BP plc, a European integrated energy major, has shown promising signs of growth despite facing challenges in the energy market. The company's stock has seen a 7% increase this year, currently trading at around $38 per share. Despite a decline in underlying replacement cost operating profit in FY 2023, BP remains optimistic about its long-term prospects.
In Q4 2023, BP reported a 25% y-o-y decline in revenue, attributed to lower product and crude prices. The company's adjusted EPADS stood at $1.07, with a significant 96% y-o-y decline in Q4 profits. However, BP announced a share buyback program totaling $1.75 billion for Q4 and committed to $3.5 billion for the first half of FY 2024, aiming to support its stock price.
BP's net debt decreased to $20.9 billion by the end of 2023, the lowest level in a decade. The company plans to buy back shares worth at least $14 billion by 2025. Additionally, OPEC+ has extended oil production cutbacks through the first half of 2024 to stabilize prices amid weaker global demand.
Despite underperforming the S&P 500 in 2023, BP expects both reported and underlying upstream production to increase slightly in 2024. The company forecasts revenues of $205.3 billion for 2024, with an expected EPS of $4.74. Based on these projections, BP's valuation is estimated at $42 per share, representing an 11% premium from the current market price.
BP's strategic shift towards renewable energy includes investments in charging stations, biofuels, hydrogen fuels, and fueling stations. The company aims to be a net-zero company by 2050 and has set ambitious targets for renewable energy capacity by 2025 and 2030. BP's CEO plans to position the company as a key player in clean energy, distinguishing it from competitors like Shell.
As BP continues to navigate market challenges and invest in sustainable energy solutions, its performance and strategic initiatives will be closely monitored by investors and industry analysts.
