Latest news with #MurrayAuchincloss
Reuters
2 days ago
- Business
- Reuters
BP needs to scrap its Big Oil mentality, and its buybacks: Bousso
LONDON, June 3 - BP has jumped from crisis to crisis in recent years, severely eroding the British firm's stature as one of the world's leading oil companies. Given the increasingly challenging dynamics in today's oil market, BP may finally need to accept that it is no longer a true oil major and can't keep managing cash like one. The exclusive Big Oil club of Exxon Mobil (XOM.N), opens new tab, Chevron (CVX.N), opens new tab, Shell (SHEL.L), opens new tab, TotalEnergies ( opens new tab and BP (BP.L), opens new tab has for decades been synonymous with sprawling upstream and downstream oil and gas operations, solid balance sheets and long-term strategies that have helped generate sizeable, stable shareholder returns. But BP hasn't ticked most of these boxes for years, having dealt with a succession of crises over the past 15 years that have slashed its market cap and left it financially vulnerable and lacking clear strategic direction. Most recently, a failed foray into renewables and a management scandal saddled the company with a ballooning debt pile as it struggles to revert back to oil and gas. CEO Murray Auchincloss acknowledged the need for change when he unveiled in February a fundamental strategy reset that includes reducing spending to below $15 billion to 2027, cutting up to $5 billion in costs and selling $20 billion of assets in an effort to boost performance and rein in ballooning debt. The plan also reset the rate of shareholder returns to 30-40% of operating cash flow. But the reset has done little to alleviate investor concerns. BP's shares have declined by 18% since the strategy update, underperforming rivals. Piling on the pressure, activist shareholder Elliott Management, which has recently built a 5% position in the company, has indicated it wants BP to cut spending even more. There is, therefore, clearly a need for deeper change. While it may be challenging for the 116-year-old company to admit that it can no longer carry the same financial heft it once did, accepting reality will offer the company's leadership an opportunity to reduce some of its commitments to investors, particularly its share repurchase programme. All energy majors today have multi-billion-dollar buyback programmes that send capital back to shareholders, helping to attract investors who may be wary about the future of fossil fuel demand. But BP's buybacks feel like a luxury that is out of synch with its financial woes. In its first quarter results released in February, BP said it would buy back $750 million over the following three months. That was lower than the $1.75 billion in the previous three months, but even at this reduced rate, this would still total $3 billion per year. That doesn't seem prudent, especially given the 20% drop in oil prices to around $65 a barrel this year and the darkening economic outlook. Auchincloss' financial objectives assume a Brent oil price of $70, meaning the Canadian CEO will most likely struggle to meet his targets without borrowing further. Removing the annual $3 billion buyback would certainly upset investors, but it would go a long way towards reducing BP's net debt to between $14 and $18 billion by 2027, compared with $27 billion at the end of March 2025. The 'ground zero' of BP's financial decline was the deadly 2010 Deepwater Horizon disaster in the Gulf of Mexico, which generated $69 billion in clean-up and legal costs, opens new tab. The company continues to pay out over $1 billion per year in settlements. The financial shock forced BP to sell billions of dollars of assets and issue huge amounts of debt to foot the bill. Its market value dropped to around $77 billion today compared to $180 billion in 2010. BP's debt-to-capitalization ratio, known as gearing, reached 25.7% at the end of the first quarter of 2025, significantly higher than those of other oil majors, including Shell's 19% or Chevron's 14%. And, importantly, BP's current $27 billion net debt figure omits several major liabilities held on its books. This includes $17 billion in hybrid bonds, an instrument that has qualities of both equity and debt, including a coupon that must be paid or accrued. While companies may issue hybrids for many reasons, including maintaining flexibility, they often do so in part because rating agencies do not treat hybrids as regular debt, which flatters the issuer's leverage ratios. Anish Kapadia, director of energy at Palissy Advisors, calculated BP's adjusted net debt hit $86 billion at the end of the first quarter of 2025, when including net debt, hybrids, Gulf of Mexico liabilities, leases and other provisions. Ultimately, cutting the buybacks should enable BP to tame its huge debt pile and repair its balance sheet faster. That, in turn, should create a strong foundation for rebuilding investor confidence. The departure of current BP Chairman Helge Lund in the coming months could be a good opportunity for the company to consider such radical change. It's unclear who will take this job, but one qualification for whoever succeeds Lund should be a much-needed sense of financial realism. Want to receive my column in your inbox every Thursday, along with additional energy insights and trending stories? Sign up for my Power Up newsletter here.
Yahoo
29-05-2025
- Business
- Yahoo
BP stirs controversy after halting operations for new type of fuel: 'Weaker-than-anticipated growth in the market'
Oil giant BP has ceased a project to produce "clean jet fuel" at its Castellon refinery in Spain. The move signals a broader concern and shift in the company's approach to cleaner energy initiatives. BP's decision raises questions about the commitment of major energy corporations to transitioning away from polluting, dirty energy sources. According to a Bloomberg News report cited by Reuters, BP paused its investment in producing sustainable aviation fuel (SAF) at the Spanish facility. The reason given was "weaker-than-anticipated growth in the market" for these cleaner alternatives. Halting clean energy plans comes on the heels of a more strategic overhaul BP announced in February. The company revealed plans to increase its investments in oil and gas production while slashing spending on renewable energy projects by over $5 billion annually. This pivot from a major global energy player like BP is a significant blow to fighting planet-overheating pollution. SAF is considered a crucial tool for reducing the environmental impact of air travel. Moreover, aviation is one of the most challenging sectors to decarbonize. Slowing or ending investments in cleaner alternatives, while boosting oil and gas operations, denies the urgent need to transition to less polluting energy sources. BP CEO Murray Auchincloss stated that the energy transition "has not proceeded at the pace we would have thought," citing strong ongoing demand for oil and gas, per Reuters. His perspective might reflect current market dynamics. Being economical instead of ecological can also become a self-fulfilling prophecy. If major players don't actively invest in and champion the growth of cleaner alternatives, there won't be an economy or environment. The world needs to turn away from dirty fuels to avoid the worst consequences of an overheating planet. Extreme weather events, rising sea levels, and threats to global food security will occur otherwise. Relying on oil and gas without fostering alternatives delays this vital transition. Despite these setbacks, the broader push for cleaner energy continues globally. Governments are implementing policies to encourage the production and adoption of sustainable fuels and renewable energy. Technological innovations — battery storage, green hydrogen, and SAF production — are advancing, making these options increasingly viable. Consumers also play a role by supporting companies genuinely committed to sustainability. Both are advocating for stronger climate policies that reduce their carbon footprints. Conscious choices like sustainable travel, energy-efficient homes, or renewable energy projects all work toward this common goal. Staying informed about corporate actions, like understanding greenwashing tactics, empowers individuals to hold companies accountable. While corporate strategies can result in poor decisions, the collective demand for a cleaner future remains a powerful catalyst for the right change. Do you think America has a plastic waste problem? Definitely Only in some areas Not really I'm not sure Click your choice to see results and speak your mind. Join our free newsletter for good news and useful tips, and don't miss this cool list of easy ways to help yourself while helping the planet.
Yahoo
28-05-2025
- Business
- Yahoo
BP Begins Sale of Castrol in $20B Asset Divestment Strategy
BP plc BP, the UK-based energy major, has officially launched the sale of its Castrol lubricants business, marking a significant move in the British energy giant's plan to raise $20 billion by 2027 through asset sales. The divestment aims to streamline BP's portfolio and strengthen its financial footing amid strategic recalibration under CEO Murray Auchincloss. According to sources familiar with the matter, BP has enlisted Goldman Sachs to handle the sale process and has already circulated an information memorandum to potential strategic and private equity bidders. While BP declined to confirm specific details, it noted that its broader divestment program was "progressing," with $1.5 billion in deals already signed. Founded in 1899, Castrol is one of the world's most recognized lubricant brands, with operations spanning over 150 countries. It has also enjoyed a high-profile sponsorship history in motorsports, including partnerships in Formula 1 and the World Rally Championship. BP acquired Castrol in 2000 for approximately £3 billion, integrating it into its downstream business. The lubricants unit is now viewed as a valuable standalone asset. Analysts at Bernstein estimate that the sale could fetch $10-$11 billion, making it one of the largest in BP's current divestment pipeline. The Castrol sale is part of BP's broader restructuring effort, which includes evaluating several other non-core assets. This includes plans to divest the Gelsenkirchen refinery in Germany, retail operations in Austria, and a 50% stake in Lightsource bp — BP's solar energy joint venture. Bidders for the Lightsource stake are expected to be shortlisted in July. BP's asset sales decision followed as activist investor Elliott Management pressured the company for strategic changes and operational efficiencies. The move also reflects CEO Auchincloss' return to traditional hydrocarbons, cutting back on low-carbon investments in favor of boosting returns from oil and gas. Earlier reports indicated that Saudi Aramco had expressed interest in Castrol. While no bidder has been officially named, the commencement of the formal sale process and the hiring of Goldman Sachs signal increasing momentum. BP's divestment program will continue to be closely watched as the company seeks to realign its business mix and respond to investor calls for improved performance and strategic clarity. BP currently carries a Zack Rank #5 (Strong Sell). Investors interested in the energy sector may look at some better-ranked stocks like Subsea 7 S.A. SUBCY, Energy Transfer LP ET and RPC Inc. RES. Subsea 7 presently sports a Zacks Rank #1 (Strong Buy), while Energy Transfer and RPC carry a Zacks Rank #2 (Buy) each. You can see the complete list of today's Zacks #1 Rank stocks here. Subsea 7helps build underwater oil and gas fields. It is a top player in the Oil and Gas Equipment and Services market, which is expected to grow as oil and gas production moves further offshore. The Zacks Consensus Estimate for SUBCY's 2025 EPS is pegged at $1.31. The company has a Value Score of A. Energy Transfer is poised to benefit from long-term fee-based commitments. It is also focused on expanding operations through organic and inorganic initiatives. The firm is looking for solutions to meet growing energy demands from additional demand centers through its pipeline network. Energy Transfer's systematic investments should boost its total fractionation capacity at Mont Belvieu and raise its top line. The Zacks Consensus Estimate for ET's 2025 EPS is pegged at $1.44. The company has a Value Score of A. RPC generates strong and stable revenues through a diverse range of oilfield services, including pressure pumping, coiled tubing and rental tools. The company is strongly committed to returning value to shareholders through consistent dividends and share buybacks. RPC's current dividend yield is higher than that of the composite stocks in the industry. Its new Tier IV dual-fuel fleet has boosted profits, with plans to further expand high-efficiency equipment to enhance operational capabilities. The Zacks Consensus Estimate for RES' 2025 EPS is pegged at 38 cents. The company has a Value Score of A. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BP p.l.c. (BP) : Free Stock Analysis Report Energy Transfer LP (ET) : Free Stock Analysis Report RPC, Inc. (RES) : Free Stock Analysis Report Subsea 7 SA (SUBCY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Mail
09-05-2025
- Business
- Daily Mail
ALEX BRUMMER: BP's survival is core to UK
A succession of strategic errors and management disruptions has made BP a sitting duck for takeover. The oil and gas giant is particularly vulnerable in that it has a departing chairman, Helge Lund, hanging on to his job and couldn't be relied upon to put up a muscular defence or hold out for a value which would properly reward shareholders. It is vital that Dame Amanda Blanc, who is leading the search for a successor, moves swiftly. When in difficulties, companies have a right to suspend sclerotic governance procedures. BP's spin on the green roulette wheel under the leadership of Bernard Looney, and the personal entanglements which hurried his resignation, have been disastrous. So far, his Canadian successor Murray Auchincloss has failed to steady the ship. It is unusual for corporations to switch chairman and chief executive simultaneously. Sometimes necessity dictates. With a market value of just £58billion, BP is vulnerable. It is a bargain of the first order given a sum-of-the-parts valuation of £120billion. No wonder rivals such as Chevron, Exxon Mobil, Total and Middle East investors are casting their eyes over one of the FTSE 100's behemoths. As The Mail on Sunday has reported, senior investment bankers have been touting the idea of an all-British oil major, formed by a merger of Shell and BP, since the spring. A break-up or sale to overseas interests of BP should not be an option. Unlike BAE Systems or Rolls-Royce, it has no golden share to protect the company. Yet the 116-year-old UK giant, founded as the Anglo-Persian Oil Company, is part of the country's commercial DNA. Down the decades it has been a powerful political and economic force for Britain around the globe. It also has a remarkable record on exploration and production of liquefied natural gas and oil as well as a world-class trading operation. Moreover, having survived an existential crisis in 2010, after the disastrous explosion on the Deepwater Horizon platform in the Gulf of Mexico (now America!), the 28 per cent dip in the stock over the last year is as nothing. It should not be forgotten how it was brought back from the near-dead by Texan Bob Dudley after former US president Barack Obama weaponised its problems for political reasons. A look at the BP share register shows it would be a hard company to defend from overseas marauders. BlackRock holds a chunky 9.27 per cent. Legal & General is the biggest UK holder, in seventh place with just 1.03 per cent. That means all which stands between it and being swallowed is a Labour government that has declared war on fossil fuels, even though big oil is among the significant investors in green choices such as hydrogen. The best defence strategy for BP is rapid-fire change at the top of the kind which has been seen at Unilever and elsewhere. If a deal is to be done, then the least bad outcome would be a merger with Shell, even though Shell chief executive Wael Sawan publicly argues that buying back shares is a preferable strategy to creating a UK-based rival to Exxon Mobil. But big deals are notoriously difficult to execute calmly and successfully. A Shell deal is also risky in that the Anglo-Dutch group flirts with shifting its listing to New York. There should be no other choice for BP but keeping it British and independent.
Daily Express
07-05-2025
- Business
- Daily Express
BP shares rise amid Shell takeover report
Published on: Wednesday, May 07, 2025 Published on: Wed, May 07, 2025 By: Bernama Text Size: A merger would be among the largest in the oil industry's history, and would end decades of speculation over a possible deal between two of the United Kingdom's biggest companies. LONDON: British oil major BP's shares jumped on Tuesday following reports that its rival, Shell, is exploring a possible acquisition of the oil and gas giant. Shares rose as much as 2.5 per cent in early trading after it was reported that Shell has been weighing the merits of a takeover with advisers in recent weeks, reported PA Media/dpa news. BP's stock has slumped following a period of massive investment in renewable energy which failed to deliver enough profits to please investors. In February, it revealed a new growth strategy focused on extracting more oil and gas after pressure from some investors to boost profits at the firm. At the time, bosses said the business went 'too far, too fast' on green energy and confirmed plans to heavily reduce spending on renewables. It is also facing pressure from influential US hedge fund Elliott Management, which took a nearly £4 billion (US$5.3 billion) stake in the company – just under 5 per cent of its shares – earlier this year. The move is understood to have been aimed at pushing BP back towards fossil fuels to boost profit. In April, chief executive Murray Auchincloss said the company has been making progress with the strategy despite wider economic uncertainty. But it has done little to arrest the slide in BP's share price, which is down about one-third compared with the same point last year. BP's market capitalisation is about £56.5 billion based on its current shares, compared with Shell's £146.7 billion. A merger would be among the largest in the oil industry's history, and would end decades of speculation over a possible deal between two of the United Kingdom's biggest companies. A Shell spokesman said: 'As we have said many times before, we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification.' Shell shares were down 1.35 per cent on Tuesday morning. BP has been approached for comment. * Follow us on Instagram and join our Telegram and/or WhatsApp channel(s) for the latest news you don't want to miss. * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
