In This Article:
LONDON—BP said it would boost oil-and-gas production and sharply cut investments in clean energy, pivoting back to fossil fuels in a bid to revive its flagging share price.
The struggling British energy company announced the moves Wednesday as part of a much-anticipated strategy update aimed at winning over investors. Those include activist hedge fund Elliott Management, which recently took a stake in BP with a view to pushing for significant changes.
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“It’s a radical shift,” Chief Executive Murray Auchincloss said in an interview. BP would focus on pumping more oil in the U.S., where the company is a big offshore producer, and in Middle Eastern countries including Oman, the United Arab Emirates and Iraq, he said.
Auchincloss declined to comment on whether BP had altered its plans to reflect conversations with Elliott.
BP shares closed down about 1.5% in London. Investors may have been disappointed by the size of the company’s buyback this quarter, according to analysts at Bernstein. The analysts said BP was right to live within its means given its debt levels, adding that Auchincloss’s longer-term plan would bring BP back into line with its major peers strategically.
The context
BP’s shares have lagged behind those of rivals Shell, Exxon Mobil and Chevron since the company took the most aggressive steps by an oil major to shift toward lower-carbon sources of energy in 2020. That bet backfired when fossil-fuel consumption roared back after the early days of the pandemic and prices rocketed when Russia invaded Ukraine.
Since taking the helm in the fall of 2023, Auchincloss has dialed back BP’s hydrogen and biofuel plans, put its onshore-wind business in the U.S. up for sale and launched a cost-cutting drive. He has also greenlighted several big oil-and-gas investments and secured quick-and-easy access to barrels in Iraq and elsewhere.
But BP has struggled to reduce its debt load and the moves have failed to ignite its share price, leading to speculation among bankers that a rival could swoop in for parts—or the entirety—of the business.
Companies in sectors from oil to autos have struggled to calibrate the pace of the energy transition as governments have wavered in efforts to curb climate change. President Trump began dismantling the Biden administration’s climate-focused initiatives soon after taking office in January.