The oil and gas group BP is launching a fresh cost-cutting scheme, despite reporting better-than-expected profits, as it tries to do more for its shareholders to fend off pressure from activist investors.
The fossil fuel company said it would begin a fresh review of its business when its new chair, Albert Manifold, joins the board in September.
BP reported a rise in profits to $2.35bn (£1.77bn) between April and June, a drop of 15% on the same period a year earlier when the company benefited from higher oil and gas prices.
However, it was an increase on the $1.38bn reported in the January to March quarter, and beat analysts’ estimates of $1.8bn underlying profits.
Murray Auchincloss, BP’s chief executive, said in a statement on Tuesday that the FTSE 100 company had performed well “operationally and strategically”, even though crude oil is trading at about 10% lower than it was in the first quarter.
Currently trading at just under $66 a barrel, Brent crude prices are lower than last year’s average of $80 a barrel.
Auchincloss added: “So far this year we’ve brought five new oil and gas major projects onstream, sanctioned four more and made 10 exploration discoveries.”
Disclosing a 4% increase in the shareholder dividend to 8.32 cents in the first quarter, he said: “BP can and will do better for its investors.”
The CEO said he and Manifold, the former boss of the building material company CRH who takes the reins on 1 October, had agreed to conduct a review of its businesses; this year BP revealed it would cut more than $5bn from its green investment plan.
Under the embattled current chair, Helge Lund, BP invested heavily in the offshore wind industry, which has been subject to increasing costs in recent years, at the same time as its rivals took advantage of the surge in fossil fuel prices after Russia’s full-scale invasion of Ukraine.
BP’s latest overhaul was just six months ago, when Auchincloss promised to “fundamentally reset” the oil company’s strategy. This revamp met little investor enthusiasm and failed to increase its share price. BP’s shares are trading about 10% lower than at the time of Auchincloss’s announcement.
The company is also under pressure from Elliott Management, the feared New York hedge fund known for its attempts to shake up listed companies, which has built up a stake in BP after growing dissatisfaction among shareholders over the company’s plans to curb its fossil fuel production in favour of green investments.
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The activist investor has been pushing BP to cut its operating expenses more aggressively and has been demanding more cost reductions.
Lund’s forthcoming departure helps BP to sever ties with its botched attempt to reinvent itself as a net zero energy company, forged during Lund’s tenure and that of its former chief executive Bernard Looney.
Russ Mould, an investment director at broker AJ Bell, said: “At present BP still has a modestly larger workforce than Shell – based on the companies’ respective last reported headcounts – despite being a significantly smaller business in terms of its valuation and annual revenue.”
BP said this week it had made its largest oil and gas discovery of the past 25 years off the coast of Brazil at a time when it is shifting away from renewables and refocusing on fossil fuels.
The company is carrying out tests at the Santos basin, which is located in deep waters. It marks its 10th oil discovery of the year and could be its largest since its discovery at the Shah Deniz gasfield in Azerbaijan in 1999.