- ‘Significant’ find offshore Brazil
- Planned upstream production growth
- Q2 results to reveal hit from lower prices
Global energy giant BP (BP.) has announced its biggest oil and gas discovery in 25 years, off the coast of Brazil, a find which also represents its tenth discovery in 2025-to-date.
Shares in the FTSE 100 oil major were marked up 1.7% to 405.5p on the news, a subdued reaction with investors perhaps fretting over upcoming second-quarter results (5 August) expected to show the impact of lower oil and gas prices on BP’s earnings.
DEEP VALUE
BP has made a big oil and gas discovery at the Bumerangue prospect in the deepwater offshore Brazil, which was awarded to the company in late 2022 and lies some 218 nautical miles from Rio de Janeiro.
In fact, Bumerangue marks the oil major’s tenth discovery so far this year, BP having already announced oil and gas exploration finds as far afield as Trinidad, Egypt and the Gulf of America to Libya, Namibia and Angola.
BP, whose current chief executive Murray Auchincloss unveiled a renewed focus on hydrocarbons at an investor day in February, plans to grow its global upstream production to 2.3 to 2.5 million barrels of oil equivalent a day in 2030, with the capacity to increase production out to 2035.
Gordon Birrell, BP’s executive vice president for production and operations, said the discovery at Bumerangue is ‘another success in what has been an exceptional year so far for our exploration team, underscoring our commitment to growing our upstream.’
He added: ‘Brazil is an important country for BP, and our ambition is to explore the potential of establishing a material and advantaged production hub in the country.’
WHAT TO EXPECT FROM Q2 PRINT?
Both BP and Shell (SHEL) have dialled back on their green push, with BP under particular pressure to do so from activist investor Elliott since it joined the shareholder register at the start of 2025.
BP CEO Murray Auchincloss unveiled a renewed focus on hydrocarbons at an investor day in February, but most parties, including Elliott, seemed to feel what had been announced did not go far enough.
The departure of chair Helge Lund, who is set to be replaced by former CRH (CRH:NYSE) boss Albert Manifold, reflects the perception he is a key architect of BP’s recent problems.
In a results teaser (11 July), BP stated it expected second-quarter upstream output to be higher than in the first three months of 2025.
The customers and products segment is projected to benefit from increased refining margins, estimated between $300 million and $500 million, alongside a higher level of turnaround activity. The oil trading result is also anticipated to remain strong.
However, BP’s second-quarter results are likely to reflect the impact of lower oil and gas prices, following a decrease in crude prices attributed to OPEC+ countries unwinding self-imposed production cuts in April.
RENEWED HYDROCARBON FOCUS
AJ Bell investment director Russ Mould said that if BP wanted a piece of news to convince the markets of its renewed focus on hydrocarbons ahead of the second-quarter numbers, ‘then its biggest oil discovery in a quarter of a century provides it. The full significance of the find in Brazil will take time to establish, and there are initial suggestions it could be challenging to develop given elevated levels of carbon dioxide being detected, but it certainly helps with the narrative.’
Mould continued: ‘With a new chair in place, BP will want to use its latest numbers to convince the market it has truly revamped its strategy and moved away from the green push which proved unpopular with a significant portion of its shareholder base.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.
