By Nicholas Earl
Shares in BP have risen robustly in today’s trading, with investor sentiment improving towards the energy giant following a bullish earnings forecast.
The FTSE 100 company has seen its share price rise 3.02 per cent to 536.2p per share on the London Stock Exchange in this afternoon’s trading.
This follows the company lifting its target for pretax profits forecasts for the end of the decade at an upbeat capital markets conference in the US yesterday.
It now anticipates gross earnings of between $53-58bn for 2030 – expecting a stronger performance from its fossil fuel businesses, which will deliver between $41-44bn in profits, passing previous estimates of $39-42bn.
Barclays welcomed the update with an optimistic trading note, forecasting that the group shares are worth almost double their current price – analysts calculated that BP’s share price would still represent fair value at 1,000p per share.
BP has suffered from a stagnant share price compared to its rivals, which have posted significant growth in market capitalisation during the commodities boom which fuelled record earnings across the sector last year.
In contrast to rivals, it has not upped oil and gas production targets, and has more robust green goals than US counterparts such as Exxon and Chevron.
Its short-term watering down of pledges to reduce emissions in oil and gas production from 40 per cent to 25 per cent are comparable to Shell’s recent decision to shelve plans for oil and gas production cuts.
But its rhetoric has been focused on being a company transitioning to going green, while others are positioning themselves chiefly as oil and gas companies first, using the war in Ukraine as a justification for boosting fossil fuel production.
This has raised investor concerns over returns on low carbon projects, with the expected uptick in fossil fuel earnings now easing shareholder worries.
It also still expects to complete a $2bn deal with UAE’s National Oil Co to acquire a 50 per cent stake in Israeil gas producer Newmed Energy.
The US event in Denver, Colorado, was the first led by interim chief executive Murray Auchincloss, in his first major public appearance since taking the top position after chief executive Bernard Looney’s dramatic exit last month.
Auchincloss confirmed the energy group’s “strategy, financial frame and net zero ambition are unchanged”.
“BP remains focused on delivering its strategy safely, with disciplined delivery, quarter-on-quarter, to meet 2025 targets and 2030 aims,” he said in a statement.
BP has pledged to spend £18bn on low and zero carbon projects across the UK by the end of the decade.
