Analysts expect $70 billion drop in supermajor net debt through 2028
BP entered 2026 as the most heavily indebted of the five Western supermajors, a position that prompted new management to halt stock buybacks and pursue asset sales to repair the balance sheet. The $7 billion in second-quarter liability reductions — covering corporate debt, hybrid debt instruments, leases and Deepwater Horizon settlement payments — delivered on that pledge, according to a Wall Street Journal analysis.
The reduction illustrates the broader deleveraging expected across the integrated majors. At the start of the year, the five large integrated energy companies described their plans in terms of “structural cost efficiencies,” “consistent delivery” and “superior shareholder returns, despite declining oil prices” — language the Journal observed did little to excite investors. The war with Iran changed that calculation, lifting commodity prices more quickly than business plans could adjust.
The industry is now expected to generate roughly $75 billion more in free cash flow in 2026 than in 2025. Analysts surveyed by FactSet project combined net debt for the five integrated majors to fall by about $70 billion between 2025 and 2028. The deleveraging is expected to run further at smaller pure-play drillers and refiners: Expand Energy and Valero are seen reaching net cash positions on their balance sheets by 2028.
With cash building and borrowing costs down, the companies face familiar questions about how to deploy the surplus. Sinking additional capital into major oil and gas projects is difficult to justify unless commodity prices remain higher for longer, the Journal noted. Drilling too aggressively today risks producing the next industry bust. Stock buybacks offer one route back to shareholders; smaller all-cash acquisitions offer another.
The Journal identified a roughly two-and-a-half-year window before the next president takes office as an opportunity for more consolidation while U.S. antitrust enforcement remains energy-friendly. Healthy balance sheets make single-digit-billion-dollar all-cash transactions particularly feasible in the interim, the Journal reported.
Recent megadeals provide context for what consolidation looks like at the larger end of the spectrum. Chevron announced its $53 billion all-stock acquisition of Hess in 2023 and completed the transaction last summer, the Journal reported. A year earlier, Exxon closed its $60 billion all-stock acquisition of Pioneer Natural Resources. Both transactions were structured as stock-for-stock deals, accepting the target’s balance sheet alongside the acquirer’s own.
For investors, the practical question is how quickly the surplus translates into returns. Some cash will arrive gradually through dividends and incremental buybacks; some will arrive in larger sums accompanying acquisition announcements promising “synergies” and “world class assets,” the Journal reported. The pattern of capital return is set to run through 2028, the period covered by FactSet’s net-debt projections.