Oil major BP's rating lowered to 'neutral' over at Citigroup

“We think the market now better reflects the inherent value in BP. A good-news story around a self-help agenda, narrowing Russian discount rates and a favourable Macondo Phase II ruling have all driven the equity story in recent months,” said Citi.

It added that while these elements may continue to play out, they need to be balanced against the risks, specifically on narrowing growth optionality and on Macondo where the recent decision to put Alabama Oil Pollution Act under jury trial now creates more uncertainty.

That said, Citi retains its 455p target price, noting that BP management’s plan to identify the need to re-align the business to current oil prices is a key attraction to the company’s investment profile in 2015.

“In an environment where return of equity is far below cost of equity, we think an agenda that promotes self-help over beta shows much greater shareholder alignment,” added Citi.

“Cost-cutting is at the centre of BP’s self-help strategy. To date the extent of the ambition has not been announced, although a cost-cutting provision has (circa $1bn). We believe that the provision will increase and that BP will end up with a target that tackles around a 15% reduction in costs in the core upstream business segment,” Citi added.