KEY POINTS
- BP shares surged 7 percent after reports of Elliott’s stake.
- Investors anticipate leadership changes and a revised strategy.
- BP’s upcoming Capital Markets Day will be crucial for its future direction.
BP shares jumped 7 percent on Monday, marking the biggest single-day gain in two years, following reports that activist investor Elliott Management has taken a stake in the company.
The recent move has ignited conversations about Elliott potentially steering for board changes and strategic overhaul, that will optimize shareholder profits.
BP’s stock climbed to 463.70 pence by midday trading, outperforming its energy sector peers. Investors have been frustrated with BP’s unclear direction, particularly its struggles to balance oil and gas investments with its renewable energy strategy.
Murray Auchincloss, who took over as BP’s CEO in January 2024, has faced mounting pressure to turn the company’s lagging performance around. With Elliott’s involvement, investors anticipate major changes to BP’s leadership and long-term strategy.
BP’s strategy faces scrutiny
BP has struggled in recent years, underperforming its rivals like Shell and ExxonMobil. In 2024, BP’s stock dropped nearly 16 percent, making it one of the weakest performers in the sector. Critics say the company has failed to present a clear plan for growth and profitability.
Some analysts believe Elliott could push for leadership changes, including replacing BP’s chairperson. “Given the circumstances around the previous CEO’s departure, activists will likely demand changes at the top level,” said RBC Capital Markets analyst Biraj Borkhataria.
BP is set to report fourth-quarter earnings on Tuesday and has also postponed its Capital Markets Day (CMD) from February 11 to February 26, citing a medical procedure for Auchincloss.
According to Reuters, the CMD is expected to be a crucial moment for BP to outline its revised strategy, and with Elliott’s stake now public, the pressure has intensified.
What’s next for BP?
The investment world waits attentively to observe BP’s leadership handle the expanding pressure for transition. Auchincloss has redirected BP toward additional oil and gas activities while delaying plans for renewable energy development since he took over.
Moreover, the analysts predict that Elliott plans to drive intense restructuring by dividing BP’s core energy sector from its transition operations.
The size of Elliott’s stake has not been disclosed, but reports suggest it is large enough to influence decision-making. The track record of Elliott indicates to Jefferies analyst Giacomo Romeo that the organization will push for both portfolio restructuring and cost reduction, to produce maximum free cash flow.
All attention revolves around BP’s Capital Markets Day set for only two weeks, as the company needs to show its position regarding activist pressure as well as what decisions Elliott aims to trigger in BP’s future path.
