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BP “on the cusp” of delivering strongest oil and gas portfolio in the industry - Goldman

Goldman Sachs maintained its ‘buy’ recommendation on the FTSE-100 oil giant with a 12-month price target of 730p a share
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BP's portfolio of new projects is seen as more profitable today and is now among the best in the industry, said Goldman

BP PLC (LON:BP.) is on the cusp of delivering huge oil and gas results, according to US investment bank Goldman Sachs, which added the oil giant to its ‘Conviction List’.

“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.

READ: BP second-quarter profit four-times higher than a year earlier, boosted by higher oil price

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.

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