The "reset" strategy struggles against weak oil prices, BP PLC-Spons Q1 profit plummets by 49%

According to Zhitong Finance APP, British oil giant BP PLC (BP.US) announced its first-quarter financial report before the market opened on Tuesday Eastern Time, with net profit slightly below market expectations. The company had just completed a strategic adjustment, and its performance was impacted by a significant drop in crude oil prices.

The struggling oil and gas giant reported a 49% year-on-year decline in its underlying replacement cost profit (commonly used as a measure of net profit) for the first three months of this year, amounting to $1.38 billion, lower than the $1.6 billion expected by analysts surveyed by LSEG. In the same period last year, BP's figure was $2.723 billion, and it was $1.169 billion in the fourth quarter of 2024.

BP announced a dividend of 8 cents per share for the first quarter and plans to repurchase $750 million worth of shares.

In this quarter, the company's net debt rose from $22.99 billion at the end of the fourth quarter last year to $26.97 billion. BP had previously warned that upstream production would decline in the first quarter compared to the last three months of last year, and net debt would also increase.

It is worth mentioning that due to BP's underperformance compared to industry peers for a long time, the company committed in February to reduce spending in the renewable energy sector and increase annual investment in its core oil and gas business to rebuild investor confidence.

At the time of this earnings announcement, it had been less than two months since the energy giant announced its strategic adjustments, and it was already facing new pressure from activist investors.

BP CEO Murray Auchincloss stated in an interview on Tuesday that the company is off to a "good start" in advancing its strategic adjustments.

Auchincloss said, "Our operational performance this quarter was outstanding, with upstream operational efficiency reaching an all-time high, and refinery operations achieving their best level in 24 years. We have had six consecutive exploration discoveries, which is extremely rare, and we have also initiated three major projects."

Pressure from Activist Investors

However, for activist investors such as Elliott Management, BP's shift in its green strategy seems far from sufficient.

Last week, Elliott Management publicly disclosed that it holds over 5% of the shares in this London-listed company. According to Refinitiv data, this makes the American hedge fund the second-largest shareholder in BP, second only to the world's largest asset management company, BlackRock.

As early as February this year, reports indicated that Elliott Management held shares in BP. At that time, the market expected its involvement would prompt BP to focus more on its oil and gas business, driving up the company's stock price.

When asked whether the company needed to take further action based on the strategic adjustments announced in February due to pressure from investors like Elliott, Auchincloss declined to comment on interactions with investors.

It is noteworthy that earlier this month, BP faced "betrayal" from shareholders at its annual general meeting. Nearly a quarter (24.3%) of investors voted against the reappointment of outgoing chairman Helge Lund, a symbolic result reflecting strong dissatisfaction among shareholders When asked whether the weakening of oil prices would jeopardize some of the company's strategic adjustment plans, O'Kinklos stated, "The impact is minimal. We have a diverse product portfolio, and oil, natural gas, and refined products can all generate revenue for the company."