The chief executive of BP has promised to “fundamentally reset” the oil company’s strategy to defend it against the threat of a radical overhaul by an activist investor.
BP reported a sharp slump in annual profits to $8.9bn (£7.9bn), from $14bn the year before, just days after it emerged that the activist hedge fund Elliott Investment Management has taken aim at the oil major by building a stake in the company.
The New York-based investor is expected to use its grip on the company to demand sweeping changes to BP, which could include ousting the BP chair, Helge Lund, and executing a boardroom cull, or a break-up of the 120-year-old company.
Auchincloss used BP’s annual financial results to argue that BP had already “laid the foundations for growth” in 2024 by reshaping its energy portfolio. He promised to “fundamentally reset our strategy and drive further improvements in performance” at an investor day later this month.
“It will be a new direction for BP, and not business as usual. I am excited about it and look forward to updating the market and seeing many of you then,” he said.
The changes are expected to include a further watering-down of BP’s climate commitments. Auchincloss said the company had already begun pursuing new fossil fuel projects and would restructure its low-carbon business “to grow, but in a more capital-light way”.
The advance of Elliott, which was first reported by Bloomberg, has come amid growing concerns that BP could become a takeover target after a series of disappointing financial results and criticism of its green energy strategy.
The company has fallen from favour among many big investors since its previous chief executive, Bernard Looney, set a plan for BP to become a net zero energy company by slashing its oil and gas production by the end of the decade in favour of spending billions on renewable energy projects.
In the past two years BP has lost almost a quarter of its market value, while its rivals in Europe and the US have managed to grow. The company’s share price bounced by 7% on Monday after it emerged that Elliott had taken the stake. The stock was flat on Tuesday morning.
The aggressive hedge fund typically takes stakes in companies that it believes have lost value because of mismanagement, and demands changes that can improve its market value. It has previously agitated for change at the drugmaker GSK and the housebuilder Taylor Wimpey.
Auchincloss has sought to defend the company against the fund by setting out plans for a “fundamental reset” of BP’s strategy. He declined to comment on Elliott’s stake.
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The company’s profits have fallen steadily since global oil and gas prices reached historic highs in 2022 after Russia’s invasion of Ukraine. Its earnings fell to $1.17bn for the final quarter of 2024, its lowest quarterly profit in four years and less than half the almost $3bn it reported for the same quarter the year before.
Auchincloss hopes to find $2bn in cost savings and create a simpler company. He warned last month that this would include cutting thousands of jobs from BP’s global workforce, amounting to 5% of its staff. The former chief financial officer is expected to unveil a new strategy at BP’s investor day this month.
Auchincloss said: “Since setting out our strategy five years ago, a lot has changed – in the global economy, across the energy sector and within BP. We have come through a period of active transformation, we have learned and we have been actively engaging with, and listening to, you, our shareholders.”
Auchincloss has already watered down some of the climate targets set by his predecessor, who first began diluting BP’s net zero agenda months before he abruptly left the company after admitting he had been dishonest about his previous relationships with colleagues.
