New research: New oil and gas investment will worsen BP’s performance woes

BP’s US$22 billion investment in new conventional oil and gas projects over the past six years has only created US$0.9 billion in shareholder value under forward prices, according to new research from ACCR.

“Moving BP from rhetoric to action on capital discipline” finds BP could be US$11 billion more valuable if it stopped exploration and development relating to conventional oil and gas projects and focused on production only.

BP’s total shareholder returns (TSR) have underperformed both the market and its peers over three, five, ten and 15 years. At its 2025 Capital Markets Day, BP announced a “fundamental reset” of its strategy, pledging to grow long-term shareholder value. The company is reducing capex for its low-carbon energy business to less than $800 million per year, while simultaneously increasing upstream capex from $8.5 to $10 billion p.a and increasing exploration.

The research finds that BP’s conventional oil and gas portfolio awaiting Final Investment Decision (FID) is not cost competitive when compared to global supply. A change to BP’s upstream strategy – in particular, tightening its investment framework and ceasing conventional exploration – offers a more credible path to the value that shareholders expect.

Key Findings:

• BP's $22 billion of conventional greenfield capex sanctioned over the last six years has created limited value for shareholders. The estimated net present value (NPV) of these projects is $0.9 billion under forward prices.
• BP’s conventional pre-FID portfolio is not low on the cost curve. The company’s gas assets are, on average, more expensive than 76% of global pre-FID supply; and its oil assets are, on average, more expensive than 53% of global pre-FID supply.
• We modelled the impact of BP stopping exploration and the sanctioning of conventional projects, finding the company would be $11 billion more valuable and still be a major producer, with 400 million boe in 2050. This suggests BP is more valuable as a production company than as an exploration and production company.
• Globally, conventional exploration has been eroding value since the 1990s. BP's conventional exploration has become less successful, more expensive and less productive.
• BP’s investment framework risks misallocating capital into low value projects. Under BP’s price deck, and assuming no delays or cost overruns beyond Rystad’s estimates, the value of BP's conventional pre-FID portfolio is $6-8 billion. Under forward prices, and adjusting for typical cost and schedule slips, this same portfolio would be worth 80-85% less.

Commenting on the research, Nick Mazan, ACCR Oil and Gas Strategy Lead, said:

“BP has significantly underperformed the sector and market more broadly over the past three, five, 10 and 15 years. Increasing exploration and doubling down on upstream capex is not a turnaround plan, it’s a rerun.

“The $22 billion BP has poured into conventional oil and gas projects over the past six years has delivered limited value to shareholders. If BP was serious about a disciplined approach to capital expenditure, it would extend that discipline to its upstream business.

“Long-term investors want to see BP taking a genuinely disciplined approach to capital allocation to protect shareholder value through the energy transition.

“This research shows that growing upstream capex and expanding exploration is likely to be an irresponsible use of shareholder capital, the opposite of what is required from a 'fundamental reset'.

“BP’s pre-FID portfolio does not sit on the low end of the cost curve. The company’s high oil price assumptions, declining exploration success rates and rising discovery costs all increase the risk that sanctioning new projects could erode value.

“The rationale for continued exploration spending is increasingly unclear. BP’s exploration efforts have grown more expensive and less successful over time, raising serious questions about the value this can deliver for shareholders.”

Cllr Doug McMurdo, Chair of the Local Authority Pension Fund Forum (LAPFF) said:

“As long-term investors in BP, we want to see the company taking a genuinely disciplined approach to capital allocation to protect shareholder value through the energy transition. As part of the company’s ‘fundamental reset’, we expect bp to be able to explain how growing upstream capex and expanding exploration can truly be viewed through the lens of capital discipline.”

Harry Ashman, Senior Engagement Specialist, Robeco said:

“Investors are increasingly scrutinising the resilience of ongoing upstream and exploration spending as the energy transition marches on, and this report supports calls for further capital discipline in the oil and gas sector. It highlights an alternative path that could improve companies’ resilience, increase shareholder returns and reduce emissions. At Robeco, we remain committed to the net-zero transition to benefit our clients and create long-term value while balancing risk, return and sustainability; research like this demonstrates how these aims can be mutually reinforcing.”