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BP shares tumble to 25-year low

as investors doubt green strategy

BP chief Bernard Looney has struggled to convince investors
that the company’s clean energy goals are achievable

COMMENTARY CEO Bernard Looney and other top managers BP “didn’t detail how they planned on meet-
at BP made a series of presentations earlier this ing their targets,” one major investor told the
month, in which they fleshed out the UK major’s Financial Times. “There were just a lot of McK-
WHAT: grand strategy for transforming itself into a clean insey slides.”
BP’s share price has energy giant. But investors are unconvinced, and “In this sector, intentions mean very little
fallen to its lowest level the company’s share price slumped to a 25-year because companies have a poor track record of
since October 1995. low last week. capital allocation,” RBC Capital Markets’ Biraj
BP Week took place between September 15 Borkhataria said, stating that the major needed
WHY: and 17, and saw the company’s management to do more to convince investors it can deliver
The slump indicates team devote over 10 hours to explaining how it on its promises.
that investors are can not only survive but thrive in a low-carbon Others have argued that investors may need
unconvinced by BP’s future. The plan includes a 40% cut to BP’s oil and more time to decide on BP’s new strategy.
strategy of becoming a gas production over the next decade, along with “Investors need to digest the numbers, assess
clean energy giant. a tenfold increase in clean energy investments. BP’s assumptions and come up with a reasonable
BP’s share price closed in London at view on the feasibility of achieving some of the
WHAT NEXT: GBP2.324 ($2.95) on September 24, its lowest targets,” Bernstein’s Oswald Clint argued.
Oil majors face level since October 1995. While weaker oil prices
difficulties trying to build and fears of a second COVID-19 wave were con- High targets
up their clean energy tributing factors, the decline indicates that Loon- Looney took the helm of BP in February, replac-
operations at a time when ey’s pitch was unsuccessful. ing retiring head Bob Dudley. Since day one he
low oil prices mean they While BP’s change in direction has been has been clear about his desire to put the com-
are cash-strapped. But hailed as bold, “investors remain sceptical,” pany on a much cleaner path.
failure to diversify into Bloomberg quoted Aviva Investors’ Mirza Baig BP plans to grow its renewable energy capacity
renewables also carries as saying, “particularly as this move is being from 2.5 GW to 20 GW by 2025, and 50 GW by
significant risks. forced on the company by climate change.” 2030, primarily focusing on offshore wind. These

P4 www. NEWSBASE .com Week 39 01•October•2020