BP (LON: BP) chief executive Murray Auchincloss has vowed to reveal a “new direction” for the energy giant as investors seek “transformative” change.
The energy giant unveiled a 36% slump in annual profits to $8.9 billion (£7.2bn) in its 2024 in which the firm said it has “laid the foundations for growth”.
It reported underlying RC profit – its measure of profit and loss – for the quarter was $1.2bn, compared with $2.3 billion for the previous quarter.
Auchincloss said he plans to set out a “new direction” for the firm at its delayed capital markets day in London on 26 February.
Revealing the firm’s fourth quarter results, he said BP has been “reshaping” its global portfolio, “sanctioning new major projects and focusing our low-carbon investment” – as well as reducing costs, a key expectation among investors.
BP said it has so far delivered $800 million of a planned $2bn structural cost reduction.
Meanwhile it pointed to a new contract for India’s largest oil and gas field with state-owned ONGC and “strong progress” towards landing a deal with Kirkuk in Iraq.
It said it has sanctioned 10 major hydrocarbon projects including Kaskida in the US Gulf of Mexico and and Tangguh in Indonesia, but that it had “stopped or paused 30”.
It has also pointed to plans to sell off its US onshore wind business and highlighted the derisking of its offshore wind portfolio, following the formation of a joint venture with Japanese firm Jera.
The firm has been rocked after reports suggested activist hedge fund Elliott Advisers has taken a stake in the firm in an effort to wrest change from the board.
Bloomgerg reported the firm, which has close to $70 billion in assets under management, wants BP to consider “transformative” measures to boost shareholder value.
A spokeswoman for New York and London-based Elliot declined to comment.
Elliot was founded in 1977 by Paul Singer and has been a known thorn in the side of many management teams since, including Dundee’s Alliance Trust in 2015. In the extraction business, the firm prompted minter BHP (LON: BHP) to divest its oil business in 2021 and encouraged $3bn divestment for Phillips 66 (NYSE: PHX).
Auchinloss, who was chief financial officer of BP before he replaced CEO Bernard Looney, said: “In 2024 we laid the foundations for growth. We have been reshaping our portfolio – sanctioning new major projects and focusing our low-carbon investment – and we have made strong progress in reducing costs.
“Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns.
“It will be a new direction for BP and we look forward to sharing it at our capital markets update on 26 February.”
Panmure Liberum analyst Ashley Kelty called the firm’s year end a “mixed bag” but said it had made some progress towards meeting investor demand to “ditch the low margin renewables strategy and focus on core O&G business where the company skills lie”.
He added: “Whether the board has the courage to change tack remains to be seen, although they have made some moves to water down the Looney targets on renewables. CEO Auchinloss’ seat is getting warmer, and with US activist investor Elliot building a stake, the pressure will be building to demonstrate he is the man to lead the company back to growth.”
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