As BP contemplates the future without Bernard Looney, the ‘ATM’ – which the former BP boss referred to last year – is back up and running.
Saudi Arabia’s oil exports plunged to their lowest level in two years in July as ruler Mohammed Bin Salman, in concert with Moscow, tried to prevent oil prices from falling by cutting production.
The pressure on oil-importing nations is working. The benchmark price for Brent crude has jumped to around $95 a barrel and prices are rising at the fastest pace since Putin invaded Ukraine.
With prices at high levels, another profit bonanza awaits Big Oil.
Changing market conditions are likely to be a major factor as BP Chairman Helge Lund and a divided and ineffective board search for a new chief executive.
Underrated: BP has a reputation as one of the most agile exploration and production companies
The last time the oil price was at current levels, Looney was under pressure to scale back its green ambitions and improve shareholder payouts.
The reduction of BP’s ambitious carbon reduction targets, from 35 to 40 per cent by 2050 to 20 to 30 per cent, angered the green lobby and Labor’s Ed Miliband, but did not go far enough to calm investors. dissatisfied.
Lund will have to decide whether, after Looney’s restrained leadership, even the most modest climate change goals will be enough to restore investor confidence.
BP has a reputation as one of the most agile exploration and production companies and, despite setbacks in recent decades, is almost certainly undervalued.
In fact, the possibility that it could find investors in its share registry, or even become an acquisition target, is very real.
With a current market value of £85.6bn, it is a tiddler in a world of whales. At the top of the league is Saudi Aramco, worth $2.2tn (£1.78tn), followed by Exxon, valued at $465.2bn (£375bn).
It is not the first time that UK-based rival Shell, valued at £172.6bn, could see the opportunity for a bear hug.
Looking further afield, the world’s most astute investor, Berkshire Hathaway’s Warren Buffett, has made no secret of his interest in Big Oil.
It has already shelled out $13.5bn (£10.9bn) for a strategic stake in second-tier US oil group Occidental.
An attack on BP would require quick reflection in Whitehall, given the special status it has enjoyed over decades.
A long period of uncertainty without a defined leadership plan and an update to the balance between profits, dividends and share buybacks could leave BP vulnerable.
All the details of the personal drama that caused Looney’s departure are still unknown. With each side fully staffed with lawyers (Looney has hired legal sharpshooters Mishcon de Reya), details may take time to emerge.
But it is an unfinished business that is damaging BP’s reputation and has caused Looney personal harm.
The immediate turmoil is far from over.
Nuclear summer
As a supporter of renewing Britain’s decaying infrastructure, it is good to see the Government pushing to raise funds for a new 3.23 gigawatt nuclear power station, Sizewell C.
The UK has committed £700 million to the Électricité de France project and is now seeking support from private sector investors.
However, having spent the summer in Walberswick on the Suffolk coast, where the existing Sizewell plant dominates the skyline in a largely unspoilt corner of England, one can understand reservations about such an out-of-scale project in Constable’s country.
The published minutes of Walberswick council’s most recent meeting seemed reconciled to the idea as long as there are local jobs and economic benefits.
But years of construction trucks on narrow country roads, along with fears of water contamination, loom large. A friend, a nuclear scientist, joked that swimmers on that stretch of coast would no longer need their wetsuits. What a terrifying thought.
New era
Sir Martin Sorrell is a long-term executive and businessman, as fans of the ups and downs of WPP, which nearly failed in a 1990s credit crisis, will remember.
Revenue problems at Sorrell’s listed digital advertising vehicle, S4 Capital, have seen the shares plummet from a high of 870p in 2021 to below 74.8p in late trading.
Sorrell is a force of nature and younger than the gerontocracy fighting her in Washington DC. But even Sorrell must have doubts that he alone can pull S4 out of its tailspin.
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