BP "Deleveraging begins - 2Q26 Trading Update" (Buy) Stone

Research evidence excerpt

BP "Deleveraging begins - 2Q26 Trading Update" (Buy) Stone

Lower 12/27E 0.67 0.68 1 0.68

upstream production q/q was in line. Our EBIT estimate increases by 18% to $2bn. 12/28E 0.71 0.72 1 0.64

Joshua Stone

Customers & Products - better oil trading, stronger margins

Analyst

Indications of a 'slightly higher' q/q contribution from oil trading were above our joshua.stone@ubs.com

expectations given last quarter was 'exceptional'. The impact of stronger realised +44-20-7901 5588

refining margins (+$1.2-1.4bn) was in line with our expectation (~$1.3bn) with some Henri Patricot, CFA

downtime at Whiting driving throughput slightly lower q/q. Within customers, volumes Analyst

are expected to be seasonally higher with better fuels margins and a sustained good henri.patricot@ubs.com

contribution from midstream. The net result is a 42% increase of our estimate to $5bn, +33-14-888 3033

led mainly by oil trading. Ellinor Cederstroem Palliotto

Associate Analyst

Net debt declines q/q, but there are more low carbon impairments ellinor-cederstroem.palliotto@ubs.com

BP highlights net debt to be '$22-23bn' vs UBSe of $24.8bn, helped by the strong cash +44-20-7567 1823

generation. The implication is a 4.0pp decrease of gearing (ND/Cap on UBS definition) to

43.4%. Alongside the release, BP highlighted $1bn of impairments primarily within the

transition businesses of the GLC segment.

Valuation: Buy, PT 675p/sh

Our price target is set on a 50/50 blend between a SOTP and multiples approach, using a

long-run oil price of $75/bl and EV/DACF multiple of 6.0x.

Highlights (US$m) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Net earnings (UBS) 13,836 8,915 7,485 14,776 10,550 11,103 12,359 13,194

EPS (UBS, diluted) (US$) 0.78 0.53 0.47 0.95 0.68 0.72 0.80 0.85