BP Increases Shale Production as It Shifts Focus to Worldwide Upstream Expansion

BP’s Strategic Shift: Doubling Down on U.S. Shale

BP is making a significant commitment to U.S. shale operations, aiming to increase global output and ramp up drilling activity, all while maintaining strict control over its capital expenditures.

Unlike many shale-focused companies, BP is taking a different approach. While most shale producers have been reducing drilling or holding back on production growth due to unpredictable oil prices—often dipping below profitable levels—BP is moving in the opposite direction.

Industry Trends and BP’s Divergence

Take Diamondback Energy, for instance—a major player in the shale sector. The company intends to keep both activity and output steady through 2026, matching fourth-quarter figures. Their 2025 production target is set at 500,000–510,000 barrels of oil per day, or 926,000–962,000 barrels of oil equivalent per day, all within a disciplined spending plan.

“Given the unpredictable outlook for oil prices in 2026, our focus remains on factors within our control,” Diamondback Energy stated this week.

In contrast, BP’s U.S. onshore division, BPX Energy, is charting its own course.

BPX Energy’s Ambitious Growth Plans

Kyle Koontz, CEO of BPX Energy, revealed in a recent interview that the company plans to increase shale output by 8% this year, reaching 500,000 barrels of oil equivalent per day. This figure would represent roughly one-fifth of BP’s total global oil and gas production.

Looking ahead, Koontz aims to push shale production even higher—to 650,000 boe/d by decade’s end—while reducing capital spending by $800 million.

“This is exciting for BP because it frees up capital for other growth opportunities,” Koontz, a Midland, Texas native, noted.

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Production Growth and Shareholder Pressure

BP reported a 2.6% increase in underlying production for 2025, primarily driven by BPX Energy, according to its latest earnings report.

Boosting output with less capital is central to BP’s strategy to reverse a production decline that began after its 2020 pledge to pivot toward green energy and allow upstream output to decrease.

However, this green transition has been more challenging for BP than for other oil majors. Dissatisfied shareholders have called for change, especially as BP’s stock has lagged behind competitors and oil prices surged in 2022–2023.

Shareholder unrest has been simmering for years, fueled by rising debt and disappointing share performance. Activist investor Elliott Investment Management has been particularly vocal in demanding a turnaround.

BP’s Strategy Reset and Future Outlook

About a year ago, BP responded to investor demands by announcing a major strategic overhaul, scaling back on renewable investments to refocus on its core oil and gas business.

Under this renewed strategy, BP plans to launch 10 major upstream projects by the end of 2027, with an additional 8–10 projects targeted by 2030. By then, production is expected to reach 2.3–2.5 million boe/d, with further growth possible through 2035.

In the past year alone, BP brought six major projects online worldwide and intends to keep increasing output.

When announcing its Q4 and full-year 2025 results in February, BP halted share buybacks and dropped its previous goal of returning 30–40% of operating cash flow to shareholders, aiming instead to strengthen its balance sheet amid mounting investor pressure. Last year, BP recorded approximately $4 billion in post-tax net impairments, mainly tied to its gas and low-carbon energy businesses.

By shifting away from energy transition investments and prioritizing upstream growth—where returns are higher—BP may be able to reverse its declining oil and gas output. The U.S. shale sector is poised to play a crucial role in BP’s renewed focus on supplying the world’s ongoing energy needs for years to come.

By Tsvetana Paraskova for Oilprice.com

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