bp's reset plan can work with oil below $70, says CEO
(Bloomberg) – bp Plc is off to a “great start” in its strategy reset and can follow through on the turnaround despite the recent drop in oil prices, said Chief Executive Officer Murray Auchincloss.
U.S. President Donald Trump’s trade war has driven Brent crude below $70 a barrel, the price assumption that underpins bp's plans to boost cash flow and reduce debt by selling assets. While the financial framework has tightened, the company is on track and its $20 billion divestment program could actually be assisted, Auchincloss said.
“Given the nature of the assets we’re selling and the fact that the investors are a lot of infrastructure funds, with interest rates dropping it actually makes it easier,” Auchincloss said in an interview on Tuesday. Such divestments “are actually more in demand as interest rates start to drop, so people are hunting for yield.”
His comments came after BP reported a slump in cash flow and rising debt in the first three months of the year, forcing the London-based company to reduce the pace of its quarterly share buyback to $750 million, the low end of its target range. Its shares fell as much as 4.7% to 345 pence in London trading.
Auchincloss acknowledged BP is “a little tighter than we were at $70.” As a result, the firm trimmed its capital spending plans this year by $500 million.
He said there are multiple factors he’s watching to determine trends in oil markets in the coming months. One is how the Trump administration proceeds with any sanctions and negotiations with Iran, a major oil exporter. Another is the wider global supply mix.
“We’re starting to see investments slow down across the sector,” Auchincloss said. “For example, rig count is down 10% in the United States. That impacts supply, so we’re just cautiously moving forward.”
Despite the headwinds, Auchincloss highlighted BP’s “highest upstream operating efficiency in the history of the business,” which included the best refinery availability in more than 20 years. Keeping operations online, which was not always the case in 2024, will be key to helping deliver a turnaround.