BP (BP), a global energy company, is now in the middle of takeover talks. Shell (SHEL), Chevron (CVX), and Exxon Mobil (XOM) are all considering possibly buying the British oil giant. Interest has picked up because BP’s stock price is at its lowest in years, making it a tempting buy for bigger companies wanting a good deal. 

On May 9, BP’s shares went up by 4% after news broke that several competitors were considering possible buyout. 

With a high-yield dividend and a renewed focus on its core oil and gas operations, investors should consider whether these takeover rumors indicate a rare buying opportunity or if they reveal deeper risks. Let’s explore this further.

How BP’s Financials Stack Up in 2025

BP (BP) is a global integrated energy company focused on oil (CBN25), gas (NGM25), and lower-carbon solutions. BP’s annual dividend is $1.92, translating to a generous 6.5% yield, one of the highest among global oil majors and a key draw for income-focused investors.

The stock is up just 0.5% in the year to date and is down 21.3% over the past 52 weeks.

BP’s market capitalization is $82.4 billion, with a forward price-earnings ratio of 11.6x. Its valuation is currently discounted relative to its historical norms.

The company’s Q1 2025 earnings, released April 29, provide a detailed look at its financial standing amid this strategic reset. BP reported earnings per share of $0.53, falling short of the $0.56 consensus estimate. The company reported an underlying replacement cost (RC) profit of $1.4 billion for the first quarter, up from $1.2 billion in Q4 2024, driven by stronger refining margins and reduced turnaround activity. Investors should note that Its Q1 RC profit was down significantly from $2.7 billion in the year-ago period. 

Reported profit for the quarter was $0.7 billion, a sharp turnaround from a $2.0 billion loss in the previous quarter, but still significantly below the $2.2 billion profit posted in Q1 2024. CEO Murray Auchincloss described the quarter as “a great start” for BP’s strategy reset, despite the challenging environment. 

Operating cash flow for the quarter came in at $2.8 billion, a notable drop from Q4 due to seasonal inventory effects and the timing of annual payments, while net debt stood at $27.0 billion. 

Inside BP’s Fundamentals

Before the takeover rumors started, BP was already making some big moves. BP has started production from three major projects this year – Cypre in Trinidad, Raven in Egypt, and the GTA project in Mauritania and Senegal.

Together, these projects are set to add about 100,000 barrels of oil equivalent per day to BP’s output. This is a crucial step toward BP’s goal of increasing production capacity by 250,000 barrels per day by 2027, even as the broader oil sector faces a slowdown in upstream growth.

The company is also in the midst of a major pivot, slashing spending on net-zero ventures by $5 billion annually and capping green investments at $2 billion per year, while redirecting focus and capital back to its core oil and gas business. This “Reset BP” strategy is designed to boost returns and free cash flow. 

At the same time, BP is working to cut methane emissions with certified supplies. Earlier in 2025, BP made another major move by signing an agreement with Iraq’s government to help redevelop the huge Kirkuk oil fields. This project aims to tap into 3 billion barrels of oil and is a sign that BP is focusing more on high-value oil production in important regions.

Analyst Perspectives on BP’s Future

BP expects its oil and gas production for the second quarter to stay about the same as the first quarter. For the full year, BP thinks its overall production will be a bit lower than last year, but it does see some bright spots. 

Analysts predict that BP will earn $0.70 per share for the current quarter and $2.50 for the entire year. That’s down from $1.00 in the same quarter last year and $3.26 for the full year, which means a drop of 30% for the quarter and 23% for the year. 

This cautious outlook is mostly because of steady refining margins, more planned maintenance at refineries, and a high tax rate of about 40%, all of which could pressure profits. 

Even with these mixed signals, Wall Street is mostly positive. Out of 24 analysts, BP gets a “Moderate Buy” rating, and the average price target is $36.72. That implies roughly 25% upside potential from here. 

Conclusion

BP’s high-yield dividend and discounted valuation make it an appealing pick for income-focused investors, especially with takeover rumors swirling. If a deal materializes, shareholders could see a solid premium. If not, BP’s fundamentals and ongoing strategic reset still offer upside as the company leans into its core strengths.