BP is feeling some major pain themselves as they freefall through a downturn in their gas trading and refining arms. BP’s new CEO, Murray Auchincloss, sought to calm jittery investors, promising that BP would persist in determining the market landscape and navigating volatility. He praised BP’s commitment to increase shareholder value in the long-run. They intend to do this by improving cash flow, reducing expense and debt, and improving their balance sheet.
BP started the trend with a $750 million share buyback announced just before that company’s second-quarter results. Despite the impressive international expansion, the company announced a 19% drop in revenues during its first quarter of 2025. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) reached $8 billion. That’s down from $10.3 billion during the third quarter of 2022. Operating cash flow dropped to $2.8 billion, down from $5 billion in the same quarter of 2024. BP’s underlying replacement cost profit was only $1.4 billion, a decline from $2.7 billion in the same quarter of last year.
In February, Auchincloss launched an offensive on BP’s strategic direction. He described a “fundamental reset” that includes growing upstream, focusing on downstream and being disciplined in transition investments. He remarked, “So far this year we have started up three major projects, made six exploration discoveries and have progressed our divestment programme – all while delivering strong operational performance.”
The recent departure of Giulia Chierchia, BP’s head of strategy who oversaw the push into clean energy, raised concerns among investors regarding the company’s commitment to its environmental objectives. Helge Lund, the chair of BP, provided important leadership on BP’s pivot to green strategy. Now, he’s getting ready to depart the organization. The sudden leadership change has understandably created strong reactions on both sides. Industry and financial analysts, including AJ Bell’s Russ Mould, have already sounded off on what this could mean for BP’s trajectory.
“Auchincloss and his team seem to be struggling to keep anybody happy after the abandonment of the firm’s energy transition strategy amid pressure from activist shareholder Elliott and the unveiling of a new strategic direction in February.” – Russ Mould
Mould explained BP’s stubborn hydrocarbons-first approach is hardening. This perplexing move will likely put the company in a contentious place as it seeks to satisfy both shareholder activists and traditional investors concerned about the company’s environmental commitments.
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