Market Welcomes BP’s Announcement of Strategic Course Adjustment on Oil and Gas

BP announced fourth-quarter earnings that exceeded market expectations, but the rally in shares was more likely attributable to the strategic course modifications management announced with the earnings release. The market was most likely celebrating the announced increase in investment in oil and gas and increase in BP’s long-term production targets that imply its 2030 production levels will be higher than previously guided, although still declining, but with growth through 2025. Combined with an increase in investment in its energy transition plays, BP also revised its expected 2030 earnings target higher and reiterated its cash-return framework. The latter should allay any fears over capital discipline or that investments will reduce payouts.