BP chief targets US$200b market value, FT
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The news: BP CEO Murray Auchincloss told the Financial Times that he plans to more than double the oil major’s market value within five years.
The numbers: Auchincloss is aiming for a market value of over USD200 billion ($318.9 billion) by the end of the decade, the position it achieved before it suffered from the 2010 Deepwater Horizon disaster.* The company’s current market value sits just under USD89 billion.
The context: Earlier this week, BP announced it would abandon its plan to reinvent itself as a green energy company, and instead capitalise on “tremendous” demand for oil and gas. BP said that it will increase spending on oil and gas by USD10 billion annually, while cutting spending on renewables by 70%.
Auchincloss told the FT that demand for oil and gas will be around for a long time, and that increasing demand for datacentres will fuel the demand for gas in particular.
Earlier this month it emerged that activist hedge fund Elliott Management has become the third-largest shareholder in BP after building out a £3.8 billion stake in the oil major, representing almost 5% of BP’s ownership, with only BlackRock and Vanguard holding larger positions at 9% and 5% respectively.
The activist interest is adding pressure on BP to improve its lacklustre performance. On Thursday reports emerged that Elliott is unsatisfied with BP’s new strategy, arguing that it falls short of expectations and is lacking in urgency, according to Bloomberg.
Defending criticism levelled against BP that it is not as valuable as US peers, Auchincloss told the FT that “Our size is smaller, but the quality of our assets is exceptionally high.”
*The 2010 Deepwater Horizon incident saw a BP oil drilling rig in the Macondo Prospect in the Gulf of Mexico explode and sink. 11 workers were killed and the explosion led to the largest oil spill in marine oil drilling history, which left the company with a USD62.5 billion cleanup bill.
The sources: Financial Times, Bloomberg
