UBS has highlighted BP, TotalEnergies and Vår Energi as the most attractive European energy stocks in its latest Equity Compass report, citing a combination of valuation, dividend yield and operational efficiency.
The Swiss bank’s Global Equity Framework assesses the trio for their ability to deliver shareholder returns while maintaining financial discipline in a shifting energy landscape. BP, led by its first externally appointed CEO, has refocused on core oil and gas operations after reversing a strategy adopted in 2020. The company produces roughly 2.4 million barrels of oil equivalent per day across the U.S., North Africa, the Middle East and Latin America. UBS notes BP offers the highest leverage to oil prices among major peers due to elevated financial leverage, while its valuation remains the lowest in the group and its dividend yield the highest.
TotalEnergies, France’s largest energy company, also produces about 2.4 million barrels of oil equivalent daily. The group maintains the strongest across-the-cycle profitability among the five major European oil majors and ranks as the world’s second-largest liquefied natural gas producer, with a particular presence in Africa. UBS highlights TotalEnergies’ low financial leverage and diversified revenue base, alongside consistent shareholder returns through regular and special dividends plus buybacks. The company plans to expand the Fujairah oil export pipeline in Abu Dhabi and has appointed a new exploration manager to assess opportunities on the Norwegian continental shelf.
Rounding out the trio, Norway-focused Vår Energi produces approximately 450,000 barrels of oil equivalent per day, with 90% of output originating in Norway. Eni holds a 60% stake in the company, which UBS identifies for its indicative dividend yield near 10% and reduced unit costs. Vår Energi’s recent acquisition of BlueNord, granting access to the Danish Underground Consortium, is expected to fund nearly one quarterly dividend at a 9% dilution for existing shareholders. The company reported adjusted net profit of $0.33 per share on $3.72 billion in revenue for the second quarter, beating analyst estimates, and has partnered with Equinor and Aker BP to explore frontier Norwegian oil and gas areas.
