Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
BP will spend $10bn a year on producing more oil and gas, slash its spending on renewable energy and sell $20bn of assets as it tries to revive its share price and respond to pressure from activist investor Elliott Management.
The UK-listed oil major told investors on Wednesday that it would pivot away from a five-year-old plan to cut oil and gas output and invest heavily in renewable energy.
Shares had risen more than 1 per cent ahead of the strategy announcement on Wednesday morning but were trading 1.8 per cent lower after the update was released.
In a break from its previous strategy, BP will increase its target for oil and gas production to a maximum of 2.5mn barrels a day by 2030, with an option to raise it further by 2035.
It had previously pledged to cut output to about 2mn b/d by the end of the decade. The new goal would still see BP produce less oil and gas in 2030 than the 2.6mn barrels a day it pumped in 2019.
Meanwhile, BP will cut its spending on renewable energy by $5bn a year, to between $1.5bn and $2bn. It also said it would sell $20bn of businesses in the next two years, potentially including its lubricants arm Castrol, which has been placed under “strategic review”.
BP also said it would cut its net debt from $23bn to between $14bn and $18bn by the end of 2027.
Wednesday’s presentation to investors was the first time that Murray Auchincloss, who formally became chief executive in January 2024, has outlined his vision for BP.
The group has been under increased pressure to boost its performance after it emerged this month that the US hedge fund Elliott Management had built a near 5 per cent stake in the £72bn FTSE 100 company.
Auchincloss said on Wednesday: “Today we have fundamentally reset BP’s strategy. We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency.”
Read the full article here
