Shares of BP (LON:BP) (NYSE:BP) rose on Monday after the energy giant announced a significant oil and gas discovery offshore Brazil, marking the company’s largest find in 25 years. The discovery was made in the Santos basin, located in a deepwater pre-salt region, which is known for being one of the most promising areas for hydrocarbon reserves.
The find is BP’s tenth discovery of the year, following earlier exploration successes in regions such as Trinidad, Egypt, and others. The company is targeting an increase in its oil and gas output to between 2.3 million and 2.5 million barrels of oil equivalent per day by the end of the decade. In 2024, BP’s production reached 2.4 million barrels per day, though the company anticipates a decline in output next year.
As of 09:47 GMT, BP shares were up 1.6% in London trading.
Initial Analysis and Future Plans for the Discovery
Initial analysis from the drilling site indicated high levels of carbon dioxide, which will require further laboratory testing to better understand the block’s potential. BP plans to establish a significant production hub in the region as part of its renewed focus on fossil fuels, a strategy aimed at bolstering its energy portfolio.
This latest discovery comes ahead of BP’s second-quarter earnings report, which is scheduled for release on Tuesday. The company’s earnings report will also likely address its cost-cutting initiatives, with an expected focus on the $5 billion cost-reduction program.
Pressure from Activist Investor on Cost-Cutting Measures
BP is facing mounting pressure from activist investor Elliott Management to accelerate its cost-cutting efforts. Elliott has urged BP’s CEO Murray Auchincloss to double down on efficiency, suggesting an additional $5 billion in savings on top of the $4 billion to $5 billion already targeted by 2027. The proposed savings would be based on 2023 spending levels.
BP has already achieved $750 million in cost cuts this year, with the company aiming to reach its full target through workforce reductions, asset sales, and streamlining its supply chains, according to reports.
As the company navigates the balance between increasing its production capacity and meeting investor demands for cost reductions, BP’s upcoming earnings report will likely provide key insights into its strategy moving forward.