For BP to survive the energy transition in a world that’s gradually falling out of love with oil, it will need to make big investments in new sources of clean energy, ensure cash keeps flowing from its fossil fuel assets, while also funneling generous returns to investors. It’s a tricky balancing act that its closest peer Shell is already struggling to master.
BP’s commitment to do all this while still boosting free cash flow and shareholder returns is “really the key challenge,” said RBC Capital Markets analyst Biraj Borkhataria.
The company announced structural changes alongside its emissions target. Looney will dismantle its upstream and downstream businesses and reorganize them into an entity made up of 11 new teams that will be more integrated and focused.
“For us the statement represents a step change in terms of vision for the company and one that moves the group toward the biggest reorganization and modernization in at least two decades, if not a century,” analysts at Barclays said in a note. “The magnitude and radical nature of this shift should not be underestimated.”
The trend of public opinion relating to climate change has put most conventional energy companies in a bind. They have been the subject of vitriol from the green lobby for as long as I can remember but that was manageable when the environment was not an election issue. Today, the situation could not be more different. Wild fires, everywhere, droughts, floods, extinction angst and teenagers lecturing world leaders all point to a very hostile backdrop for oil, gas and coal companies.Click HERE to subscribe to Fuller Treacy Money Back to top