It's true that the black series of the last fifteen years resembled a never-ending nightmare. It began in 2010 with the Deepwater Horizon disaster in the Gulf of Mexico, then continued with the fall in the price of oil between 2014 and 2019 and the pitiful results of a strategy to break into renewables that had no head or tail.
This, before ending with a $24 billion loss when BP had to give up its stake in Rosneft following the invasion of Ukraine, and finally with the collapse in recent quarters of the US offshore wind market on which the British company had bet big.
Last year, like its compatriot Shell and, more recently, Norway's Equinor, BP promised to put its greenwashing behind it and return to the fundamentals of its historic business: oil and gas production. Like the other European majors, BP made Saint Augustine's prayer its own - "Lord, give me chastity, but not just yet".
In this context, the arrival of Elliott as a shareholder comes as no surprise. From well-informed sources, MarketScreener is of the opinion that the activist fund is preparing to argue in favor of a merger between Shell and BP. The UK has no use for two majors in a sector that has long since been fully consolidated.
All that remains is for Shell shareholders to swallow the pill, as they benefit from an intensely pragmatic strategy - a cultural credo not unlike that of France's TotalEnergies - from which they have been reaping generous rewards for some years now. On this subject, see Shell: Farewell to political corectness published last summer in these same columns.
The deal promises to be a tough one, however. In 2024, Shell's free cash flow was three times that of BP. Under these conditions, will the former really take the risk of encumbering itself with the latter's problems?
While it's easy to howl with the pack, MarketScreener can't help pointing out that, despite a succession of calamities, BP, if not growing, is at least showing surprising stability. Its free cash flow before asset disposals will reach $12 billion in 2024, exactly the same level as twenty years ago.
The British major similarly returned $12 billion to shareholders over the last twelve months - more than half of which via share buy-backs - compared with $13 billion in 2023 and $14 billion in 2022. MarketScreener expects these distributions to be sanctified, given that shareholders will henceforth reject en bloc major new investment projects with uncertain profitability.
BP's market capitalization hovers around $91 billion, a multiple of barely x7-x8 the amounts returned to shareholders in 2024. It's hard not to draw a parallel between the British company and Suncor, another major that failed completely a few years ago, and which Elliott's activists worked hard to put back on the right track, with convincing success.
