Page 6 - EurOil Week 39

EurOil COMMENTARY EurOil

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

P6 www. NEWSBASE .com Week 39 01•October•2020