Here is the prognosis of the price of BP shares for the next 12 months

It has been a tumultuous moment for the BP (LSE: BP) shares price. So what's up?

From the Deepwater horizon tragedy in 2010, BP staggered crisis. The volatility of the price of oil, the pandemic, the energy shock and a staggering green transition have given the Board, and investors, a trip full of potholes.

More recently, BP has been recovering a strong pivot to fossil fuels, a movement that some investors will encourage as a return to their main business. Others worry, it is another false step in an identity crisis of a decade.

CEO Murray Auchincloss is doubling costs and efficiency, promising “Fundamentally restore” BP strategy. But that means better yields for shareholders?

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The price of BP shares has increased by 17% in the last three months, but still decreased by 10% during the past year. That reflects the weakest oil prices, but also a company that has lost its course.

BP has been squeezed between green activists who think that it is not doing enough in renewables and activist investors who think they are doing too much. Now he has taken his choice.

The Board cuts green projects, reassigning capital to business with greater oil and gas yield, and increases efficiency. It is also aimed at $ 20 billion in assets of assets and reduces its net debt of $ 23 billion to between $ 14 billion and $ 18 billion by 2027.

But does the Board simply slide between strategies, risking fossil fuel assets stranded in an energy market that changes rapidly?

Auchincloss does not really seem to be at the top of the events, more beaten by broader forces. With the activist investor Elliott floating impatiently, he needs to have his playing face. There are no second opportunities here.

So what does the market think? The 27 analysts that cover the BP shares have an average price of 12 months of just over 492p, which suggests a 11% potential on the rise of the 444P today.

It is not exactly a vote of trust.

At least investors receive dividends while waiting for BP to resolve. The performance forecast will reach 5.69% this year and 5.93% in 2026.

Dividends and repurchases too

The repurchases of shares continue, but the rhythm is slowing down as the profits fall. Subject to the approval of the Board, BP expects to pay between $ 750 million and $ 1 billion in the first quarter of 2024. That is less than $ 1.75 billion in the previous quarter.

In fact, I bought BP actions recently. At that time, the relationship ratio to profits (p/e) was around six. An unmissable bargain, I thought. Shortly after, BP profits per action fell 97% throughout the year 2024, and suddenly that P/E relationship shot more than 240 times.

I have achieved a modest gain so far and obtained my last dividend on Friday (March 28), which I will reinvest automatically. I am left with BP, and I can understand why investors would consider buying the shares today, despite that shock p/e.

Investors should treat BP as a pure fossil fuel game. He did not build a convincing business of renewable energies when he listed to do it, and certainly will not bother now. At least he is back at home.

Investors who consider the shares can take their own opinion in this regard. For now, I'm holding, but I'm not impressed.