Fate of BP top brass in the balance after: Activist Elliott 'evaluating' new strategy as oil giant ditches green agenda

Activist investor Elliott was last night poring over BP’s new strategy after the energy giant admitted its rush to Net Zero was ‘misplaced’.

In a highly-anticipated update, chief executive Murray Auchincloss watered down BP’s climate change targets and ramped up investment in oil and gas.

But his masterplan, which also included proposals to sell parts of the business including its £8billion motor oil arm Castrol, did little to cheer investors and BP’s share price drifted lower.

That could spell bad news for Auchincloss and chairman Helge Lund whose jobs are seen to hinge on the success of the ‘fundamental reset’ of BP’s agenda.

The verdict of Elliott, which is run by notorious New York hedge fund tycoon Paul Singer and has built a near-£4billion stake in BP to become its third-largest shareholder, is likely to be crucial in deciding their fate.

Sources close to Elliott last night said that it was ‘evaluating’ the proposals.

Analysts said the situation was particularly precarious for Lund, who has been chairman since 2019 and has already overseen a number of failed strategy shifts as well as the appointment and sudden departure of former chief executive Bernard Looney.

Auchincloss, who took over from Looney last year, yesterday admitted that BP’s ‘optimism for a fast [green energy] transition was misplaced’ and said it had gone ‘too far, too fast’ down this road in recent years.

As part of his new strategy to close the valuation gap between BP and its rivals, he plans to increase the company’s oil and gas investment to £8billion a year and slash spending on renewables by nearly £4billion to £1.5billion.

BP wants to reduce its net debt to between £11billion and £14billion by the end of 2027, compared to £18billion at the end of last year.

And it is aiming to raise some £16billion by 2027 by selling off parts of the business including lubricants arm Castrol, which could go for £8billion, and a share of its solar unit Lightsource.

Its total capital expenditure will be slashed by as much as £2.4billion to a target of £10.3billion within two years.

And the company plans to cut £4billion in costs by the end of 2027, which is more than its previous goal of saving £1.6billion between 2023 and 2026. The shares fell 1.4 per cent, or 6p, yesterday to 430.9p.

It is not yet clear whether the plans go far enough to appease Elliott. The hedge fund reportedly wanted BP to cut renewables spending and sell a large swathe of its assets, including in its green business. The activist also wanted to see an aggressive chairman leading the board.

‘The fact its share price fell on the news implies investor disappointment that it isn’t being more aggressive with the U-turn from renewables back to oil and gas,’ said Dan Coatsworth, an analyst at AJ Bell.

‘This is Murray Auchincloss’s moment to show the reset was in the best interests of the company and its shareholders.

‘He will need to deliver a sharp increase in earnings as quickly as possible otherwise BP might find it is under pressure to join the army of companies replacing the person at the top.’

Derren Nathan, an analyst at Hargreaves Lansdown, said: ‘The chief executive has put his best foot forward and has probably bought himself some breathing space.

‘However, if the actions don’t boost profits as expected the pressure will be back on.

‘As for the chairman he’s very much part of the old guard which means he remains in a more precarious position.’