By Brian Swint

U.K. oil major BP said Wednesday it's having a "fundamental reset," having fallen far behind U.S. rivals Exxon and Chevron in investor returns over the past few years. Investors are skeptical.

The company's American depositary receipts fell 1.4% in premarket trading after BP published details for its Capital Markets Day in London. It promised to increase investments in oil and gas, grow production, and improve cash flow while at the same time investing less in low-carbon projects. It also plans to divest $20 billion of assets by 2027.

The problem for CEO Murray Auchincloss is that he was the company's finance chief in 2020 when it pivoted toward the energy transition, so he's seen as representing more of the same. Five years ago BP pledged to reduce output of fossil fuels and invest heavily in green energy. Even though most of those plans have been abandoned, rivals that stuck to oil and gas have performed considerably better since.

BP faces the challenge of reducing its debt load while maintaining payouts to investors. That could be extra tricky as it changes strategy at the same time.

"The refocus on hydrocarbons is positive for BP as is the overall lower spending," said Allen Good, a strategist at Morningstar. "However, there still is little, if any, production growth."

The pressure on Auchincloss is rising after activist Elliott Management built up a stake in the company. It's expected to push for changes in strategy and possibly in management.

Coming into Wednesday trading, BP ADRs are down 5% over the past 12 months. Exxon is up 5%, and Chevron has gained 2.7%. BP's crosstown London rival Shell has added 6.9%.

Write to Brian Swint at brian.swint@barrons.com

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February 26, 2025 07:45 ET (12:45 GMT)

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