BP shares climbed by more than 5% on Wednesday after hedge fund Elliott Management revealed a 5.006% stake in the British oil major.
The stock was up 5.11% at 10:12 a.m. London time, partially reversing its declines year-to-date.
The jump follows Elliott’s regulatory filing late Tuesday, which confirmed its holding in BP, now making it one of the company’s significant stakeholders alongside BlackRock, Vanguard, and Norway’s sovereign wealth fund.
Elliott’s holding, executed through equity swaps, does not carry voting rights but reflects an intent to influence direction by aligning with other shareholders.
According to Reuters, the hedge fund has already engaged with over 20 of BP’s largest active investors to build support for its agenda.
Elliott calls for deep spending cuts and higher returns
Elliott’s proposals centre on improving BP’s financial performance by trimming annual capital expenditure to $12 billion from its current range of $13–$15 billion and driving free cash flow up from $8 billion in 2023 to $20 billion by 2027, Reuters reported citing sources.
The fund argues this can be achieved through extensive cost-cutting, particularly in administrative spending.
In private discussions, Elliott has also called for divestments of BP’s solar and offshore wind businesses, describing the company’s renewable ventures as underperforming and distracting from core operations, the sources told Reuters.
These proposals reflect a broader push to reverse BP’s transition strategy, launched in 2020 under former CEO Bernard Looney and continued by current chief executive Murray Auchincloss.
BP responded on Wednesday by stating that it “welcomes constructive feedback from all shareholders,” while reiterating that it has received positive responses from many investors regarding its existing strategy.
Elliott dissatisfied with BP’s executive team despite oil push
The renewed scrutiny comes at a time of strategic recalibration within BP.
In February, the company confirmed it would invest $10 billion in oil and gas projects through 2027, dialling back previous commitments to slash emissions by 40% by 2030.
It now targets a reduction between 20% and 30%, citing the need to maintain oil and gas output to meet global demand.
BP’s decision to scale down its green ambitions has drawn mixed reactions.
Legal and General, the firm’s seventh-largest shareholder, expressed “deep concern” earlier this month about the renewed emphasis on fossil fuels.
However, many energy analysts have applauded the pivot as more pragmatic given market dynamics and recent oil price volatility.
The company’s top leadership has also come under pressure.
Although Auchincloss and Chair Helge Lund were retained following the board’s recent re-election vote, both saw a reduction in support from shareholders.
Elliott is reportedly dissatisfied with BP’s broader executive team and has suggested underperformance has not been adequately addressed.
Analysts see takeover potential amid strategic shakeup
BP’s underperformance relative to peers like Shell and ExxonMobil has long frustrated investors.
The company’s stock has lagged rivals even as oil prices rebounded post-pandemic.
With a major activist now in play and continued volatility in oil markets driven by trade tensions between the US and China, BP is once again being floated as a possible takeover candidate.
Energy commentators have suggested that Shell or US oil majors like Chevron and ExxonMobil could consider acquisition bids, particularly if BP continues to streamline its portfolio and enhance returns.
Elliott’s intervention could act as a catalyst in this direction.
BP is set to report its first-quarter earnings on Tuesday.
The company has already warned of lower upstream production and higher net debt compared to the final quarter of 2024, setting the stage for a closely watched update amid ongoing strategic flux.
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