Elliott Urges BP to Shift Away from Oil and Gas Expansion
Hedge fund Elliott Management, now holding over 5% of BP's shares, has urged the energy giant to shift away from its expansion in the oil and gas business. Elliott, led by Paul Elliott, believes BP can achieve higher valuation and free cash flow through more disciplined spending.
Elliott proposes reducing BP's capital expenditures to $12 billion per year, a significant cut from its current levels. Additionally, Elliott suggests achieving further cost savings of $5 billion. The hedge fund believes this approach can boost BP's free cash flow by 40 percent.
Elliott criticizes BP's current strategy, particularly CEO Murray Auchincloss' 'fundamental restart' plan, deeming it insufficient. Elliott recommends selling BP's solar and offshore wind businesses to raise funds and focus on core operations.
To illustrate its point, Elliott highlights BP's past struggles with capital discipline. It points to cost overruns on the Tortue LNG project and high costs leading to partner withdrawal from a shale oil joint venture. Elliott argues that BP's management has not adequately addressed these issues.
Elliott's alternative plan aims to increase BP's free cash flow to $20 billion by 2027. The hedge fund's increased stake in BP signals its confidence in its proposed strategy and its dissatisfaction with the current management's approach. However, it remains to be seen how BP will respond to Elliott's demands.
Read also:
- India's 2021 Financial Reforms: Reducing Bank Stake, Boosting Jobs, and Pragmatic Budget
- Orioles' 2025 Turnaround Powered by Late-Season Pitching Acquisitions
- The Cost of Speech is Zero, True Strength Lies in Unity
- Aiming to simplify the move towards cleaner automobiles, the newly established ministry plans to take direct action with Pannier-Runacher, Létard, and Vautrin at the helm.
