JPMorgan upgrades BP, downgrades TotalEnergies in oil sector reshuffle

JPMorgan upgraded BP's stock to 'overweight' with a price target of 675 pence ($54 for ADR), citing improved balance sheet and potential dividend growth. The firm expects BP's financial obligations to halve by 2027, aligning with European peers. Meanwhile, JPMorgan downgraded TotalEnergies to 'neutral' due to Middle East exposure and windfall tax risks.

Namibia awarded TotalEnergies a 3-month fuel import contract (Nov 2026-Jan 2027), expecting 220.5M N$ in savings by avoiding interest. TotalEnergies offered a 63.85 cents/litre discount, replacing Vitol. The deal aims to stabilize fuel prices and bolster the National Energy Fund.

TotalEnergies and AMNI have approved the development of the Ima gas field offshore Nigeria, expected to start producing in 2028. The field will supply gas to a Nigeria LNG plant, supporting its Train 7 expansion, which aims to increase liquefaction capacity to 30 million metric tons per year from 22 million tons currently. The project aligns with TotalEnergies' integrated gas strategy in Nigeria.

TotalEnergies SE and AMNI approved the final investment decision for the Ima gas field in Nigeria, with production expected to start in 2028. The field will supply one-third of the gas needed for the Nigeria LNG Train 7 expansion project, increasing liquefaction capacity to 30 Mtpa. The project is characterized by low costs, low emissions, and strong local involvement.

JPMorgan downgraded TotalEnergies (TTE) to Neutral from Overweight with a EUR83.00 price target, citing valuation concerns. The stock trades at $89.85, up over 40% year-to-date. JPMorgan noted strong long-term fundamentals but suggested the company's industrial strength is priced in. TotalEnergies trades at a P/E ratio of 11.18 with a 9% free cash flow yield and 4% dividend yield. The firm also expressed concerns about Middle East asset exposure and potential energy windfall taxes.

A U.S. judge dismissed Michigan's antitrust suit against BP PLC, ruling the plaintiffs failed to prove alleged conspiracy caused claimed energy overcharges. Separately, BP sold its stake in the Sapref refinery to Central Energy Fund for 1 rand, exiting the asset.