BP Announces Strategic Reset Amid Investor Pressure and Falling Profits
BP has pledged to "fundamentally reset" its strategy following a sharp decline in profits and pressure from an activist investor. The company's profits plummeted from $13.4 billion in 2023 to $8.2 billion last year, raising concerns about its transition to green energy.
Elliott Management, a US hedge fund known for its aggressive investment approach, has recently targeted BP. Murray Auchincloss, BP's chief executive, acknowledged the need to enhance performance and drive shareholder returns.
"We plan to fundamentally reset our strategy and drive further performance improvements, all in service of growing cash flow and returns," said Auchincloss.
BP's shares have underperformed compared to its rival Shell, with an approximately 9% decline in value over the past year. Investors have expressed dissatisfaction with the company's high debt levels and lack of strategic clarity.
While most oil companies experienced profit declines last year due to falling energy prices, BP's challenges extended beyond this trend. A power outage at its Whiting refinery significantly impacted profits.
Moreover, BP is divesting its onshore wind farms and forming a joint venture for its offshore wind portfolio. The company is predominantly focusing on its core business of fossil fuel production, refining, and sales.
Speculation persists about a potential merger with Shell, given their shared British heritage. Auchincloss hinted at a "new direction for BP" without confirming such a possibility. The company plans to provide further details during a capital markets update on February 26th.