Green energy chief quits BP as profits halve: Activist investor Elliott claims another scalp

An architect behind BP’s unsuccessful shift towards renewable sources has exited as earnings drastically declined.

With renowned activist investor Elliott advocating for reforms, the FTSE 100 energy corporation declared that green energy director Giulia Chierchia will depart.

Leadership Changes Amid Profit Plunge

Chairman Helge Lund declared he would quit next year in another triumph for the US hedge fund – though the Norwegian executive is facing demands to leave sooner.

Shares in BP dropped by 2.4% yesterday as the company disclosed disappointing first quarter earnings, with profits plunging 49% from £2.01 billion to £1.03 billion – below market forecasts of £1.1 billion.

A Strategic Reversal

Sustaining pressure from Elliott, CEO Murray Auchincloss in February rescinded BP’s renewable energy strategy, which had been promoted by strategy and sustainability executive Chierchia.

She was appointed by the former CEO, Bernard Looney – who was dismissed last year amidst controversy – to spearhead the green initiative.

The Future of BP’s Renewables Division

Yesterday, BP confirmed that Chierchia will leave at the start of June and will not be replaced. A spokesperson for the company stated that Chierchia is ‘departing BP to pursue other ventures’.

The sustainability unit will be integrated into other business divisions, which BP states will result in ‘swifter decision-making and clearer responsibilities’.

A Renewed Focus on Oil and Gas

Market Volatility and Strategic Shifts

In an early-year ‘comprehensive overhaul,’ Auchincloss pivoted emphasis back to oil and gas, aiming to close the valuation gap with main competitors Shell, Exxon Mobil, and Chevron.

However, Elliott, an aggressive activist investor, has not been satisfied. The firm has boosted its shareholding in BP to over 5% – placing it among leading shareholders BlackRock and Vanguard – and has called for significant leadership changes.

The New CEO’s Strategy Faces Hurdles

Flurries in the oil market, stirred by Donald Trump’s return to the White House and subsequent trade threats, could disrupt Auchincloss’s new strategy. BP’s plan hinges on an oil price of roughly $70 a barrel; it was trading at $64 a barrel yesterday. Auchincloss stated: ‘We persist in observing market volatility and transformations and remain focused on swift progress.’

Financial Challenges and Future Prospects

Additionally, BP revealed diminished cash flow, a nearly £3 billion increase in net debt to £20.1 billion, and a scaled-back share repurchase initiative.

Despite these challenges, Auchincloss affirmed that his turnaround scheme had achieved ‘substantial advancements’ in the first quarter.

‘I am optimistic that our plans to fortify the balance sheet, curb expenses, and enhance cash flow and returns will boost long-term shareholder value and fortify BP’s resilience,’ he stated.

The company references recent discoveries of six exploration sites, including a notable oil find in Namibia, as proof of its allegiance to the strategy.

• £1.1 billion worth of divestments were finalized during the quarter, targeting £15 billion by the close of 2027.

Analyst Insights

‘It seems that management isn’t progressing swiftly enough for the activist’s preferences, while other institutions are skeptical about the direction change and its handling,’ said Russ Mould, investment director at AJ Bell. ‘Some investors have merely been disappointed.’

David Morrison, a senior market analyst at broker Trade Nation, stated: ‘The company attributed the weak oil price, yet it is widely recognized that BP has trailed competitors due to a series of suboptimal management choices.’