Page 5 - MEOG Week 05 2021

MEOG COMMENTARY MEOG

Meanwhile, the Thai company also added UK major is effectively paying $3.1bn per GW,
2% stakes in both Oman LNG and ADNOC Gas suggesting that BP’s 2025 target may cost over
Processing. $60bn to achieve.
However, the knee-jerk reaction was some-
BP’s plans what unsurprising given the major upheaval
Looney announced BP’s strategy for transform- the move to transform the company, and inves-
ing itself into a clean energy giant in September, tors clearly needed time to decide on BP’s new
leaving investors unconvinced, and the compa- strategy.
ny’s share price slumped to a 25-year low. This has largely proved accurate, as the com-
The plan includes a 40% cut to BP’s oil and pany’s share price rose 0.1% on the Block 61
gas production over the next decade, along with divestment news to GBP2.72 ($3.72) on Febru-
a tenfold increase in clean energy investments. ary 1 and was up 6.6% in 2021 until the end of
BP intends to grow its renewable energy last week.
capacity from 2.5 GW to 20 GW by 2025, and However, BP’s stock took a new hit on Febru-
50 GW by 2030, primarily by focusing on off- ary 2 when the company reported a $5.7bn loss
shore wind. This compares impressively with the for 2020, the first time it had finished a year with
world’s current largest wind developer Iberdola, a loss for a decade. Shares fell 3.8% on the news,
which has a capacity of around 18 GW. dropping to GBP2.59 ($3.54).
BP’s share price closed in London at The firm is sticking with its plans despite the
GBP2.324 ($2.95) on September 24, its lowest loss though, with Chief Financial Officer Mur-
level since October 1995. While weaker oil prices ray Auchincloss saying that capital expenditure
and fears of a second coronavirus (COVID-19) would rise by $1bn to $13bn in 2021 with $9bn
wave were contributing factors, the decline indi- earmarked for oil and gas.
cates that Looney’s pitch was unsuccessful. While BP is likely set for a long and bumpy
Shareholder concerns were not unwarranted. journey, the growing investor appetite for clean
Offshore wind is an expensive proposition: the energy stock suggests there may be light at the
company announced on September 10 a $1.1bn end of the tunnel, while successful divestments
investment in two offshore wind projects under that balance ongoing sources of production with
development by Norway’s Equinor. Their gener- debt reduction may be enough to keep investors
ation is due to reach 0.7 GW within five years, onside long enough for other efforts to bear
of which BP will net 0.35 GW. This means the fruit.™

Week 05 03•February•2021 www. NEWSBASE .com P5