03:15 PM EST, 01/22/2025 (MT Newswires) -- BP's (BP) investor presentation in late February "should provide much

needed strategic clarity," RBC Capital Markets said Wednesday in a report.

The Feb. 26 event "should stand as a significant line in the sand" after an initial energy transition strategy outlined in 2020 "included macro assumptions look out of tune with reality," RBC said.

"The crux of BP's issues relate to poor capital allocation alongside these strategic shifts, which have deteriorated its earnings potential," RBC said.

Capital spending probably will be shifted to the upstream business "to provide room for resource acquisitions," RBC said. The capex framework probably will drop to $13 billion to $16 billion a year from $14 billion to $18 billion, the report said.

BP's balance sheet includes "stubbornly high" levels of debt with high leverage versus peers leaving "the shareholder returns framework less defensive in a potential downcycle," RBC said. "For now, we see better risk-reward elsewhere in the sector."

RBC kept its sector perform rating on BP's stock.

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