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BP’s chief executive wants to more than double the oil major’s market value to $200bn within five years, restoring the company to the level it achieved before the 2010 Deepwater Horizon disaster.
Murray Auchincloss told the Financial Times that BP would capitalise on “tremendous” demand for oil and gas after this week abandoning a plan to reinvent itself as a green energy company.
“At the end of the decade, it would be nice to be back to where we were before Macondo,” said Auchincloss, referring to the name of the oil well that blew out, causing one of the worst spills of all time and leaving BP with a $62.5bn clean-up bill.
He spoke a day after BP, whose current market value is just under £70bn ($89bn), cut its annual spending on renewables by 70 per cent and pivoted back to its core oil and gas business.
The plan, which has received a lukewarm reception from the market, is an acknowledgment by BP that the energy transition is moving far more slowly than expected.
“Oil and gas demand is going to be around for a long time,” said Auchincloss, when asked what BP would look like after 2050. “There’s still going to be tremendous amounts of demand for it.”
He said the growing electricity demands of datacentres would make gas, in particular, the fuel of choice. “The challenge is how do we decarbonise this stuff as much as you can,” he said, adding that BP was already actively capturing carbon emissions.
While Auchincloss has dropped all targets for renewables and wants to move BP’s wind and solar arms off the company’s balance sheet, he said these would still be “very big” businesses.
BP has been criticised for moving too slowly to implement its strategy but Auchincloss said he had no regrets about his first year as permanent chief executive. “Nothing comes top of mind,” he said.
“You don’t announce a strategy change until you change it,” he said, adding that if he had announced such a bold pivot before laying any groundwork, the market would not have believed him.
BP has been under pressure to improve its performance, particularly after it emerged earlier this month that activist investor Elliott had built a near 5 per cent stake in the company and was pushing for change.
A person familiar with Elliott’s thinking said on Thursday the company’s plans did not go far enough, having previously called for big divestments and cuts to spending on renewable energy. Bloomberg first reported the hedge fund’s dissatisfaction with the new strategy.
Auchincloss declined to comment on whether he had had any interaction with the New York-based hedge fund.
He acknowledged that BP would suffer some financial pain in the short term as it refills its pipeline of oil and gas projects after years of trimming its portfolio. But he said he would focus on promoting the company to American investors and said the majority of BP’s growth would come from the US and the Middle East.
“We’re more American than an awful lot of the American companies are,” he said.
“I’m really focusing on American investors and showing them how attractive we are relative to their domestic opportunities in the States,” he said, adding that the management team would speak to more than a third of BP’s shareholders in roadshows over the coming weeks.
He said, however, that moving the company’s listing to the US was “not on the agenda”.
Auchincloss also defended BP against criticism that it is less valuable, as an oil and gas company, than its peers such as ExxonMobil and Chevron, which have market capitalisations of $481bn and $279bn respectively.
“Our size is smaller, but the quality of our assets is exceptionally high,” he said, before reeling off a list of BP’s oil and gas fields that he said were the envy of the industry.
“The upstream is absolutely world class and is the envy of other corporations. We have a very, very, very good integrated position that enables trading. And American companies don’t have trading. They’d love it. We compete head to head with Shell, who’s twice our size [by market capitalisation].”
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