BP's performance over the past couple of years is best described as a 'bit limp'...after more than doubling since 2021 to 2023, the share price has gone sideways and then down since, not so great....
In 2024, BP reported an adjusted EBITDA of $38.0 billion, a decrease of approximately $5.7 billion from the previous year.
This decline has prompted a strategic pivot: BP announced plans to reduce investments in renewable energy by over $5 billion annually, redirecting focus towards oil and gas with an annual expenditure of $10 billion in these sectors.
Renewable Energy Market Trends
However, the UK renewable energy market is experiencing robust growth. Valued at approximately $20.25 billion in 2023, it is projected to grow at a compound annual growth rate (CAGR) of 20.3% from 2024 to 2030.
All of this is of course bolstered by a healthy commitment to net zero by the UK government.
So I'm not so sure this pivot is a great move by BP...?
Investor Influence and Market Reactions
That's why they're moving away....
Elliott Management among other active investors have exerted pressure on BP to divest from renewable projects, arguing that the company lacks the scale and expertise for cost-effective operations in these areas.
They have advocated for BP to concentrate on traditional sectors where it has established strengths. This investor sentiment reflects a broader skepticism about the profitability and feasibility of rapid transitions to renewable energy within traditional oil and gas companies.
BP Vesting final thoughts...
I think this is a bit short sighted of BP, kind of playing it safe by sticking with what you know... and it seems misaligned with government and market sentiment which favour renewables.
And this strategic pivot back to fossil fuels doesn't sit well with my own ethics, either.
So I won't be Vesting in BP now or likely in the future, I think it's time to start looking around for some smaller, more dynamic, sustainable energy companies to Vest in maybe...?!?