BP's share price experienced a significant jump on Monday, driven by the belief that activist investor Elliott Management would advocate for changes in the company's leadership and strategy to improve shareholder returns. Concerns about BP's performance and lack of a clear growth plan have persisted, leading to a 16% decline in its stock value last year. Elliott's involvement is expected to result in a push for board changes, portfolio adjustments, and a focus on high-return oil and gas projects.
BP Plc's shares surged by 7 percent on Monday, poised for their largest daily gain in two years, as investors anticipated that activist shareholder Elliott Management would push for board changes and strategic shifts to enhance returns. Murray Auchincloss, BP's CEO appointed in January 2022, has faced challenges in reversing the company's underperformance. Anticipation that Elliott's acquisition of a stake would trigger reforms propelled shares up to 463.70 pence by 1223 GMT.
If the gains persist, it would mark the biggest daily increase since February 2023. Investors have expressed concerns about BP's lack of a clear strategy for growing its oil and gas business and delivering substantial returns to shareholders. Its stock plummeted nearly 16 percent last year.Among other energy giants, Shell declined almost 4 percent, while ExxonMobil climbed 8 percent. With a market value of approximately £69 billion ($85.57 billion), BP's valuation is less than half that of Shell. This underperformance has also positioned the British company as a potential takeover target. Abu Dhabi National Oil Company (ADNOC) explored a potential acquisition last year. 'Given the circumstances surrounding the changes to its previous CEO, we believe any activist would call for a change in the Chairperson at the very least,' stated Biraj Borkhataria, an analyst at RBC Capital Markets. Auchincloss has been striving to restore investor confidence in the company's strategy following the resignation of his predecessor, Bernard Looney, in September 2023, due to undisclosed relationships with employees.'In terms of strategic business reviews, we would anticipate a push to effectively split up the core oil and gas segment into some of BP's transition growth engines, in order to help minimize capital into these areas,' added Borkhataria. BP also delayed its investor day to February 26 from February 11 because Auchincloss required a medical procedure. Since taking office, he has tempered investments in renewables and low-carbon energy, prioritizing higher-return oil and gas projects. 'Reports of Elliott taking an activist position in BP emerge at an interesting time with its CMD only two weeks out. Management was already under pressure going into this event – this development, if true, adds to it,' commented analysts at brokerage TD Cowen. 'Given Elliott's track record, we believe its involvement could lead to board changes for BP, portfolio rationalization, and capex prioritization on upstream projects, aiming to maximize free cash flow generation,' said Giacomo Romeo, an analyst at Jefferies. A source familiar with the matter disclosed to Reuters on Saturday that Elliott had accumulated a stake without revealing its size. Bloomberg News earlier reported that U.S.-based Elliott was seeking to bolster shareholder value by urging BP to consider transformative measures and deemed Elliott's stake in the company 'significant.
BP Elliott Management Activist Investor Share Price Surge Board Changes Strategic Shifts Oil And Gas Industry Renewables Underperformance Shareholder Value
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