BP’s 4Q24 results show a company in crisis and on the cusp of change
Key takeaways
In BP’s 4Q24 results, chief executive Murray Auchincloss promised a ‘fundamental reset’ to the company’s strategy at its upcoming capital market update on February 26.
The 4Q24 results also highlight the growing gap between BP’s low-carbon targets and its execution of projects to deliver on them.
Accela expects many of BP’s low-carbon targets to be scrapped or downgraded in the strategic reset. However, investors will have a renewed opportunity to hold BP accountable for its strategic execution rather than its ambitions.
Author: Rohan Bowater, Lead Analyst for Oil & Gas and Co-founder at Accela Research, specialising in climate transition analysis.
Read Accela’s full note on BP’s 4Q24 results here.
BP is on the cusp of wholesale change. In its fourth-quarter results released on Tuesday (Feb 11), chief executive Murray Auchincloss announced a ‘fundamental reset’ to the company’s strategy in its upcoming capital market update on February 26.
The chief executive promises that the new direction will build on actions taken in FY24, which have included winding back spending on the energy transition in favour of a renewed focus on fossil fuels. This aligns with a sector-wide push for higher shareholder distributions, which Accela’s forensic analysis has been tracking.
The upcoming strategic update comes at a pivotal time. BP’s shares have fallen the most among oil majors in the past year, while its main rivals in Europe and the United States have managed to grow and, in some cases, have reported record annual profits. Media reports paint a picture of an organisation under pressure and increasingly looking like ‘a prime takeover target for a rival with deep enough pockets’.
How quickly things can change. In our pre-AGM report last April, Accela identified BP as a front-runner in the energy transition. Since then, BP has withdrawn its oil and gas production target, scaled back biofuels and hydrogen, and shifted its offshore wind into a joint venture. There are also plans to divest onshore wind. The company meanwhile delivered $7bn of buybacks in FY24, leaving a further $7bn to be delivered in FY25 to meet their target of $14bn over two years. Prioritising this goal will likely limit the funds available for low-carbon investment.
Accela expects BP to scrap or downgrade low-carbon targets across the board in late February. BP’s Transition Growth Engines (TGE) capex target is one of those at serious risk. The company would need to ramp up TGE capex from $3.7 bn (23% to group capex) in FY24 to $6-8bn (50% of capex) in FY25. BP’s ‘Aim 2’ upstream scope 3 reduction target of 20-30% by 2030 is also at risk if oil and gas production grows as expected.
BP has consistently maintained that its net zero 'destination remains unchanged'. The question is now whether this will remain the case, and if so, what the path forward looks like. One possibility is that BP will focus its low-carbon arm on a smaller number of offerings, like solar and EV charging, while abandoning others.
The BP capital markets update is scheduled for February 26. Accela will provide an initial view of the update on the day, followed by a comprehensive report on BP’s transition plan in March. Subscribe here to get our insights delivered to your inbox. 