After the trauma of CEO Bernard Looney’s departure, BP’s latest results were an opportunity to show that all is well at the British oil major.
Lackluster third-quarter profits of £2.7 billion, following a boom in the same period in 2022, sent shares tumbling despite another £1.2 billion in share buybacks designed to please investors.
Interim CEO Murray Auchincloss is in a difficult situation. The American oil majors Exxon and Chevron have decided that, for the moment, the green transition is a matter for birds and have redoubled their commitment to fossil fuels with agreements for Pioneer Natural Resources and Chevron, respectively.
If the World Bank’s alarming projection of an oil price of $150 a barrel amid growing conflict in the Middle East proves correct, then the timing of the U.S. offers could prove fortuitous.
For now, BP is sticking to the Looney legacy of a greener future, although it’s taking longer to get there.
Dip: Lackluster third-quarter profits of £2.7bn sent BP shares tumbling despite a further £1.2bn worth of share buybacks designed to please investors.
Along with the latest financial results, BP highlights a $100m (£82.3m) deal with Tesla for its US superchargers, and that its Archaea biogas plant in the US is starting to produce.
Auchincloss said it remains committed to offshore wind despite a £416 million setback in New York.
BP’s board must ask itself whether it makes sense to move so far away from carbon when the rewards for investors could be promising.
BP is reportedly exploring onshore natural gas joint ventures in the United States, particularly deals near the border with Mexico. It plans to invest around $2.5bn (£2.1bn) a year in shale companies.
Focusing more on US shale production may seem like a good option, given the poor political climate in the UK for fossil fuel companies.
Despite long-standing cultural differences and rivalries, the possibility of an eventual defensive merger with Shell cannot be ruled out as the two British oil majors seek to navigate through hostile waters.
A Global Witness report says BP has gifted shareholders £20bn in dividends and share buybacks at a time when energy costs have hit consumers.
The Labor Party is committed to closing what it calls tax loopholes on North Sea oil. This, despite an overall tax rate of 75 percent.
Seen from inside BP (and Shell), saber-rattling by non-governmental organizations and opposition politicians can only fuel future investment plans abroad, such as Texas, Guyana, Africa and elsewhere.
Critics of Big Oil must recognize that dividends are a reliable source of income for pension funds and insurers and that the higher the profits, the bigger the tax increase for the Treasury.
contraction signal
Vodafone’s new chief executive, Margherita Della Valle, is following Amanda Blanc’s lead.
Aviva’s feisty boss appeased the company’s critics, such as activist investor Cevian Capital, by selling underperforming foreign companies when she took the helm of the insurer.
Della Valle has opened his account with the sale of Voda’s Spanish operation to UK buyout group Zegona Communications in a £4.3bn (£3.6bn) deal, largely in cash.
Over the years, Vodafone has been fantastic at selling businesses, but has focused less on trying to turn around underperforming units and bolster customer service.
This resulted in ill-timed sales in Japan and the United States, where Verizon Wireless sold. Revenue was wasted just as data was starting to take off.
Selling Spain can be easy compared to the rest of your inbox. Vodafone is overexposed to the slow German market.
Della Valle is counting on a merger with Hutchison’s Three in the UK to drive growth and revenue by eliminating a competitor.
It plans to satisfy critics by promising £11bn investment in better networks.
But as Microsoft and others are learning, Sarah Cardell, head of the Competition and Markets Authority, is no easy target for anyone.
bitter medicine
Home buyers and, indirectly, renters are not the only ones hurt by rising interest rates.
As higher borrowing costs, business rates and energy bills take their toll, corporate insolvencies are at their highest level in two decades and 41.3 per cent higher than pre-pandemic levels.
Free marketers might welcome the end of an era of zombie companies.
But the damage to entrepreneurship should not be underestimated.
