BP (BP (BP)) is venturing into new territory — literally. On Wednesday, the oil major announced it had signed a production sharing agreement (PSA) for six blocks in Uzbekistan's North Ustyurt region, marking its first project in the Central Asian country.
The company picked up a 40% stake in the PSA from existing partners SOCAR and Uzbekneftegaz. Those two will each keep 30%, with SOCAR staying on as operator. The project is still in its early days — seismic work is underway, and we're in phase one.
It's a classic BP move: get a foothold in a promising but under-explored region, share the risk with local players, and keep the upside open. Uzbekistan has significant natural gas potential, and BP knows a thing or two about big gas projects.
Earnings Beat, But Production Clouds Loom
Last month, BP reported adjusted earnings of $1.24 per American depositary share, more than double the 53 cents from a year earlier. Revenue climbed to $52.26 billion from $46.91 billion, beating analyst estimates of $45.66 billion. The company also declared a quarterly dividend of 8.32 cents per ordinary share and said it expects to raise the payout by at least 4% annually.
But the production outlook is less rosy. BP said it expects reported upstream production to decline in 2026 due to ongoing disruptions in the Middle East. Underlying upstream production is projected to remain broadly flat compared with 2025 levels — not exactly a growth story.
For the second quarter, the company sees sequential declines in upstream production, citing seasonal maintenance in the Gulf of America and continued geopolitical disruptions in the Middle East. And here's the kicker: BP warned that elevated oil and gas price volatility could pressure contracts tied to production-sharing agreements — the very kind of deal it just signed in Uzbekistan.
What Analysts Think
Wall Street is cautiously optimistic. The stock carries a Hold rating with an average price target of $47.04. Recent moves include:
- Argus Research: Upgraded to Buy with a $50.00 forecast (May 11)
- RBC Capital: Upgraded to Outperform (May 11)
- Scotiabank: Sector Outperform, raising its forecast to $58.00 (April 22)
BP shares were trading down 0.90% at $44.00 at the time of publication on Wednesday. The Uzbekistan deal is a long-term bet, but for now, the market is focused on the near-term headwinds.
