BP Teases Fundamental Reset of Strategy to Boost Returns and Cash

ByTsvetana Paraskova– Feb 11, 2025, 6:00 AM CST

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BP (NYSE: BP) on Tuesday pledged to fundamentally reset its strategy as it booked its lowest annual and quarterly profits in years and seeks to push up its stock performance and regain investor trust.

“Building on the actions taken in the past 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns,” BP’s chief executive Murray Auchincloss said in a statement as the UK-based supermajor reported its fourth-quarter and full-year 2024 results today.

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BP’s leadership will communicate its new strategy, which “will be a new direction for bp”, at a Capital Markets Update on February 26, Auchincloss added.

The executive, who took over as BP’s CEO after the abrupt resignation of Bernard Looney, has already vowed to make the supermajor a simpler and far more focused company and has cut some investments in renewables.

Analysts and investors expect even more cuts to the low-carbon business and a pledge to boost oil and gas production at the capital markets day later this month.

Shell and Equinor have already announced significant reductions in their commitment to renewable energy.

BP’s stock has been underperforming its UK-based peer, Shell, in recent years and Auchincloss and the board have been under increased pressure to seek fundamental changes to the business to reward shareholders more.

The pressure became more intense earlier this week after reports emerged that activist investor Elliott Management had bought a stake in BP and would be pushing for changes in strategy, or even for board reshuffles.

Meanwhile, BP on Tuesday reported an underlying replacement cost profit – its proxy for net profit – of $1.17 billion for the fourth quarter, down from $2.27 billion for the previous quarter, and down from $3 billion a year earlier.

The Q4 2024 earnings missed the analyst consensus estimate of $1.26 billion and were the lowest quarterly profit since the fourth quarter of 2020 when the pandemic was hitting global oil demand. BP attributed the lower profit to weaker realized refining margins – as flagged last month – as well as higher impact from turnaround activity, seasonally lower customer volumes, and fuel margins.

Today BP announced a $1.75 billion share buyback program related to the fourth quarter results which will be executed prior to reporting the first-quarter results.

BP will announce its full 2025 buyback and capex guidance at the capital markets day on February 26.

By Tsvetana Paraskova for Oilprice.com

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