BP shares jump as oil giant targeted by activist investor
BP’s stock soared over 6% on Monday following reports that activist hedge fund Elliott Investment Management has taken a stake in the company.
The New York-based hedge fund is known for pushing strategic changes at companies it invests in, often advocating for restructuring, asset disposals, or even breakups. News of Elliott’s involvement has sparked optimism that it could drive much-needed improvements at BP, which has struggled with performance issues.
BP Under Pressure Amid Industry Shifts
BP has faced mounting challenges as it tries to navigate its energy transition strategy while contending with stronger-performing US competitors. The company’s stock has dropped 9.3% over the past year, in stark contrast to Shell, which has seen its shares rise by 6.2% in the same period. The decline has made BP more vulnerable, fueling speculation that it could become a takeover target.
Investor frustration has grown due to the company’s underwhelming financial performance and lack of a clear strategic direction.
Former CEO Bernard Looney had pledged to transform BP into a leader in green energy, with a commitment to achieving net zero emissions by 2050. However, his assumption that oil production had peaked did not yield the expected returns. Late last year, BP abandoned its plan to reduce oil output, pivoting back toward fossil fuels while maintaining its long-term net zero goal.
Upcoming Strategy Announcement and Cost-Cutting Measures
Current CEO Murray Auchincloss is set to unveil BP’s revised corporate strategy on February 26. The company is also preparing to report its annual financial results on Tuesday, with analysts forecasting fourth-quarter earnings of $1.2 billion (£970 million), significantly lower than the $3 billion reported a year earlier.
To boost performance, BP has announced plans to cut costs by $2 billion by 2026. As part of this effort, it recently confirmed the sale of a refinery in Germany. Additionally, in January, BP revealed it would reduce its global workforce by over 5%, equating to nearly 8,000 job cuts. The UK workforce of 15,000 is expected to be particularly impacted.
Industry Outlook and Political Influence
BP’s struggles come as US oil companies anticipate a boom under President Donald Trump, who has emphasized aggressive energy production with his campaign slogan, “drill, baby drill.” In his inauguration speech, Trump highlighted the role of oil in making the US a “rich nation again.”
Meanwhile, in the UK, Labour leaders Sir Keir Starmer and Rachel Reeves have prioritized economic growth, even approving Heathrow’s expansion despite environmental concerns. However, Energy Secretary Ed Miliband has taken a harder stance on fossil fuels, halting new oil and gas licensing in the North Sea.
Both BP and Elliott Investment Management declined to comment on the reports.
