BP: Rapid Debt Reduction
Oil prices have risen sharply in 2026, and so have refinery margins. This plays into the hands of companies that produce crude oil and process it themselves into gasoline and diesel. One of them is BP. Half-year profit attributable to shareholders climbed from USD 2.316 billion to USD 7.753 billion, an increase of about 235%. The main drivers were higher refining margins, better realized oil prices, and the oil trading business. Day-to-day operations, however, have recently hit a few snags. In the second quarter, both asset availability in the upstream business and refinery throughput were below the previous quarter’s levels.
In February, BP halted its share buybacks. High oil prices have since accelerated debt reduction. Net debt fell to USD 22.3 billion by the end of June, down from USD 26.0 billion in the second quarter of 2025. The original target of USD 14 to USD 18 billion had been set for the end of 2027. Under current assumptions, management says it could reach this target as early as the end of 2026, though this is not a firm commitment. Meg O’Neill has been leading the group since April 1, and the company is once again looking for acquisitions.
On September 24, Reuters reported that BP is reviewing Devon Energy’s Eagle Ford operations in Texas. According to the updated report, however, BP could also withdraw after the review; an acquisition is by no means a done deal. BP is also active in the North Sea. Together with Equinor and TotalEnergies, BP is establishing the Northern Endurance Partnership there, which is intended to store CO₂ beneath the seabed. In early September, the pipe-laying vessel Castorone began laying the approximately 145-km-long pipeline. In the Andrew field, however, they are plugging wells. Production will end in 2027, and starting in 2025, the wells will be permanently plugged.
Zefiro Methane: Record Revenue and Entry into CO₂ Storage
In the US, millions of abandoned and orphaned oil and gas wells leak methane. Plugging them will keep companies busy for decades. One such company is Zefiro Methane. Through its subsidiary Plants & Goodwin, based in Bradford, Pennsylvania, the company now serves customers in 15 states. It generates revenue from government-funded decommissioning of abandoned wells, contracts with energy producers, methane measurements, and emissions credits. In addition, developers of power plants and data centres are often not allowed to build until they plug the orphaned wells on their sites. This plays right into the hands of the Canadian company.
As Zefiro announced on September 3, revenue for the past twelve months reached a record level of USD 41.2 million, up 21% from the same period last year. Gross margin rose by about 900 basis points to 32%. On September 8, a contract worth USD 11.5 million from the Great Lakes region was secured, running through June 2029. On September 15, three federal projects in Ohio and Pennsylvania totaling approximately USD 1.9 million were added. The two Ohio contracts are worth approximately USD 184,000 per well. For comparison, Ohio’s 2022 report cites a figure of USD 129,997.93. Zefiro was the sole bidder on two of the three projects, as competition is scarce in this specialized niche.
Work began in Indiana and Michigan on September 22. In Indiana, Zefiro has begun its first CO₂ storage project, an eight-week contract worth approximately USD 750,000. In Michigan, an emergency response to a single well leaking hydrogen sulfide is worth approximately USD 500,000. This was made possible by the equipment acquired from Viking Well Service in May 2026. If the expansion of CO₂ storage is successful, the company would have established another pillar of revenue alongside its other business segments. The business is growing but remains primarily project-driven for now, until CO₂ revenue generates recurring income.
Occidental Petroleum: CO₂ Division as a Second Pillar
Following the acquisition of CrownRock, Occidental Petroleum’s debt piled up. The company also financed part of the repayment by selling its chemical division, OxyChem, to Berkshire Hathaway. On August 5, the Houston-based company released its quarterly results; the following day, management discussed the financial situation during a conference call. USD 8.6 billion of the principal debt has been repaid since the start of the year, including USD 1.5 billion in the second quarter. The principal debt thus fell to USD 11.8 billion, the lowest level since 2019. The company still has some way to go to reach the USD 10 billion target. The balance sheet is noticeably lighter.
Operations are running smoothly. Production climbed to 1.433 million BOE per day in the second quarter, up from 1.400 million BOE in the same quarter last year. Net revenue from continuing operations reached USD 8.065 billion, and profit jumped from USD 288 million in the same quarter a year ago to USD 2.807 billion. This gave the board leeway to raise the quarterly dividend by 8% to USD 0.28 per share. According to Reuters, Occidental also secured a 10% stake in a deepwater exploration block operated by ExxonMobil off the coast of Trinidad and Tobago; however, no commercially viable discovery has yet been confirmed there.
Things are getting exciting in the third business segment. Through its subsidiary 1PointFive and the joint venture established with BlackRock, Occidental is building the STRATOS facility, which is set to begin operations toward the end of 2026 and is expected to capture up to 500,000 metric tons of CO₂ per year from the air. Regular operations will not begin until 2027. The CO₂ can be used, among other things, for enhanced oil recovery in the Permian Basin. STRATOS would mark the company’s first in-house CO₂ source. Whether this becomes a second pillar of the business will also be decided in South Texas, where Occidental is exploring a potential joint venture with ADNOC’s investment arm, XRG, for another DAC hub.
The billion-dollar market underground is becoming accessible to investors. BP is taking advantage of high oil prices and strong refining margins, rapidly reducing debt, and pushing ahead with CO₂ storage and asset decommissioning. Zefiro Methane reports record revenue, a growing customer base across 15 states, government contracts, and its first foray into CO₂ storage. A growth stock with a clear expansion story. Occidental Petroleum is paying down debt, raising its dividend, and establishing a CO₂ foothold with STRATOS.
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