Core Viewpoint - BP plc reported first-quarter 2025 earnings that missed expectations due to lower liquid price realizations and weaker refining margins, but the company highlighted new upstream project launches and discoveries that improve its core business outlook [1]. Financial Performance - BP's first-quarter adjusted earnings were 53 cents per American Depositary Share, missing the Zacks Consensus Estimate of 56 cents and declining from 97 cents reported a year ago [2]. - Total quarterly revenues were $47.9 billion, falling short of the Zacks Consensus Estimate of $57.2 billion and down from $49.9 billion reported a year ago [3]. Upstream Projects and Discoveries - BP has commenced production from three key projects: Cypre in Trinidad, Raven infill in Egypt, and GTA in Mauritania and Senegal, which will increase production capacity by 100 thousand barrels per day, contributing to a target of 250 thousand barrels per day by 2027 [5]. - The company made six successful oil and gas discoveries in the Gulf of Mexico, Trinidad, Egypt, and Namibia, enhancing its production outlook [6]. Renewable Energy Initiatives - BP is transitioning to lower-carbon energy solutions, exemplified by its acquisition of Archaea Energy, which captures methane emissions and converts them into renewable natural gas [7]. - The integration of Archaea into BP's "Gas and Low Carbon Energy" segment is a significant part of its energy transition strategy, with expectations for Archaea to become free cash flow positive by 2026 [8]. Divestment Strategy - BP has made progress in divesting non-core assets, completing or signing $1.5 billion in divestment agreements year to date, with a target of $3 billion to $4 billion for the year [9]. - The company has a multi-year divestment program of $20 billion aimed at strengthening its balance sheet, with proceeds helping to reach a net debt target of $14 to $18 billion by 2027 [10]. Stock Performance and Valuation - BP's stock has declined 23.8% over the past year, underperforming the industry average decline of 11.5% and also lagging behind competitors ExxonMobil and Chevron [11]. - The stock is trading at a 2.68x trailing 12-month EV/EBITDA, which is below the industry average of 3.95x, indicating it is not overpriced [14]. Market Outlook - The short-term Wall Street average price target for BP is 33.3% higher than the last closing price of $27.88, with the highest target set at $56, suggesting a potential upside of 100.9% [18].
Should You Stay Invested in BP Stock or Sell it Post Q1 Earnings?