BP Shares Surge on Activist Investor Elliott's 5% Stake Disclosure

BP shares jumped 4.6% after activist investor Elliott disclosed a 5.006% stake in the company. Elliott's involvement was first reported in February, leading to a share rally amid expectations it would pressure BP to shift gears from its green strategy to core oil and gas businesses. BP announced plans to ramp up fossil fuel investments to $10 billion through 2027, following pressure from both revenue and climate-focused investors.

BP shares surged 4.6% on April 23, 2025, following the disclosure by activist investor Elliott Management that it had expanded its stake in the company to above 5%. This move signals Elliott's push for BP to enhance its financial efficiency and boost free cash flow. The hedge fund is advocating for a significant reduction in BP's expenditure, aiming to increase the company's free cash flow by 40% [1].

Despite BP CEO Murray Auchincloss outlining a strategic plan for a "fundamental reset" earlier this year, Elliott Management believes these measures are insufficient. Elliott has proposed an alternative strategy that shifts BP’s focus towards maximizing free cash flow generation, targeting $20 billion annually by 2027. This strategic pivot involves moving away from expanding BP’s oil and gas operations and reallocating resources to prioritize shareholder returns and financial stability in the face of evolving industry dynamics [1].

Wall Street analysts forecast that the average target price for BP PLC (BP, Financial) is $35.29, with a high estimate of $44.00 and a low estimate of $27.00. The average target implies an upside of 22.99% from the current price of $28.69. The consensus recommendation from 18 brokerage firms is "Outperform," indicating a positive outlook for BP's stock [1].

Elliott's involvement follows a period of shareholder revolt over BP’s climate strategy. At BP's annual general meeting, nearly a quarter of shareholders voted against the re-election of outgoing chair Helge Lund due to conflict over BP’s decision to cut back on climate goals. This revolt was the largest protest vote against the chair of a FTSE 100 company in half a decade [2].

BP shares were trading up 0.82% by mid-afternoon following the vote, with CEO Murray Auchincloss announcing plans to increase oil and gas investment by a fifth to around $10 billion a year. BP is also under pressure to return to oil and gas from Elliott Management, which took a near five-percent stake in the oil major in February [2].

Analysts say BP could scrap buybacks at $60/bbl oil price, which would increase pressure on its already underperforming shares. Oil and gas majors have made increased use of share buybacks and dividends to reward shareholders, but weaker oil prices could force BP to cut or scrap its buyback programmes [3, 4].

BP is due to report its first-quarter results on April 29. The company has said it aims to distribute 30-40% of operating cash flow via dividends, which it plans to raise by 4% a year, and buybacks. BP has also said it is cutting its costs by $4-$5 billion a year and has projects starting up that will help its cash flow [3, 4].

References:
[1] https://www.gurufocus.com/news/2794594/elliott-management-boosts-bp-stake-calls-for-increased-free-cash-flow-bp-stock-news
[2] https://oilprice.com/Energy/Energy-General/BP-Faces-Major-Shareholder-Revolt-Over-Climate-Strategy.html
[3] https://www.reuters.com/business/energy/bp-share-buyback-outlook-risk-oil-price-slump-analysts-say-2025-04-23/
[4] https://uk.finance.yahoo.com/news/bp-share-buyback-outlook-risk-062105768.html