Mark Kleinman is Sky News’ City Editor and the man who gets the Square Mile talking in his weekly City AM column. Today, he tackles activist investors drilling into BP, Ratcliffe’s cost-cutting and a big ticket auction

A reset BP might not have drilled deep enough for activists

Bernard’s Parable or Belated Pivot? These might be the most concise definitions of the Looney and Auchincloss eras at BP – replaced yesterday by an enforced urgency from the latest occupant of the company’s activist-besieged hotseat.

The oil major’s capital markets day statement sets a new course for one of Britain’s most important companies, coming weeks after it emerged that Elliott had begun building a multibillion-pound stake.

Auchincloss has firmly dispensed with the notion, spearheaded by disgraced predecessor Bernard Looney, that BP should pivot towards the energy transition and scale back investment in new oil and gas exploration.

Its statement was emphatic: a 20 per cent increase in spending on oil and gas, an abandonment of previous reduction targets as well as a pledge to develop 50 gigawatts of renewable power.

Auchincloss’s pipeline (excuse the pun) of 27 development projects, which he says equates to 16bn barrels of oil, underlines the decisiveness of BP’s shift under him.

The decision to sell Castrol, its lubricants business, is sensible, having been considered at the time of the Deepwater Horizon oil spill in 2010. It will fetch a lower sum now than it would have done then, but would nevertheless provide a useful fortification of BP’s balance sheet.

Nevertheless, investors were seemingly underwhelmed by Auchincloss’s pivot, with BP’s shares trading down about one per cent in the hours after the announcement.

That may reflect dissatisfaction at how far he had gone, but it also might underline a suspicion that the strategy would make BP more resilient to a potential predator.

Speculation in the weeks leading up to the reset included the idea that Auchincloss might put a for sale sign above the company’s downstream operations. That would have left BP wide open to a bid from Shell or a US major, so logic dictated that its board veered away from that.

“We will grow upstream investment and production to allow us to produce high margin energy for years to come,” Auchincloss said. “And we will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a reset bp, with an unwavering focus on growing long-term shareholder value.”

Enough to satisfy Elliott? I doubt it. But it represents a sensible start.