BP (BP) shares gave it both barrels today as the company’s controversial switch back to fossil fuels seems to have paid off.
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Bread and Butter
The oil giant, whose shares climbed 2%, said today that it expects to report a hike in oil and gas production for the second quarter. It said upstream production is now expected to be higher between April and June, compared with the previous three months.
This follows the company’s decision to shift its strategy away from renewable energy and back to its traditional ‘bread and butter’ of oil and gas following intense pressure from activist investor hedge fund Elliott Management.
BP had been eager to become a green energy giant, including an ambition to cut its hydrocarbon output by 40% this decade. However, its share price has suffered dropping over 10% in the last 12 months. That compares badly with rivals such as Shell (SHEL).
Not So Oil Slick
The strategy shift has, however, proved to be controversial with the company’s recent AGM sparking protests both outside and inside the venue. About a quarter of the shareholders of the oil giant voted against the reappointment of Chairman Helge Lund which was the first time in around a decade that over 10% had voted against the person in the top board seat.
The embracing of oil has also come at a time when the price of the black stuff has ebbed and flowed. This volatility is down to President Trump’s tariff policies but also recent conflicts in the Middle East.
Indeed, BP warned that today that despite higher production numbers, lower prices were expected to impact earnings by up to $800 million.
It could also see lower prices for gas weigh on earnings by up to $300 million.
However, net debt at the end of the second quarter was expected to be slightly lower compared with the end of the first quarter.
Is BP a Good Stock to Buy Now?
On TipRanks, BP has a Hold consensus based on 3 Buy, 8 Hold and 1 Sell ratings. Its highest price target is $35. BP stock’s consensus price target is $31.28 implying a 0.76% downside.
