(Bloomberg) — BP Plc said its new chairman will conduct a review of the entire portfolio and the company will seek to cut costs beyond current targets as it works to reverse years of poor performance.
Most Read from Bloomberg
The London-based oil major is under growing pressure to deliver on a turnaround plan, including from activist investor Elliott Investment Management, which amassed a stake earlier this year to force sweeping changes and has pushed for deeper cost cuts. A strategic reset outlined by the company in February received a lukewarm response from investors.
BP announced the new review Tuesday as it reported second-quarter earnings that topped analyst estimates and a $900 million reduction in structural costs in the first half. The company said it’s completed or announced at least $3 billion of divestments this year as it works to reduce debt and refocus on its core oil and gas business after a failed net-zero strategy.
Chief Executive Officer Murray Auchincloss’s corporate reset in February included targets for reducing costs and capital spending and $20 billion of asset sales by the end of 2027. The CEO said Tuesday the company is initiating a further cost review.
“We want to drive cost efficiency as much as we possibly can,” Auchincloss said in a Bloomberg Television interview. “We’ve had a good start, but we’re two quarters into 12; a lot more to do.”
Separately, incoming Chairman Albert Manifold “will conduct a thorough review of our portfolio of businesses to ensure we are maximizing shareholder value moving forward – allocating capital effectively,” Auchincloss said in a statement. “BP can and will do better for its investors.”
The company posted second-quarter adjusted net income of $2.35 billion, exceeding the average analyst estimate of $1.76 billion. The shares climbed 1.5% as of 8:50 a.m. in London, extending their gain since early April to more than 20%, outstripping UK rival Shell Plc.
Shareholder Returns
Net debt dropped by about $1 billion to $26 billion at the end of June. The company maintained quarterly share buybacks at $750 million, while the dividend was raised by 4%.
What Bloomberg Intelligence Says
“BP still has some way to go to allay investor criticism, but 2Q results show a de-risking of its near-term prospects and distributions”
—Will Hares, BI global energy analyst
Story Continues