From Breakingviews - BP strategy is still caught between two stools
on Tuesday recorded a stellar 30.5% return on average capital employed. Yet Chief Executive Bernard Looney presides over a company that trades on less than 3 times forecast 2023 EBITDA and has underperformed its big oil major rivals since he was unveiled as boss in February 2020. His solution is to do what higher-valued U.S. oil groups like Exxon MobilIn fairness, Looney is still planning to sign off on 50 gigawatts of wind and solar investments by 2030.
BP shares rose 5% on the news. But apply Exxon’s 2025 multiple to the $49 billion of EBITDA Looney now thinks he could make in the same year, and his market capitalisation should exceed $300 billion, or three times its current level. The reason that probably won’t happen any time soon is that BP is still planning to cut oil production and hike non-fossil fuel investment more than American rivals.
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