BP shares have surged. Is it time to bank my profit?

BP (LSE: BP.) shares have had a great run over the past year, with the stock up 30%. But since the tariff-induced sell-off in April last year, they’ve climbed 66%.

Having held the shares throughout, I’m now wondering whether it’s time to take some profit off the table, or whether BP could be in the early stages of a re-rating relative to its peers.

Strategy reset

For me, the pivotal moment for BP was its strategy reset early last year. It marked a watershed for the business, signalling a clear move away from its previous push into renewables and back towards the areas where it has traditionally been strongest.

The targets set at the time were ambitious. It aimed to grow free cash flow at a compound annual growth rate of 20% and improve return on average capital employed by two percentage points to 16%, both by 2027. Importantly, those targets were based on an assumption of Brent crude trading at just $74 a barrel in 2027.

Now, with new CEO Meg O’Neill in place, that strategy’s being accelerated. She’s streamlining the business around upstream and downstream operations and putting assets up for sale if they no longer earn their place in the portfolio, regardless of their history.

And I think the market’s starting to take notice.

Why I’m not selling

So why haven’t I taken some profit? For me, it comes down to the fact that I don’t think the BP turnaround is finished. For starters, the guidance laid out in 2025 runs through to 2027.

If management can deliver the promised improvement in free cash flow and returns, there could still be plenty of scope for the market to reassess the company’s worth. But ultimately, it’s the quality of BP’s assets that I think the market has yet to fully appreciate.

Take bpx, its Permian Basin operation, which produced 545,000 barrels of oil equivalent a day in the second quarter. What I really like is the speed at which BP can turn investment decisions into production and, ultimately, revenue.

Then there are the longer-dated assets. Reviving the Kirkuk operations in Iraq could be a significant opportunity for the company. Bringing in partners means BP can share some of the risk while still gaining exposure to potentially substantial future production.

And BP’s still serious about exploration. Its Bumerangue oil discovery in Brazil was its largest in 25 years. If the project’s successfully developed, it could provide another source of production and cash flow for decades to come.

These are the key reasons why I’m in no rush to sell.

What could make me sell?

Of course, there are risks. A sustained fall in oil prices or failure to deliver the promised improvement in returns could quickly change my view, particularly if either puts further pressure on its already weak balance sheet.

The company also needs to prove that its streamlined strategy can translate into consistently stronger cash generation.

But for now, I’m not rushing to sell. Given the quality of its assets and the progress made so far, I still see BP as one to consider for investors looking for long-term growth and income.

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Andrew Mackie owns shares in BP.