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BP is betting big on the U.S. shale patch to raise its worldwide production and accelerate drilling while keeping a tight capital budget.
The UK-based supermajor is doing something few other pure shale producers are doing. Shale drillers have been slowing drilling activity, or at least not spending too much on raising production, amid volatile oil prices that have dropped below the estimated break-even levels too many times to count in the past few months.
For example, Diamondback Energy, one of the biggest names in the patch, plans to keep activity and production in 2026 flat relative to fourth-quarter levels. Production guidance for this year is 500,000 – 510,000 barrels of oil per day, or 926,000 – 962,000 barrels of oil equivalent per day (boe/d), with a disciplined capital program.
“Given the uncertain outlook for 2026 oil prices, we are going to continue to focus on what we can control,” Diamondback Energy said this week.
But BP’s U.S. onshore oil and gas business, BPX Energy, isn’t doing what most others do.
BPX Energy plans to boost its shale production by 8% to 500,000 boe/d this year, Kyle Koontz, the unit’s chief executive officer, told Bloomberg in an interview published this week.
Such a volume of shale output would be equivalent to about 20% of BP’s current oil and gas output globally.
Moreover, BPX Energy’s Koontz aims to raise shale production further, to 650,000 boe/d by the end of the decade, and do that with $800 million lower capital.
“The reason that’s exciting for BP is that allows them to sanction other growth projects; they can redeploy that capital to other growth,” Midland, Texas, native Koontz told Bloomberg.
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BP’s underlying production for the full year 2025 rose by 2.6%, mainly in BPX Energy, the supermajor said in its Q4 and 2025 earnings release.
For BP, production growth with less capital is fundamental to reverse a decline in the upstream that began with a 2020 pledge to transform into a major energy conglomerate where green energy will be the focus and the upstream production would be left to decline.
However, BP, more than other supermajors, suffered from the green strategy, with shareholders unhappy and demanding changes, and a share price severely underperforming those of its peers, and the surge in oil prices in 2022-2023.
Revolt among shareholders has been brewing for years over rising debt and an underperforming share price, with activist hedge fund Elliott Investment Management especially vocal in its demand for a turnaround at the supermajor.
A year ago, BP yielded to investor pressure and announced a major strategy reset to slash investments in renewables and focus on its core business of producing oil and gas.
Under the new strategy of return to the basics, BP will aim for 10 new major upstream projects to start up by the end of 2027, and a further 8–10 projects by the end of 2030. Production is also expected to grow to 2.3–2.5 million boe/d in 2030, with capacity to increase to 2035.
Last year alone, BP started up six major projects globally and plans to continue boosting production.
Announcing the Q4 and full-year 2025 results in February, BP suspended share buybacks and retired the goal to return 30-40% of operating cash flow to shareholders, as the supermajor looks to strengthen its balance sheet amid intense shareholder pressure. For last year, BP booked post-tax net impairments and impairments in equity-accounted entities of around $4 billion, primarily related to the company’s transition businesses in the gas and low-carbon energy segment.
Pulling back from energy transition investments and focusing on upstream growth – where returns and rewards are much higher – could allow BP to begin reversing the drop in its oil and gas production in the first half of the decade. And it looks like the U.S. shale patch will play a prominent role in the supermajor’s return to its core business of providing the world with the oil and gas it needs and will still need years and decades from now.
By Tsvetana Paraskova for Oilprice.com
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