BP shares have fallen about 12% from their 31 March one-year high of £6.09, reversing part of the gains made after the company announced on 17 December that Meg O’Neill would replace Murray Auchincloss as permanent chief executive. The market had initially welcomed the change because it signaled a stronger focus on oil and gas rather than BP’s earlier push toward greener energy. That shift matters because pure oil and gas companies often trade at higher valuations than businesses spending heavily on lower-margin transition projects.
The recent pullback appears to be driven less by company-specific weakness and more by expectations of a possible peace deal between the US and Iran, which could ease tensions in energy markets and put pressure on oil and gas prices in the near term. For BP, that could mean softer earnings over the short run. Even so, the broader case for the new leadership and strategy remains intact, according to the article.
A discounted cash flow analysis is used to estimate BP’s long-term value by projecting future cash generation and discounting it back to the present. Based on that approach, and using a 7.7% discount rate, the stock is described as 49% undervalued at its current price of £5.46. That implies a fair value of around £10.71 per share, well above the current level. If BP’s performance tracks toward those assumptions, the shares could offer substantial upside.
The article argues that BP’s future share price performance will depend mainly on profit growth. Key risks include delays to new upstream projects and any prolonged weakness in oil and gas prices, both of which could weigh on production and margins. However, analysts are still forecasting average annual profit growth of about 10% through the end of 2028, and the author believes that forecast may be conservative.
BP’s first-quarter 2026 results, released on 28 April, are cited as evidence of stronger momentum. Underlying replacement cost profit rose 132% year on year to $3.2 billion from $1.4 billion, while operating cash flow increased 1% to $2.9 billion. The company also reported progress on several upstream projects, including discoveries in Angola and new Gulf of Mexico lease wins. Additional exploration and development activity has been announced in the Nile Delta, Brazil and Azerbaijan.
Overall, the article presents BP as a company that is refocusing on fossil fuel projects to support stronger profits and cash flow in the years ahead. That, it says, should help lift the share price toward fair value and support higher dividends. Based on that view, the author says they plan to buy more BP shares.
