JPMorgan has adjusted its recommendations for major European oil names, moving Galp into an Overweight position while lowering Repsol to Neutral. The change reflects a reappraisal of which business models are best placed to benefit from an emphasis on oil longevity beyond 2030 and improving cash flow trajectories.
Shares in Repsol declined 1.5% by 09:20 GMT following the bank’s note. The institution’s analyst, Matthew Lofting, described the decision as driven by a "rising emphasis on 2030+ oil longevity," where low-cost production and optionality for low-carbon barrels are becoming key differentiators among integrated producers.
Lofting highlighted Galp’s offshore assets in Brazil and its longer-dated development options in Namibia as examples of what he described as "unrivalled growth potential amongst EU Oils." He underlined that these assets are supported by low production costs and comparatively lower carbon intensity per barrel, characteristics JPMorgan now ranks highly when assessing long-term value.
Another central factor in the upgrade is the expected jump in free cash flow tied to the Bacalhau oil project in Brazil. JPMorgan projects that the project’s contribution will help drive one of the sector’s strongest deleveraging paths in 2026 and 2027. The bank expects Galp’s net debt to EBITDA ratio to fall below 0.5x by the end of 2027, a metric the analyst uses to underpin the company’s improved credit and capital return outlook.
Lofting also flagged Galp’s proposed downstream combination with Moeve as a strategic move that could help surface upstream value and create a more adaptable corporate structure. JPMorgan suggests this structural shift could allow Galp to capture more of the upside from its exploration and production assets while operating with greater organizational flexibility.
By contrast, JPMorgan adopted a more cautious view on Repsol. The analyst acknowledged Repsol’s strong, integrated refining system and notable diesel exposure, which have helped make it a top share-price performer among European oil stocks since early 2025. Despite these strengths, Lofting noted signs of moderating earnings momentum and concluded that Repsol’s potential upside is now more limited.
"Repsol is superior, but Galp represents an effective second tier alternative. Put together, we believe this creates scope for Galp to re-rate with less oil price dependency than in the past and justifies a clearer sector relative valuation premium," Lofting wrote.
On valuation adjustments, JPMorgan tightened the discount applied to Galp’s net asset value to 10%, placing it at the low end of the sector range, and raised Galp’s June 2027 price target to 20. For Repsol, the bank reduced the June 2027 price target to 17.5, a figure based on a blend of net asset value and earnings multiples aligned with European majors.
JPMorgan’s note rebalances emphasis toward low-cost upstream growth and cash-flow durability as central criteria when valuing European oil companies. The moves underline a strategic preference for assets that combine low production cost, lower carbon intensity and clear deleveraging potential.