BP plc BP is pivoting away from its aggressive emission reduction goals as it scrapped plans to cut oil and gas production by 2030, per a Reuters report.
The U.K.-based energy giant aims to increase production, particularly in the U.S. Gulf of Mexico and the Middle East, as part of a renewed focus on core hydrocarbons. This shift signals BP's response to investor pressures and the realities of energy security, with profitability in oil and gas taking precedence over short-term emissions cuts.
Under CEO Murray Auchincloss, BP's updated strategy (set to be unveiled in February 2025) will officially remove the 2030 production target that was once a key pillar of its green transition. BP had initially pledged to cut output by 40% and aggressively expand its renewables by the end of the decade. However, by 2022, it already scaled back that ambition, revising the goal to a 25% cut, leaving it to produce 2 million barrels per day.
Auchincloss emphasized that BP will "pragmatically adapt" to energy demand while prioritizing shareholder returns. The company remains committed to its long-term net-zero target by 2050 but is refocusing on higher-profit oil and gas ventures to satisfy investors seeking near-term gains. The energy crisis triggered by Russia's invasion of Ukraine has reinforced the importance of affordability and energy security in the industry.
BP has approved investments in oil, with its upcoming Kaskida project in the U.S. Gulf of Mexico set to begin production in 2029. This marks BP's sixth production hub in the region, capable of producing 80,000 barrels of oil per day. The company is committed to ensuring energy reliability while navigating the shifting landscape of energy demand.
BP’s strategic pivot mirrors moves by rivals like Shell plc SHEL, whose CEO Wael Sawan also moderated the company's energy transition goals, scaling back projects in renewables and selling off related assets. Shell's new approach focuses on profitable operations, primarily in oil and gas, and reflects growing uncertainty surrounding the pace of the global energy transition.
SHEL’s current plan aims for a 15-20% reduction in carbon intensity by 2030, down from the previous 20% goal. The company has also sold off some renewable and power businesses, focusing instead on maintaining profitability in its core oil and gas sectors.
As Europe's oil majors recalibrate their strategies, it has become clear that the road to net-zero may involve a slower and more cautious approach, with hydrocarbons remaining central to their profitability.
Zacks Rank & Stocks to Consider
BP currently carries a Zack Rank #5 (Strong Sell).
Investors interested in the energy sector may look at some better-ranked stocks that currently sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
MPLX LP MPLX derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.
The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.29. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days. The company has a Value Score of B.
Targa Resources Corp. TRGP is a premier energy infrastructure company. A leading provider of integrated midstream services in North America, the Houston, TX-based operator primarily derives its revenues from gathering, compressing, treating, processing and selling natural gas.
The Zacks Consensus Estimate for TRGP’s 2024 EPS is pegged at $5.90. It has witnessed upward earnings estimate revisions for 2024 in the past seven days.
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