A BP logo its petrol stand in Katwijk, Netherlands. (Photo: Yuriko Nakao)
Going by near-term metrics, energy giant BP (LON: BP) has suffered a troubling stock price slump from already sagging levels relative to its peers – a position no company wants to be in.
For the year to April 17, BP’s share price came in 32.42% lower. Year-till-date it is currently down 12.41% and has risen by just 14.42% over the past five years. Contrast the performance with that of its U.K.-listed peer Shell (LON: SHEL) which is down 16.2% on an annualized basis and 3.59% year-till-date for the same period but up 76.64% over five years.
Not only does the long-term performance of Shell’s stock put BP in the shade, that of U.S. supermajor ExxonMobil’s (NYSE: XOM) stock, which logged an uptick of 144.45% over five years till date, makes it look absolutely sclerotic.
The five-year stock price appreciation levels of Chevron (58.45%) and TotalEnergies (61.09%) also pip BP’s by considerable margins. Unsurprisingly, markets and investors are loosing their patience with BP.
An Activist Investor And A Shareholders’ Revolt
A much-needed jolt arrived on February 13, as activist investor Elliott Investment Management took a near-5% stake in BP. Known to shake things up at its investment targets, Elliot’s move prompted as quick a response from BP as shareholders could have hoped for.
BP CEO Murray Auchincloss – who was already in the process of returning the company back to oil and gas basics – announced a reset promising to do “fewer things with higher returns” on February 26.
He mentioned two key regions for oil and gas growth – the U.S. and the Middle East. The BP CEO also reiterated his plan to grow hydrocarbon production to the 2.3 million to 2.5 million barrels of oil equivalent per day range by 2030, having scrapped a previous target to reduce output during the decade.
BP has been attempting to change things for some time now, under Auchincloss, who took the CEO’s post in September 2023. He inherited the company’s underwhelming performance under his predecessor Bernard Looney, as well as the turmoil from the latter’s unceremonious and sudden exit.
In January, BP announced 8,000 job cuts, followed by plans to cut investments in renewable energy, and raise its annual spending on oil and gas to $10 billion, in a bid to improve investor confidence.
To address shareholder dissatisfaction with BP’s leadership, Chairman Helge Lund – seen among the architects of its costly green agenda – offered to step down in April 2026.
However, nothing seems to be working and BP’s stock price continues to disappoint. And as the company’s stock continues to underwhelm, pressure is growing on Auchincloss.
Shareholders’ ire surfaced at the company’s annual general meeting on Thursday, when nearly a quarter of them voted against Lund’s reelection. The revolt was the largest shareholder protest vote against a chairman of company on the FTSE 100 – the U.K. blue chip index – in half a decade.
What May Come Next?
Elliott Investment Management is not known to sit back when it takes a position in a target company. It is expected to push BP to sell assets and boost its balance sheet which may be stock price positive. Rumors of a potential takeover or merger with Shell have also surfaced.
Such chatter is not new. It is fraught with challenges and competition concerns, and is in fact an embarrassing indictment of how far BP has fallen. Furthermore, it is doubtful Shell would be interested in such a deal.
As I have noted before, BP’s majority shareholders would likely seek an offer that represents at least a doubling of the company’s current price, something Shell’s shareholders may not be prepared to agree to. Elliott is also said to be in favor of BP’s independence and not a merger.
A holistic portfolio rejigging with renewed medium-term faith in oil and gas ventures will probably be, and in many ways already is, the order of the day. Of course, as Auchincloss has previously stressed, renewables will remain “important” for BP to stay in because its giant trading business needs a steady supply of electrons.
However, the company will be “smart” and strategically redirect capital toward oil and gas moves that may potentially offer higher rates of return, according to the CEO. Whether this will bear fruit in terms of stock price appreciation and calm BP shareholders’ nerves remains to be seen.
Disclaimer: The above commentary is meant to stimulate discussion based on the author’s opinion and analysis offered in a personal capacity. It is not solicitation, recommendation or investment advice to trade oil and gas stocks, futures, options or products. Energy and equity markets can be highly volatile and opinions in the sector may change instantaneously and without notice.