5 | 12.0 | -36.4 | 4.1 | 4.5 | 5.1 |
