The sleeper in Big Oil: BP’s Q2 beat, Brazil strike and Iraq revival put €6 in sight

Q2 beat resets the narrative

BP’s second quarter results landed ahead of expectations, with underlying replacement cost profit around $2.35 billion and operating cash flow topping $6.3 billion. The board lifted the dividend to 8.32 cents and maintained $750 million in buybacks, while system reliability stayed above 96% and net debt edged down to $26 billion. Revenue and earnings both topped analyst forecasts, supported by strong refining margins, resilient upstream volumes and a solid performance from its oil trading desk.  

New barrels from Brazil and Iraq

Exploration momentum got a major boost with BP’s largest oil and gas discovery in 25 years at the Bumerangue block in Brazil’s deepwater Santos Basin — a 500‑metre hydrocarbon column in high‑quality pre‑salt carbonates. It’s BP’s tenth find this year and, despite elevated CO₂ content requiring engineering solutions, it could anchor a new production hub.  

In Iraq, BP has finalised plans to revive giant oilfields around Kirkuk under a state‑led redevelopment. Initial phases aim to unlock over 3 billion barrels of oil equivalent, with scope for much more. It’s a strategic re‑entry into one of the world’s most prolific basins, adding high‑impact barrels to the portfolio.  

€6 is realistic — and here’s why

Reaching €6 a share — roughly £5.10 in London trading terms or about $6.60 for NYSE ADR investors — doesn’t require perfect conditions. Steady execution on cost control, on‑time project delivery in Brazil and Iraq, and continued buybacks through the cycle can underpin a rerating toward fair value. The integrated trading arm and advantaged downstream footprint add ballast if commodity prices soften.  

We would give it a strong buy rating at this point in time. Factoring in the operational changes BP has made, the low share price that it's holding and the general consensus between experts saying BP is massively undervalued. 

Takeover whispers add optionality

Persistent market chatter about potential bids or break‑ups may be just that — chatter — but in equity markets, even low‑odds M&A speculation can close valuation gaps. A leaner, more cash‑generative BP is inherently less vulnerable, yet also more attractive to a well‑matched suitor. Were a credible offer to emerge, a 30–40% premium would not be unusual in the sector.  

Risks to keep in view

Oil price weakness, refining margin compression, or delays in managing Brazil’s CO₂ challenge could blunt momentum. Iraq’s operational and political complexities are real, and policy shifts could alter the capital‑allocation equation. But none of these are outliers for a global supermajor.  

Bottom line: Q2’s beat proved BP can over‑deliver while moving significant new projects forward. Combine disciplined capital management, fresh high‑quality resources, and latent M&A optionality, and the path back to €6 looks like arithmetic — not wishful thinking.