Murray Auchincloss, the chief executive of the struggling energy giant BP, promised “a fundamental reset” of the company’s strategy on Tuesday while reporting disappointing earnings.
The shift comes after a long period of lackluster share performance compared with its industry peers. BP’s weak stock price has attracted interest from Elliott Investment Management, a hedge fund known for shaking up its targets in an effort to improve shareholder value.
Mr. Auchincloss is reserving the details of BP’s shift for a presentation to investors on Feb. 26, but analysts seem to have little doubt about its direction.
BP is likely to reduce spending on low-emissions energy technologies like wind and hydrogen and try to boost oil and natural gas production, they say. “We would anticipate that there will be major changes in capital allocation, particularly around lower spending in the low-carbon arena,” Alastair Syme, an analyst at Citigroup, wrote in a note to clients on Tuesday.
Mr. Auchincloss appears headed toward a major reversal of the course taken by his predecessor, Bernard Looney, who left the company in 2023 after failing to disclose personal relationships with colleagues.
In the early part of this decade, when oil prices were low and governments were pressing companies to reduce emissions, Mr. Looney aggressively invested in green technologies like offshore wind and throttled back on oil and gas.
To investors, this strategy now looks misguided. Oil and natural gas prices have recovered, renewable energy sources have fared poorly of late and an administration that favors fossil fuels has taken power in Washington.
“BP’s weak share price is the result of a far-too-radical transition strategy,” Irene Himona, an analyst at the Wall Street research firm Bernstein, wrote in a note.
BP has long been under fire from investors, which has weighed on its shares. Mr. Syme figures that the company is now around 10 percent cheaper than its main European rivals, Shell and TotalEnergies of France.
Low valuation may have appealed to Elliott, the activist hedge fund that has amassed a position in BP, said a person with knowledge of the matter who spoke on condition of anonymity because the details were private. The size of Elliot’s stake is not yet clear, but activist investors often take small stakes and agitate for change with the support of larger shareholders.
Both Elliott and BP declined to comment on Elliot’s investment, which was earlier reported by Bloomberg.
Adding to its pressures, BP reported poor financial results on Tuesday. Adjusted profit for the fourth quarter fell about 60 percent compared with a year ago, while annual profit fell by a third to $8.9 billion. The company’s stock price, which had risen sharply on Monday after reports of Elliott’s stake, fell on Tuesday.
Moving BP away from being an aggressive alternative energy investor to an oil and gas player will not be easy. BP has spent relatively less on its fossil fuels business in recent years, analysts say, and will require years to build back that investment. “Sustained underinvestment means there is no quick fix,” Mr. Syme wrote.
Michael J. de la Merced contributed reporting.
