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Elliott Management puts BP to increase its available cash flow by an additional 40% thanks to deep discounts for expenses, while the activist investor increased his participation in the energy group to more than 5% and sharpened his company criticism.
The United States-based hedge fund has said COP The fact that “fundamental reset” described by the chief executive officer of the oil and gas group Murray Auchincloss in February is not far enough and did not present an alternative plan, according to people familiar with the discussions.
Elliott Exhort BP to focus on the growth of its oil and gas activities in order to prioritize a target of $ 20 billion in cash flows available annual by 2027, according to people familiar with discussions. This represents a 40% increase in the target involved in February when BP revealed its pivot of renewable energies and a doubling of its available “adjusted” cash flow of $ 8 billion last year.
“Murray took 18 months to develop a three -year plan that is neither ambitious nor urgent,” said a person familiar with Elliott’s thought. “The time is not on the side of BP here, with the macroeconomic environment and with the patience of the investors that run out. The continuous sub-performance of BP makes it open to a takeover.”
BP announced Tuesday that Elliott had increased his participation in just over 5%, worth around 2.8 billion pounds Sterling, putting his participation in regard with Vanguard, the second largest investor in the company. BP shares have dropped by around 18% since the announcement of the new strategy, reducing its market value to 57 billion pounds Sterling.
The Hedge Fund believes that BP has a route to a higher assessment if it can be more disciplined in its expenses, reducing capital expenses to $ 12 billion per year rather than in the $ 13 billion range to $ 15 billion dollars set out by the company, the people said. Elliott also thinks that BP could make $ 5 billion in cost savings beyond its current objective.
THE activist Also think that BP should sell its offshore solar and wind activities, and that there is room to reduce expenses through its oil and gas activity because its future oil resources are sufficient. “In the company’s piece of oil and gas, it is not a question of chasing growth, it is a question of being disciplined in the investment,” said the person familiar with the thought of Elliott.
Elliott complained that management did not recognize the roots of the company’s problems, which go beyond Strategic pivot away from renewable energiessaid people.
“The diagnosis of management was that these were vibrations and atmospheres. The diagnosis of Elliott is that it is also a question of how badly they have been in recent years, how they have accumulated. It is a story of execution,” said a person familiar with Elliott’s point of view. They added that there were reasons to believe that there should be wider changes in BP staff beyond the expected departure of Helge Lund, the president.
A quarter of BP shareholders Voted against the re -election of Lund During the annual company meeting last week, reflecting the frustration of investors in the face of the sub-performance.
Examples of his poor BP capital discipline have included the excessive expenses of his twisted LNG project in Senegal and the high costs that Devon Energy’s partner has been withdrawn from a shale oil joint venture in the United States, people said. They also declared that excessive expenses in American biogas activities of $ 4 billion in BP were risky given the dependence on fuel with regard to federal tax credits and uncertain market prospects.
BP and Elliott refused to comment.
