BP Rg (BP/ LN)

Global Markets Comment

BP has a robust financial proposition prioritised by a planned dividend policy, de-leverage and energy transition investment, hydrocarbon investments and share buybacks. Following deleveraging to a targeted$35bn net debt, at least 60% of surplus cashflow will be utilized in the form of share buybacks and BP expects to reach this point by end 2021/early 2022. Dividends are also planned to stay fixed at 5.25c/share. We expect vaccine news to support oil prices heading into 2021 and are positive on the energy transition BP is embarking on.

Performance since inception*

Company Profile

BP plc (formerly The British Petroleum Company plc and BP Amoco plc) is a British multinational oil and gas company headquartered in London, England. It is a vertically integrated company operating in all areas of the oil and gas industry, including exploration and production, refining, distribution and marketing, power generation and trading. It also has renewable energy interests in biofuels, wind power, smart grid and solar technology.

Price History 1 year

Investment Case

BP appears to be on track as it rolls out its strategic reset. Management expects cash earnings to grow at 5-6% CAGR from 2020-2025 while cutting capex in its hydrocarbon business to ~$9bn on average over 2020-2025 (down from $13bn in 2019). FCF will be used to fund a dividend fixed at 5.25c/share, investments in renewables and a share buyback program with 60% of FCF that will be completed by early 2022. We expect oil prices to normalize as the economy recovers from the COVID-19 pandemic which should provide support for BP’s share price

Price History 5 years

Risk in Investment Case

Key downside risks for BP are 1) lower oil prices (<$30/bbl) and benchmark spreads 2) Loss of Rosneft value where it holds around 20% stake 3) risk of large-scale industrial accidents taking place given BP’s history

Hong Kong & Singapore Private Clients

PLEASE READ THESE TERMS AND CONDITIONS CAREFULLY BEFORE PROCEEDING. BY UTILIZING THE WEBSITE AND PAGES THEREOF LOCATED AT WWW.UBS.COM ("WEBSITE"), YOU ACKNOWLEDGE THAT YOU HAVE READ THESE TERMS AS WELL AS THE GLOBAL TERMS OF USE (collectively "TERMS") AND THAT YOU AGREE TO BE BOUND BY THEM. IF YOU DO NOT AGREE TO ALL OF THE TERMS OF THIS AGREEMENT, YOU ARE NOT AN AUTHORIZED USER OF THESE SERVICES AND YOU SHOULD NOT USE THIS WEBSITE.

Investor status

  • Confirm that I meet the requirements to qualify as:
  • a "Professional Investor” in accordance with Section 1 of Part 1 of Schedule 1 of the Securities and Futures Ordinance (Cap 571 of the Law of Hong Kong) and as a “Private Banking Customer” as defined in the circular issued by the Hong Kong Monetary Authority on 12 June 2012; and/ or
  • an "accredited investor" or "institutional investor" as defined in the Securities and Futures Act (Chapter 289) of Singapore

Disclaimer

Content provided on “as is” and “as available” basis

  • Confirm my understanding that the materials, information or reports published, distributed or otherwise made available on the UBS Website
    (a) are published for information purposes only and are subject to change at any time without notice;
    (b) have been created without any regard to the specific investment objectives, financial situation or particular needs of any specific recipient and should not be construed as a solicitation, offer or recommendation or advice to buy or sell any securities, investment or other financial instruments, to effect any transactions or to conclude any legal act of any kind whatsoever.
Reset