Tuesday Murray Auchincloss, CEO of the Energy Giant in difficulty, promised a “fundamental restoration” of the company’s strategy on Tuesday while reporting of disappointing earnings.
The move comes after a long period of unconventional sharing performance compared to its peers in the sector. The weak price of BP actions attracted the interests of Elliott Investment Management, a hedge fund known for shaking its objectives in an attempt to improve the value of shareholders.
Auchincloss is reserving the details of the BP shift for a presentation to investors on February 26, but analysts seem to have few doubts about his direction.
It is likely that BP reduces expenses for low -emission energy technologies such as wind and hydrogen and trying to increase oil and natural gas production. “We would predict that there will be important changes in the allocation of capital, in particular around the lower expenditure in the arena at low carbon emissions,” wrote Alastair Syme, Citigroup analyst, in a note to customers Tuesday.
Mr. Auchincloss appears to be directed towards a great reversal of the course carried out by his predecessor, Bernard Looney, who left the company in 2023 after not having disclosed personal relationships with colleagues.
In the first part of this decade, when oil prices were low and the governments were pressing companies to reduce emissions, Mr. Looney aggressively invested in green technologies such as offshore wind and limited themselves to limiting oil and gas.
For investors, this strategy now seems misleading. The prices of the Gasle and natural gas have been recovered and sources of renewable energy have gone badly in recent times and an administration that favors fossil fuels has taken energy in Washington.
“The weak price of BP actions is the result of a very too radical transition strategy,” wrote Irene Himona, analyst of the research company of Wall Street Bernstein, in a note.
BP has long been under fire by investors, who weighed on his actions. Syme thinks that the company is now about 10 % cheaper compared to the main European rivals, in shell and totalizations of France.
A low evaluation may have appealed to Elliott, the hedge fund of the activists who accumulated a position in BP, said that a person with knowledge of the question that spoke on condition of anonymity because the details were private. The dimension of Elliot’s participation is not yet clear, but activist investors often take small post office and shake for change with the support of larger shareholders.
Both Elliott and BP refused to comment on Elliot’s investment, which previously was reported by Bloomberg.
By adding to his pressures, BP reported poor financial results on Tuesday. The rectified profit for the fourth quarter fell by about 60 percent compared to a year ago, while the annual profit dropped by a third to $ 8.9 billion. The price of the shares of the company, which had increased sharply on Monday after the news about Elliott’s participation, went down on Tuesday.
Transmitting BP from being an aggressive alternative energy investor to an oil and gas player will not be easy. BP has spent relatively less for its fossil fuel activities in recent years, affirm analysts and will take years to reconstruct this investment. “Supported under investment means that there is no quick solution,” Syme wrote.
Michael J. de la Merced Contributed relationships.