With Auchincloss in place, can BP go green and print green?
The US giants Exxon and Chevron have reported their second-highest profits since David Cameron and Barack Obama were leading the free world. Across the pond, Shell also posted some rather handsome results last week.
Next in line to report is BP, the little brother of the group in a market cap sense, which will update the market on Tuesday.
Chevron and Exxon are still far ahead of either of the British energy giants in terms of profits – a lead built on exponential voracity in gobbling up oil and gas projects across North America.
For Shell, chief executive Wael Sawan had a tough act to follow from oil’s 2022 zenith. His first 12 months on the job have been defined by fighting oil prices’ return to post-2022 parity by turning on the cash taps and returning money to shareholders, which some argue could have been better spent.
Indeed, NGO Reclaim Finance estimates that Shell is spending between six to nine times as much on shareholder rewards than it is on clean energy technologies.
BP also faces pressure from activists, both from the NGOs and the financial sector. Upon the coronation of its new chief executive Murray Auchincloss, activist investors Bluebell Capital Partners declared wrote to the company to say BP wasn’t fit to operate in the renewables space effectively and should instead pour more cash into oil and gas for the sake of investors and the company’s share price.
With blinkers on, the letter has some merits.
BP’s share price is down 6.4 per cent from the levels entering 2020, just before former chief executive Bernard Looney announced a raft of green ambitions.
But there are reasons to believe that BP can successfully operate in both the renewable and fossil fuel markets, demonstrated by its “and, not or” marketing campaign.
Auchincloss has the opportunity to retire the worst part of the company’s recent history, defined by strategic confusion and bad communication. Some aspects will be kept on. Company chair Helge Lund has said that BP and Auchincloss remain committed to a version of Bernard Looney’s ambitious green plan.
The firm has got some lessons to learn on how to do the transition. Investors don’t want a repeat of the $540m (£444m) charge last year for the failed offshore wind site in New York.
However, there is significant interest in its in-demand vehicle charging and biofuel projects that reportedly carry best-in-class potential.
It is also, quietly, doing the old things well, and punching above its weight in the US as the Gulf Of Mexico’s second-largest producer and with abundant shale operations in Texas.
Bluebell’s suggestion of packing in net zero targets and going great guns on oil would be foolish, on a business and ethical level.
But striking the balance on transitioning isn’t easy, and Bluebell’s plea arguably echoes what a larger chunk of the market believes – that it’s impossible to make money and transition to renewables.
BP under Auchincloss may relish the chance to prove them wrong.