Energy giant BP is making significant changes to its strategy, vowing a “fundamental reset” as it struggles with plunging profits. The company’s CEO, Murray Auchincloss, has promised to shift focus away from renewable energy sources and invest more in oil and natural gas production.
Analysts predict that BP will reduce spending on low-emissions technologies like wind and hydrogen, instead boosting oil and gas production. This move comes after a long period of lackluster share performance compared to industry peers, with some analysts attributing the weakness to an overly aggressive transition strategy under former CEO Bernard Looney.
Looney had invested heavily in green technologies during his tenure, but oil prices have recovered, renewable energy sources have struggled, and a shift towards fossil fuels has taken power in Washington. Auchincloss appears to be reversing this course, acknowledging that the previous strategy was “misguided.”
BP’s share price has fallen sharply on Tuesday, amidst poor financial results, including an adjusted profit of 60% lower than last year and annual profits of $8.9 billion, down by a third.
The shift in BP’s strategy is likely to be driven by activist hedge fund Elliott Investment Management, which has taken a stake in the company. Low valuation may have appealed to Elliott, which often takes small stakes and agitates for change with the support of larger shareholders.
Rebuilding investment in fossil fuels will not be easy, as BP has spent relatively less on this business in recent years. Analysts predict it will take years for the company to build back its investment, highlighting that there is no quick fix for the struggling energy giant.
Source: https://www.nytimes.com/2025/02/11/business/bp-earnings-4q-2024.html