BP shares are up 30%. What happens next?

While many investors are putting the latest BP (LSE: BP.) share surge down to higher oil prices, I’m not convinced that tells the whole story.

Last year’s strategy reset was initially viewed as another muddled pivot after years of chasing renewables. But perhaps the market is starting to see it differently. This isn’t simply another change of direction. It’s about simplifying BP, focusing on what it does best and improving the returns from those assets.

If that’s what the market is beginning to recognise, the question is no longer just why BP shares have risen 30%. It’s where they could go from here.

A simpler BP

The first part of the story is simplification. Meg O’Neill has been pretty clear that the company’s no longer interested in holding businesses simply because they’ve been part of the group for years. If an asset doesn’t fit the strategy or generate the returns it needs, it will be sold.

Recent speculation over the potential sale of its Brazilian biofuels business is a good example. That might look like a relatively small disposal, but I think the bigger point is what it says about the new management mindset.

For me, the strategy reset isn’t simply about moving back towards oil and gas. It’s about making BP a more focused business, with capital directed towards the assets where it can generate the best returns.

Turning simplification into cash

The second part of the story is cash. And this is where I think the strategy reset starts to look more interesting.

BP generated $14.4bn of adjusted free cash flow in the first half of 2026, compared with $6.9bn a year earlier.

Crucially, those figures are on a price-adjusted basis, using the same commodity price assumptions. That matters because it reduces the impact of oil and gas price volatility and gives a better indication of whether the underlying business is improving.

The $14.4bn figure also needs to be viewed alongside $6.4bn of capital expenditure during the period. So despite continuing to invest in the business, BP is generating a substantial amount of cash.

For me, that’s the number that matters. If BP can simplify the portfolio while generating more cash from the assets it keeps, the reset starts to look less like another strategic U-turn and more like a genuine improvement in the business.

The risks

Of course, there are still plenty of ways this story could go wrong. BP remains heavily exposed to oil and gas prices, and a sustained fall would put pressure on cash generation.

Execution remains another key risk. Selling assets and simplifying the business is one thing, but getting the remaining portfolio to deliver consistently higher returns is another.

And despite the improvement in cash generation, the company’s balance sheet hasn’t yet moved in the same direction. Net debt was $22.3bn at the half-year, broadly unchanged from the end of 2025.

For me, that’s something to watch. The reset needs to deliver sustained cash generation, not just one strong period.

Nevertheless, if the market continues to view BP in a new light, and the simplification programme delivers strong cash flows and falling debt, the shares could look cheap today. That’s why I view them as one to consider.

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Andrew Mackie owns shares in BP.