Moving BP from rhetoric to action on capital discipline

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Executive Summary

Under pressure due to consistent underperformance, BP used its 2025 Capital Markets Day to announce it had “fundamentally reset” its strategy, with the CEO pledging “comprehensive action to grow long-term shareholder value”.^[1] The company outlined a more “disciplined” approach to its low-carbon business, substantially reducing low-carbon capex to below USD 800 million per year, while simultaneously increasing upstream capex from USD 8.5 to USD 10 billion p.a and increasing exploration.^[2]

The market reaction, along with a historic protest vote against outgoing chair Helge Lund, suggests shareholders are unconvinced that BP’s “reset” addresses the root causes of its underperformance. Questions remain about how higher upstream and exploration capex can be squared with the company’s stated commitment to growing shareholder value.

Our analysis shows that BP’s recent upstream investments have provided limited value for shareholders. BP’s high oil price assumptions increase the risk of sanctioning projects that could erode value. With exploration success rates declining and discovery costs rising, an increase in exploration capex appears to be an unlikely route to value.

We find that 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 are asking for.

Key findings

• BP’s total shareholder returns (TSR) have underperformed both the market and its peers over three, five, ten and 15 years.
• 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.
• The Tiber project, a $5 billion deepwater development in the United States sanctioned by BP in September 2025, is more expensive than 81% of competing oil supply that can reach Final Investment Decision (FID) before 2035.
• 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% less.

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