BP Chief Pledges Strategic Reset as Profits Tumble Amid Elliott Pressure

BP’s newly appointed chief executive Murray Auchincloss has announced plans to “fundamentally reset” the oil giant’s strategy amidst declining profits and mounting pressure from activist investor Elliott Management. The company reported a significant 33% drop in underlying profits to $9 billion for the previous year.

The strategic overhaul, scheduled for presentation at an investor day on 26 February, is expected to abandon the company’s previous commitments to reduce oil and gas output whilst scaling back its ambitious low-carbon investment programmes. Fourth-quarter profits fell short of analysts’ expectations, reaching $1.17 billion compared to forecasts of $1.26 billion, markedly lower than the $3 billion recorded in the same period the previous year.

Despite market challenges, BP has committed to a $1.75 billion share buyback programme for the upcoming quarter. The company’s performance has notably lagged behind its oil-focused competitors, with its green investments struggling to deliver the promised returns. The emergence of Elliott Management as a significant stakeholder has intensified pressure for substantial organisational changes.

Auchincloss, who succeeded Bernard Looney following his unexpected departure in late 2023, highlighted the substantial actions already taken under his leadership. These measures include eliminating 30 underperforming projects, approving 10 new initiatives, and restructuring the offshore wind business into a joint venture requiring reduced capital investment from BP.

The CEO acknowledged the dynamic nature of the energy sector, citing unforeseen events such as the Covid-19 pandemic and the Russian invasion of Ukraine as catalysts for strategic adaptation. The company maintains its focus on monetising its Russian assets, particularly its stake in Rosneft, despite ongoing international sanctions.

Industry analysts, including Lydia Rainforth from Barclays, have characterised the results as disappointing, suggesting that Auchincloss’s commentary indicates an understanding of the urgent need to enhance performance and deliver stronger financial outcomes.