BP Faces Mounting Debt Crisis And Investor Pressure In Renewables UTurn

Murray Auchincloss’s rise to the top of BP raised eyebrows from the outset. Promoted following Bernard Looney’s sudden departure, Auchincloss was seen by some as an understated numbers man – a far cry from the buccaneering charm of predecessors like Lord Browne. Critics were quick to note his role as finance chief during Looney’s era, a period seen by many as catastrophic for the company.

Supporters argued that a steady financial hand was exactly what BP needed. The company remains encumbered by tens of billions in debt, requiring experienced stewardship. Bob Dudley, a former boss, described Auchincloss as “one of the sharpest financial people” he had encountered. Yet Auchincloss’s much-vaunted “fundamental reset” has so far failed to inspire confidence in the City, especially as activist pressure from Elliott grows more intense.

BP is expected to unveil its third-quarter results amid rising questions. The firm’s net debt, which stands disproportionately high compared to peers like Shell, remains largely unchanged, raising concerns over Auchincloss’s pledge to reduce net debt to between $14bn and $18bn by 2027. Despite promises to bolster free cash flow, sell off assets, and boost investments in higher-return projects, analysts observe only marginal progress. Borrowings have fallen just $1bn over six months; some believe real reduction remains a distant dream.

The company’s challenges are compounded by the volatile oil price and market doubts over the value of BP’s remaining assets. After a concerted shift to renewables, BP is now finding fewer high-value assets left to sell—a circumstance described as “a fanciful goal” by industry analysts. BP’s reporting also faces scrutiny. The official net debt figure omits significant liabilities, including $17.1bn of hybrid bonds mostly issued during the pandemic and $13.6bn in global lease obligations. Shell, for comparison, includes such items in its own debt figures.

Payments from the 2010 Deepwater Horizon disaster continue to haunt BP, with $7.1bn in outstanding liabilities still on the books. All told, a comprehensive reckoning of BP’s true financial obligations lifts the total debt load to nearly $64bn. Independent research by Palissy Advisors suggests an even higher adjusted net debt, approaching $82bn when factoring in restricted cash and provisions for fines and litigation. The company, according to Palissy, reports the most understated net debt among supermajors and maintains the least conservative balance sheet.

The pivot to renewables under Looney, now abandoned, proved financially ruinous. BP accrued new energy assets at premium valuations, the most striking example being its $3.3bn acquisition of US biogas producer Archaea, plus assumption of $800m in debt. Further investments in wind, solar and Brazilian biofuels followed, but did little to offset the loss of profitable fossil fuel assets sold on the cheap. Over the bullish period between 2021 and 2024, BP’s net debt barely budged, while Shell’s fell by $10bn. Many now see Auchincloss’s debt-cutting targets as reliant on the successful disposal of Castrol and other assets, targets that analysts believe are overoptimistic given the urgency of BP’s situation and the public knowledge of its need to sell.

Investor returns are being sacrificed as share buybacks dwindle. This year’s reduction to $3bn is less than half the $7bn returned in 2024, whilst Shell returned $3.5bn to shareholders in just the first quarter of 2025. With oil prices falling short of BP’s assumptions, further cuts may be unavoidable. Activist pressure is mounting, and while a recent change of chairman may offer a temporary reprieve, questions over Auchincloss’s future linger. If current trends persist, even the much-hoped-for asset sales may yield too little, too late.