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2Q24 results indicate that BP is at a crossroads, facing a choice between advancing its transition plans and providing short-term shareholder returns.

Our view

We see BP as a leader in the transition to low-carbon energy due to its ambition and progress so far in building low-carbon offerings. However, recent developments in 2Q raise concerns about this momentum. BP has scaled back its low-carbon initiatives, coupled with a 14% decrease in capital expenditure and up to a 29% reduction in earnings for its Transition Growth Engines in the first half of FY24. The question now is how BP manages the balance between advancing its transition plans and providing short-term shareholder returns.

Investors engaging with BP should ask for:

1) Clarity on BP’s trade-off between shareholder distributions (committed to at least $14bn between FY24-25) and low carbon investment, with BP targeting up to ~50% ($6-8bn) group capex for TGEs by FY25, up from 23% in FY23. 

2) Greater quarterly disclosure on earnings and capex for low carbon business (EV charging, biofuels, renewables & power, hydrogen) to assess transition performance.

3) Better disclosures relating to divested assets. Divestments are likely to continue as a key lever towards its absolute scope 3 target, with 200 kboe/d of capacity flagged for sale by FY30. 

4) Emissions reduction strategies and targets linked to its customer sectors, to drive real world emissions reductions and enable more productive engagement on transition

Key findings