BP Announces Major Strategy Overhaul After Profits Drop

BP is preparing to make a dramatic shift in its business strategy as its profits take a steep dive. The oil giant reported a net income of $8.9 billion in 2024, a sharp drop from the $13.8 billion it earned the previous year. The company’s fourth-quarter profits were particularly weak, plummeting nearly 50% from the same period in 2023. CEO Murray Auchincloss has vowed to “fundamentally reset” BP’s strategy, promising a new direction for the company at an investor meeting on February 26.  

The expected changes will include scaling back BP’s renewable energy commitments in favor of increased oil and gas production. This follows similar moves by competitors such as Shell and Equinor, which have also pulled back on their renewable energy investments due to concerns over profitability. Auchincloss has already indicated that BP will restructure its low-carbon business to be “more capital-light,” reflecting a growing trend in the energy industry to prioritize short-term financial gains over long-term climate goals.  

One of the driving forces behind BP’s shift is activist investor Elliott Investment Management, which recently acquired a stake in the company. The hedge fund, known for pressuring businesses into making major structural changes, is expected to push BP toward a stronger focus on traditional fossil fuel investments. Speculation about potential boardroom shakeups or even a company breakup has increased since Elliott’s involvement became public.  

BP’s market value has struggled over the past two years, with its share price falling by nearly 25%, while many of its rivals have seen growth. Analysts have long speculated that BP could become a takeover target, but its sheer size—valued at around £74 billion—makes that scenario difficult. Investors responded positively to Elliott’s stake, with BP’s shares jumping 7% earlier this week.  

Despite the declining profits and investor pressure, BP has still prioritized shareholder returns. The company announced a $1.75 billion share buyback program for the fourth quarter of 2024, even as capital expenditures dropped significantly. Some analysts had expected BP to scale back its buyback program to manage its finances, but the company has yet to signal any major cuts in that area.  

The transition to renewable energy has been a challenge for BP, which initially set an ambitious goal of achieving 50GW of renewable energy capacity by 2030. However, the company has been steadily moving away from those targets. It froze new offshore wind projects last June and later put most of its existing offshore wind assets into a joint venture with Japanese company Jera. The official abandonment of its renewables target is expected to be confirmed at the upcoming investor meeting.  

BP’s financial struggles reflect broader industry trends, with oil and gas prices dropping from their 2022 highs following Russia’s invasion of Ukraine. While the company’s oil production and operations increased by 37% in 2024, its gas and low-carbon energy sector saw a 15% decline in profits. Weak refining margins and lower customer demand further contributed to the downturn.  

Auchincloss has been pushing a cost-cutting agenda, aiming to save $2 billion by 2026. This effort includes major layoffs, with BP planning to cut 4,700 jobs—around 5% of its workforce. The company is also exploring the sale of its Ruhr Oel GmbH refinery assets in Germany as part of its restructuring efforts.  

The energy sector as a whole has been retreating from aggressive renewable energy investments, citing high costs and slow adoption by consumers. Equinor recently announced it would halve its investment in renewables over the next two years, with CEO Anders Opedal stating that “we don’t see the necessary profitability in the future.” BP appears to be following suit, shifting its focus back to traditional oil and gas projects.  

As BP prepares for its February 26 investor meeting, all eyes will be on Auchincloss to see just how far the company is willing to go in its strategic overhaul. With investor pressure mounting and profitability at stake, BP’s future direction will have significant implications—not just for its shareholders, but for the broader conversation around the role of oil giants in the energy transition.