Page 13 - NorthAmOil Week 39

NorthAmOil COMMENTARY NorthAmOil

BP shares tumble to 25-year

low as investors doubt clean

energy strategy

BP chief Bernard Looney has struggled to convince investors that the

company’s clean energy goals are achievable

GLOBAL CEO Bernard Looney and other top managers is being forced on the company by climate
at BP made a series of presentations earlier this change.”
WHAT: month, in which they fleshed out the UK major’s BP “didn’t detail how they planned on meet-
BP’s share price has grand strategy for transforming itself into a clean ing their targets,” one major investor told the
fallen to its lowest level energy giant. But investors are unconvinced, and Financial Times. “There were just a lot of McK-
since October 1995. the company’s share price slumped to a 25-year insey slides.”
low last week. “In this sector, intentions mean very little
WHY: BP Week took place between September 15 because companies have a poor track record of
The slump indicates and 17, and saw the company’s management capital allocation,” RBC Capital Markets’ Biraj
that investors are team devote over 10 hours to explaining how Borkhataria said, stating that the major needed
unconvinced by BP’s it can not only survive but thrive in a low-car- to do more to convince investors it can deliver
strategy of becoming a bon future. The plan includes a 40% cut to BP’s on its promises.
clean energy giant. oil and gas production over the next decade, Others have argued that investors may need
along with a tenfold increase in clean energy more time to decide on BP’s new strategy.
WHAT NEXT: investments. “Investors need to digest the numbers, assess
Oil majors face BP’s share price closed in London at GBP2.324 BP’s assumptions and come up with a reasona-
difficulties trying to build ($2.95) on September 24, its lowest level since ble view on the feasibility of achieving some of
up their clean energy October 1995. While weaker oil prices and fears the targets,” Bernstein’s Oswald Clint argued.
operations at a time when of a second coronavirus (COVID-19) wave were
low oil prices mean they contributing factors, the decline indicates that High targets
are cash-strapped. But Looney’s pitch was unsuccessful. Looney took the helm of BP in February, replac-
failure to diversify into While BP’s change in direction has been ing retiring head Bob Dudley. Since day one he
renewables also carries hailed as bold, “investors remain sceptical,” has been clear about his desire to put the com-
significant risks. Mirza Baig of Aviva Investors was quoted as pany on a much cleaner path.
saying by Bloomberg, “particularly as this move BP plans to grow its renewable energy

BP plans to grow its
renewable energy
capacity from 2.5 GW
to 20 GW by 2025,
and 50 GW by 2030,
primarily focusing on
offshore wind.

Week 39 01•October•2020 www. NEWSBASE .com P13