Elliott Management is urging BP to sell off major assets to address the undervaluation of its shares after acquiring nearly a 5% stake in the company, worth approximately $4.75 billion (£3.8 billion), according to the Financial Times. The U.S. activist investor’s recent move makes it BP’s third-largest shareholder.
The news of Elliott’s investment in BP caused the company’s stock to surge on Monday. However, on Tuesday, BP’s shares dropped after the company reported fourth-quarter earnings that fell short of expectations. The profit for the quarter was the lowest since the pandemic hit global oil demand in 2020, missing analyst estimates. BP attributed the disappointing results to weaker refining margins, increased turnaround activity, lower seasonal customer volumes, and fuel margins.
In its earnings report, BP also hinted at a significant shift in strategy aimed at improving stock performance and restoring investor confidence. BP’s CEO, Murray Auchincloss, stated, “Building on actions taken in the past 12 months, we plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns.”
The company will outline its new strategy at a Capital Markets Update on February 26, with analysts and investors expecting further cuts to its low-carbon business and a commitment to boosting oil and gas production.
The pressure on BP has intensified with Elliott’s push for change, which could include a strategic overhaul or even changes to the company’s board. This week, Elliott also targeted another major oil company, Phillips 66, demanding changes after acquiring a $2.5 billion stake.
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