BP to outline strategy after debt reduction outpaces target

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BP strategy after debt reduction

Highlights

BP expects net debt to fall to $13.5 billion–$14.5 billion by end-September, surpassing its previous target of $14 billion–$18 billion by end-2025.
BP posts nearly $9 billion in adjusted first-half profit versus $3.7 billion last year, with free cash flow over $7 billion due to higher oil and gas prices.
BP will write down clean energy business value by an additional $3 billion–$4.5 billion in Q3 as it pivots toward core oil and gas operations.

Debt targets and December strategy update

As reported by Financial Times, BP says in a trading statement ahead of its third-quarter results that net debt is expected to fall to between $13.5 billion and $14.5 billion by the end of September, down from $22 billion at the end of June.

The UK oil major had previously targeted net debt of between $14 billion and $18 billion by the end of next year. The faster improvement comes as the group continues to strengthen its balance sheet under chief executive Meg O’Neill, who takes over in April.

BP says it will present its new strategy on December 15 in New York. The company last set out a plan under former chief executive Murray Auchincloss in February 2025 and has since faced added pressure from activist hedge fund Elliott Management to repair its balance sheet and reduce costs.

Higher energy prices lift earnings and reshape priorities

The group benefits from elevated energy prices linked to the ongoing war in the Middle East and Ukraine’s campaign against Russian refineries. BP says oil trading remains strong and gas trading improves in the third quarter.

BP makes nearly $9 billion in adjusted profit in the first half of this year, compared with $3.7 billion last year, while free cash flow more than triples to more than $7 billion. Oil prices average roughly a third higher this year than last, while gas prices and fuels such as diesel reach fresh records.

At the same time, BP says it will write down the value of its clean energy businesses by a further $3 billion to $4.5 billion in the third quarter as it continues to pivot back toward its core oil and gas operations.

In our earlier coverage of Genting Bhd’s debt-reduction efforts, we explained how the group planned a RM1.25 billion rights issue to repay borrowings and shore up working capital amid heavy spending commitments. We also noted that, beyond the rights issue, further steps such as non-core asset sales and tighter capital allocation were being discussed as ways to protect credit metrics and reduce balance-sheet pressure.

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