Energy Supermajor BP Outlook Revised To Stable On Slower-Than-Expected Debt Reduction; 'A-/A-2' Ratings Affirmed

We forecast BP's revised cash allocation strategy will not result in meaningful further debt reduction. We now project funds from operations (FFO) to debt to remain at 50%-55% in our base case and below 45% at our midcycle Brent oil price assumption of $55 per barrel of oil equivalent (/boe). We therefore revised our outlook on BP to stable from positive and affirmed the 'A-' long-term and 'A-2' short-term issuer credit ratings. The stable outlook reflects our expectation of modest discretionary cash flow (DCF), even with currently supportive market conditions and FFO to debt of 50%-55% in 2024-2025. MADRID (S&P Global Ratings) June 3, 2024--S&P Global Ratings today took the rating actions listed above. Importantly, in a more midcycle scenario

...June 3, 2024 - We forecast BP's revised cash allocation strategy will not result in meaningful further debt reduction. - We now project funds from operations (FFO) to debt to remain at 50%-55% in our base case and below 45% at our midcycle Brent oil price assumption of $55 per barrel of oil equivalent (/boe). - We therefore revised our outlook on BP to stable from positive and affirmed the 'A-' long-term and 'A-2' short-term issuer credit ratings. - The stable outlook reflects our expectation of modest discretionary cash flow (DCF), even with currently supportive market conditions and FFO to debt of 50%-55% in 2024-2025. MADRID (S&P Global Ratings) June 3, 2024--S&P Global Ratings today took the rating actions listed above. BP's updated cash allocation strategy is less likely to result in meaningful further absolute debt reduction. The company's decision to allocate at least 80% of surplus cash flow to share buybacks (versus 60% before) is still commensurate with the current 'A-', rating...

Ratings Action