BP’s Twin-Track Strategy: A $5 Billion Gulf Bet Meets a $13 Billion Debt Overhaul

BP CEO Meg O'Neill refocuses on oil & gas with $5B Kaskida project, targets debt reduction to $14-18B, and streamlines structure; shares up 29% YTD.

The oil giant BP is executing a carefully choreographed pivot under new leadership, one that marries a massive new deepwater investment with an equally ambitious plan to slim down its balance sheet. Since taking the helm in early April, CEO Meg O’Neill has set about dismantling the conglomerate’s green-energy ambitions and refocusing squarely on oil and gas, while simultaneously tackling a debt pile that has weighed on the stock.

That dual push already has an anchor project. BP has given the green light to Kaskida in the Gulf of Mexico, a $5 billion development expected to pump 80,000 barrels of crude a day from 2029. The timing could hardly be more favourable: Brent crude has surged past $111 a barrel as Middle East tensions mount and the Strait of Hormuz faces disruption, a rally some analysts are labelling the “Trump Oil Shock.”

Yet the new spending does not signal a free-for-all. O’Neill is imposing strict financial discipline alongside the upstream expansion. BP intends to cut its outstanding hybrid bonds from roughly $13 billion today to around $9 billion by the end of 2027, chiefly by allowing selected securities to mature without refinancing. The company’s net debt, which stood at over $25 billion at the end of the first quarter, is targeted at a range of $14 billion to $18 billion within the same timeframe. Annual capital expenditure will be held in a tight band of $13 billion to $13.5 billion.

The organisational overhaul is equally sweeping. BP is scrapping its previous integrated model and reverting to a classic upstream-downstream split, with upstream housing all exploration and production and downstream covering refineries, product sales and customer supply. The change is designed to reduce complexity, sharpen accountability and speed up decision-making. A consequence is the dissolution of the pipeline-gas trading desk, eliminating around 20 roles, while management explores selling gas assets in Egypt — despite BP accounting for nearly 60% of national output there.

Investors have responded warmly to the clearer direction. BP’s shares closed at €6.52–€6.53 in recent sessions, marking a year-to-date gain of almost 29%. The stock now trades just shy of its 52-week high of €6.88 and comfortably above both its 50-day moving average of €6.42 and its 200-day line. Over the past twelve months, the equity has rallied nearly 49%.

Analysts are also on board. Argus Research and RBC Capital both upgraded BP to buy ratings in May, citing the company’s strong positioning in a tight crude market. They caution, however, that any swift de-escalation in the Iran standoff could trigger a sudden price correction.

For income-focused shareholders, the next payout is already on the calendar. BP will distribute an interim dividend of $0.49 per share on June 26. Between the Kaskida prize, the bond reduction plan and a restored operational clarity, O’Neill is betting that a simpler, leaner BP can deliver both growth and financial resilience in an unpredictable oil cycle.