BP Share Surge Following Elliott Investment Stake

BP's shares have witnessed a significant increase after it was revealed that activist hedge fund Elliott has acquired a stake in the oil and gas giant. On Monday morning, shares rose by over 6% following reports that New York-based Elliott Investment Management had taken a position in BP.

Elliott's reputation for advocating strategic change at companies it invests in has fueled optimism that the hedge fund could potentially revitalize BP's performance. BP has faced challenges as it navigates the transition to net zero and competes with higher performing US counterparts.

The oil giant's share value has declined by 9.3% over the past year, raising concerns about its vulnerability and the possibility of a takeover. In contrast, Shell, a rival company, has experienced a 6.2% increase in share value during the same period.

Investors have expressed dissatisfaction with BP's performance compared to rivals and a perceived lack of clear direction. Former CEO Bernard Looney had pledged to transform the company into a carbon-neutral enterprise by 2050, but his anticipation of peak oil production proved inaccurate. The company has since shifted its focus back to fossil fuels.

BP's CEO, Murray Auchincloss, is set to unveil a new strategy for the company on February 26. Investors are anticipating weak earnings when BP releases its financial results for last year. Analysts predict underlying profits of $1.2 billion for the fourth quarter of 2024, a significant decrease compared to the $3 billion reported a year prior.

BP has pledged to reduce costs by $2 billion by the end of 2026 and announced the sale of a refining facility in Germany last week. Additionally, the company has initiated plans to lay off over 5% of its global workforce, which includes approximately 8,000 employees in the UK.

While BP faces these challenges, US rivals anticipate a prosperous period under President Trump. In his inauguration speech, Trump emphasized the importance of oil production and its potential to enhance the nation's economic prosperity.