“BP is on the cusp of delivering one of the industry’s strongest pipelines of new oil & gas projects … with sector-leading production growth, free cash flow improvement and unproductive capital release from mega-projects,” Goldman Sachs said in a note to clients.
Goldman maintained its ‘buy’ recommendation on the FTSE-100 group with a 12-month price target of 730p a share, more than a third above its current level, due to its positive view on its prospects and cash flow.
"The delivery of a record pipeline of upstream projects is progressively bringing BP closer to the sweetspot of its exportation and production transformation, which we believe will materialise in 2019, with production from nine major upstream projects rapidly ramping up to peak capacity, and capital expenditure commitments falling. We estimate that BP's portfolio of new projects is more profitable today and is now among the best in the industry,” Goldman’s note added.
BP’s payments relating to the Deepwater Horizon oil spill will likely wind down to less than 5% of BP operating cash flow by 2020, said the note.
Shares in BP, which have risen by more than a pound in the last year, were 0.7% down at 560.4p in mid-morning trade.