|Bid||35.38 x 2900|
|Ask||35.38 x 3000|
|Day's Range||35.21 - 35.64|
|52 Week Range||35.07 - 45.38|
|Beta (5Y Monthly)||0.54|
|PE Ratio (TTM)||29.92|
|Forward Dividend & Yield||2.52 (7.00%)|
|Ex-Dividend Date||Feb 12, 2020|
|1y Target Est||47.84|
European stocks slipped on Friday, as worries about the coronavirus spreading beyond China offset indications the economy is improving.
The following are the top stories on the business pages of British newspapers. - Anglo American has insisted that its 405 million pound ($521.68 million) bid for Sirius Minerals is "fair and reasonable" after hedge fund Odey Asset Management joined small shareholders in pushing for a higher offer. - Royal Dutch Shell will not "get into an arms race" with BP over carbon targets, a senior executive has said, in a sign that Europe's biggest oil group will not rush to match its rival's "net zero" pledge.
The chief executive of Pioneer Natural Resources, Scott Sheffield, on Thursday called on energy investors to sell shares or pull funding from companies that have rates of natural gas flaring. The practice of burning off natural gas produced alongside more profitable oil has become a top issue for investors, who are focused on sustainability measures and already are frustrated by a decade of poor financial returns in oil and gas. The idea, Sheffield said during an earnings call, came out of a late January workshop in Austin, Texas, coordinated between Columbia University and the University of Texas at Austin, which brought together producers, pipeline companies, policymakers, non-governmental organizations, academics and analysts to talk about Permian Basin flaring.
Electric vehicles have charged up investments around the world, but Australia is revelling in a slew of deals involving old-school petrol stations, with a bidding battle developing for one of its top fuel retailers, Caltex Australia. A shake-up in the structure of the fuel industry over the past decade, sparked by refinery closures and oil major retreats, has produced deals worth $33 billion including offers for Caltex, according to Refinitiv data.
(Bloomberg) -- BP Plc and Royal Dutch Shell Plc are exploring adding more ethanol in gasoline in top corn state Iowa to take advantage of how cheap the biofuel has become.The oil majors are gauging driver interest at a small number of stations in 15% ethanol blends, up from the current state standard of 10%, after the Trump administration in May allowed an increase nationwide.Adding more ethanol to gasoline may help Midwest farmers who have been struggling to find markets for corn after biofuels demand plateaued last year. Ethanol futures slumped to the lowest in more than a decade in 2019, making it unprofitable to make the biofuel that accounts for about a third of demand for the U.S. corn crop. But cheap ethanol won’t save drivers much money: At current prices, filling up a Ford-F150 would only cost about a quarter less.The BP-branded Elliott Oil Co. has for about two weeks been selling some E15 in the small town of Osceola, CEO Andrew Woodard said. BP spokesman Michael Abendhoff said the company does not comment on marketing strategy.John Reese, downstream policy and advocacy manager in the Americas for Shell, said at the National Ethanol Conference in Houston that Shell offers higher ethanol blends, without offering specifics.Shell spokesman Ray Fisher said the company is working to add E15 in Iowa, Indiana and Illinois. “Prior to implementing E15, there is due diligence to ensure we can deliver a quality product and meet state regulations.”Benchmark Chicago cash ethanol traded at a one-year low in January, with the price decline generating interest in adding more to the mix. But that’s less than a penny per gallon below pump prices.Efforts to boost ethanol have an edge because the U.S. is sending only trace amounts of it to China, and Mexico is trending toward using less corn-based fuel, Corey Lavinsky, ethanol analyst at S&P Global Platts, said by email.There is also some political support. Iowa’s governor included an E15 tax credit extension and expansion in the state’s budget proposal.Iowa drivers like E15, and retailers have noticed, said Monte Shaw, executive director of the Iowa Renewable Fuels Association in West Des Moines, by telephone.“It’s happening because enough independents in Iowa, they know there’s no stigma, that Iowans will buy this stuff,” Shaw said.To contact the reporters on this story: Jeffrey Bair in Houston at firstname.lastname@example.org;Michael Hirtzer in Chicago at email@example.comTo contact the editors responsible for this story: David Marino at firstname.lastname@example.org, Jessica SummersFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The latest five-day oil rally has been brought to an end by market uncertainty surrounding OPEC+ production cuts and a recovery in Chinese demand
The following are the top stories on the business pages of British newspapers. Jupiter Fund Management Plc agreed to buy its smaller rival, Merian Global Investors, for as much as 419 million pounds ($544.62 million). The owner of Britain's largest and oldest train factory is to be sold off to the French company Alstom SA in a deal worth 6.25 billion pounds.
U.S. Secretary of State Mike Pompeo denounced corruption and touted American business on Monday during the second leg of an African tour in Angola, where the government is seeking to claw back billions of dollars looted from state coffers. Pompeo is aiming to promote U.S. investment as an alternative to Chinese loans while assuaging concerns over a planned U.S military withdrawal and the expansion of visa restrictions targeting four African countries.
British stocks edged higher on Monday, with companies sensitive to Chinese demand getting a boost from the country’s efforts to limit the economic fallout from the deadly coronavirus.
(Bloomberg) -- BP Plc is expanding its team working on carbon capture and storage projects as part of its ambition to zero out net greenhouse-gas emissions by 2050.The oil major has added staff over the past 12 months and is reorganizing teams that have been dispersed within different units of the company, a spokesperson confirmed. The moves build on Chief Executive Officer Bernard Looney’s announcement Wednesday that BP will target pollution not only from its own energy use but from the fuel its customers use, known as Scope 3 carbon emissions.The moves add the weight of Europe’s second-biggest oil company to efforts to make the technology a commercial reality. Carbon capture is a broad set of technologies that can be deployed to cut emissions from industrial plants. The goal is to bury pollutants underground instead of allowing them to escape into the atmosphere and contribute to climate change.The hiring spree “is a rejuvenation of the size and speed and seriousness of (carbon capture) activity within BP,” said Stuart Haszeldine, professor of carbon capture and storage at the University of Edinburgh. The company declined to provide more details on how many new people they are taking on or how many people work in the field now. The move is an indication of BP’s ambition to tackle Scope 3 emissions, which is about 90% of the carbon footprint of most oil companies. While the industry burns some fossil fuel to run refineries and deliver gasoline to service stations, its largest impact on the environment is in the oil products its customers burn. Looney said carbon-capture projects will have to be part of the solution to reaching the net-zero target. “Trillions of dollars will need to be invested in re-plumbing and rewiring the world’s energy system,” Looney said Wednesday in a statement outlining his plan. “It will require nothing short of re-imagining energy as we know it.”Read More: How Much Carbon Dioxide Is in the Atmosphere?BP flirted with carbon-capture technologies in the early 2000s, when the U.K. government put out a series of bids and competitions to attract private companies to build technology capabilities and large infrastructure projects. The U.K. government’s flip-flop on supporting the technology cost BP as much as $50 million, which it had spent studying the feasibility of the world’s first natural-gas power plant fitted with the equipment.Under new leadership, BP is aiming to align its emissions targets to match the ambition that governments set under the 2015 Paris Agreement on climate change. That deal brokered by the United Nations aims to keep global temperature increases since the industrial revolution “well below 2° Celsius,” a level that would still mark the quickest shift in the climate since the last ice age ended. Every climate model setting out how that goal can be reached suggests carbon capture will be essential.The technology plays only a marginal role in cutting emissions today, partly because each plant can cost $1 billion or more, and governments so far have been reluctant to subsidize it or put an appropriate price on carbon. Some 20 large scale projects that can capture about 40 million metric tons of carbon dioxide each year, about 1% of global emissions, are working now.As part of its commitment, last month BP joined the Global CCS Institute, an industry body promoting the use of carbon capture technology. Read more: Why Company Carbon Cuts Should Include “Scope” CheckThe company is currently leading a group looking to build a zero-carbon cluster at the U.K.’s Teesside industrial complex, which includes oil refineries and chemical factories. It’s part of a project run by the Oil and Gas Climate Initiative, which includes Royal Dutch Shell Plc and Total SA. The plan would be to inject carbon emissions into rock formations deep under the North Sea. Haszeldine said that the project “could serve as a carbon dioxide store for many, many decades.”If it’s built, the Teesside project aims to capture as much as 6 million metric tons of carbon dioxide a year, or about 2% of the U.K.’s annual emissions. The OGCI estimates the single project could create up to 4,000 jobs. That’s only one of the industrial sites ripe for the technology. Others include plants near the Humber river, Merseyside, Runcorn and in Grangemouth. Those places employ more than 90,000 people in chemicals and oil refining.The U.K. government, which has set its own legally mandated goal of hitting net-zero emissions by 2050, is also looking to invest in carbon-capture technologies. Prime Minister Boris Johnson committed to spend 800 million pounds ($1 billion) toward scaling up the technology in his party’s manifesto before the December election. Haszeldine says that the government is looking to stump as much as 30% of a project cost, if private companies pony up the rest.To contact the author of this story: Akshat Rathi in London at email@example.comTo contact the editor responsible for this story: Reed Landberg at firstname.lastname@example.org, Lars PaulssonFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Alongside environmental efforts, BP remains focused on increasing sustainable free cash flow and boosting shareholder returns in the long run.
Markets started 2020 with a 5% gain on the S&P 500. It's a fine cap to start the year, but will it last? Not so sure; Wall Street is predicting a far more modest run in 2020, with the end-year targets averaging just a 2% gain.The outlook reflects relative risk assessment, rather than depression. With the coronavirus outbreak, and a US Presidential election just nine months away, 2020 is starting out with plenty of uncertainty on the horizon.That uncertainty has investors worried, and when investors get worried they look for a safety net in their investment strategy. It’s a draw that naturally pulls them to dividend stocks. Dividend stocks don’t offer the same high share appreciation as growth stocks, but they do offer a steady income stream. And when markets are volatile, a steady income stream is a hot commodity.With this in mind, analysts from Minnesota-based investment firm Piper Sandler have tagged three energy stocks as particularly noteworthy, offering investors a valuable combination of high dividends, and even higher upsides. Using the Stock Comparison tool from TipRanks, we can look at these three tickers, side by side, comparing their attributes. All are Buy-rated with dividend payouts exceeding 5%, and show an upside between 20% and 45%.Black Stone Minerals (BSM)We’ll start with Black Stone, a Houston-based oil and gas exploration and development company. Black Stone controls over 20 million acres across 40 states, but the bulk of its operations are in the South (Alabama-Mississippi, Louisiana-Arkansas, Texas-Oklahoma) and the Northern Plains (Montana-North Dakota). The company also has a presence in the Appalachian gas fields of Pennsylvania and West Virginia.Black Stone’s ability to continue making money in the current environment was clear in the last quarterly report. The company beat the earnings forecast by 10%, reporting 32 cents per share on revenues of $137.4 million. The free cash flow reached $89.2 million, marking the fifth quarter in a row of FCF gains. BSM reports Q4 2019 on February 24 and is expected to show 26 cents EPS.Investors should note the rising FCF. Black Stone has used that money, at least in part, to fund a high dividend. The company pays out 30 cents per share quarterly, or $1.20 annually, which may not sound like much – but the yield is impressive at 11.4%. That’s almost 6 times the average yield among S&P companies. The payout ratio is 93%, indicating that BSM pays back most of its profits to shareholders – and that the payment is sustainable in current conditions.Piper Sandler analyst Pearce Hammond looks at BSM in the context of the gas industry generally, and draws a bullish conclusion. He writes, “While natural gas headwinds might intensify further in coming months, we believe this negativity is largely reflected in the unit price and there is a favorable risk/reward tradeoff... Most important, nothing cures low prices like low prices, and we expect declining natural gas drilling combined with further demand growth to result in improving natural gas s/d fundamentals over the next twelve months.”In short, Hammond sees BSM in position to grow this year, and puts an $18 price target behind his Buy rating. That target indicates a 75% upside potential. (To watch Hammond’s track record, click here)Black Stone’s Moderate Buy consensus rating is derived from 2 recent Buy reviews – and 3 Holds. Opinions are mixed on this stock, but note that even the low-ball price target estimate is higher than the current share price. The average target, $14.90, suggests room for 45% upside growth. (See Black Stone stock analysis on TipRanks)BP PLC (BP)Our next stock is a $123 billion staple of the oil industry, BP. This is the sixth largest oil and gas company globally, and brought in over $300 billion in calendar 2018 revenues. The low prices plaguing the industry through 2019 pushed hard on the bottom line, however, and BP’s 2019 profits were down 21%.At the same time, despite the slip, the $10 billion profit reported beat the forecast of $9.7 billion. Looking ahead, there are indications that production cuts by OPEC – in the range of 500,000 barrels per day – could help improve the supply-demand situation in 2020. Should OPEC be successful in its moves to push prices back toward $60 per barrel, companies like BP would see immediate gains. That would be a welcome change from the 13% price drop in Brent crude over the past 12 months.Despite the low prices and decline in profits, BP has maintained its dividend. The company announced a 63-cent quarterly payment this month, making the annual payout $2.52 and the yield a strong 6.6%. BP has been raising the dividend payment modestly over the past 4 years.Writing on the stock after the earnings report, Piper Sandler's Ryan Todd reiterated his $47 price target and Buy rating. He was particularly impressed by the dividend, writing, “…while 2020 guidance was largely in line, capex again at the low end of the guided range combined with success to date on disposals should set the stage for a coming ramp in shareholder distributions… the [dividend] raise was modest, [and] represents the second sequential (annual) bump to the dividend and management’s commitment to growing shareholder distributions going forward.”Todd’s price target suggests a 26% upside to BP shares. (To watch Todd’s track record, click here)BP is another Moderate Buy, according to the analyst consensus view. The stock has received 2 Buy ratings and 1 Hold in recent weeks. Shares are priced at $36.54, and the average target of $45 implies an upside of 23%. (See BP stock analysis on TipRanks)Total SA (TOT)Our final stock on the list, like BP, is a ‘Supermajor,’ one of the few giant companies that collectively are called “Big Oil.” Total has a $128 billion market cap, brings in some $200 billion in annual revenue, and sees more than $11 billion in net profit.Where BP has been facing lower quarterly earnings, TOT’s quarterlies are rising. In Q4, the company saw $1.19 EPS, for a 1% year-over-gain and a 5% sequential gain. The rising earnings came even as total revenues slipped. The top-line number was down 6% year-over-year, to $49.3 billion – another indication of the impact low prices have on the sector.Total’s oil production in the fourth quarter was 3.113 billion barrels per day, up 8% from the year before, while gas production showed a 4% gain to 7.264 billion cubic feet. The company saw an 8% decrease in realized oil prices, and a 25% drop in gas prices, over the course of 2019. Total ended Q4 2019 with $27.4 billion cash on hand, essentially flat year-over-year.The company has been using its cash to boost shares, with a $1.75 billion share buyback in 2019. Going forward, management expects to buy back $2 billion worth of shares in 2020. These buybacks are part of a planned program, in place for the 2018 to 2020 time horizon, totaling $5 billion.Along with share buybacks, TOT pays out a reliable quarterly dividend. The annualized payment, at $2.93, makes the yield 5.99%. For investors, the best feature of the dividend is the payout ratio. At 51%, it’s high enough to show a company commitment to paying back shareholders, while not so high to spark worries about sustainability.Analyst Ryan Todd, quoted above on BP, also reviewed TOT. He believes that this company is the best option for investors looking for an oil play, writing, “While not immune to macro headwinds, the combination of above average production growth and high-margin project starts managed to hold earnings flat YoY in a peer group showing material declines – outperformance that we expect to continue in 2020. We continue to view Total as best positioned to support both top-line growth and upside to growing shareholder returns.”Todd reiterated his Buy rating on the stock, and set a $68 price target. His target suggests a robust 36% upside for Total over the coming 12 months.TOT is the only stock in this list with a Strong Buy analyst consensus. This rating is based on 4 Buys and 1 Hold set recently. The stock is trading at $49.81, and the average price target of $67.31 indicates room for 30% upside growth potential. (See TOT stock analysis on TipRanks)
(Bloomberg) -- BP Plc’s pledge to zero out all its carbon emissions by 2050 deepens the divide between major European and American oil producers on climate change, increasing the pressure for Exxon Mobil Corp. and Chevron Corp. to do more.The U.S. supermajors have only committed to reducing greenhouse gases from their own operations, which typically account for just 10% of fossil fuel pollution. BP on Wednesday followed Royal Dutch Shell Plc and Equinor ASA in pledging to offset emissions from the fuels they sell to customers, representing about 90% of the total.“If we do see capital flowing into BP, that may force the U.S. majors to rethink the speed at which they move on carbon reduction targets,” said Noah Barrett, a Denver-based energy analyst at Janus Henderson, which manages $356 billion. Still, he doesn’t see “Chevron or Exxon adopting a BP-like strategy in the near future” as they “have historically been less aggressive in their shift away from traditional oil and gas.”Concerns about global warming are increasingly reshaping investment policies, with BlackRock Inc. and State Street Corp. becoming the latest high-profile investors to demand companies improve environmental, social and governance metrics, or ESG.Exxon and Chevron, the West’s number one and three oil producers, say it’s not up to them to offset emissions from cars, factories and other polluters known in the industry as Scope 3. For Exxon, such emissions are the “result of choices consumers make.” Chevron says “well-designed policies and carbon pricing mechanisms” are needed.But BP’s announcement “could be a real tipping point where the norm becomes taking responsibility” for customer emissions, said Kathy Mulvey, a campaign director at the Union of Concerned Scientists. “For a company to continue to stick their heads in the sand and refuse to take responsibility for those harmful impacts is not a sustainable business model.”Exxon and Chevron do agree with the goals of the Paris Agreement, support a carbon tax and are committed to cleaning up emissions from their vast network of wells, refineries and pipelines. They joined the Oil and Gas Climate Initiative later than their European rivals but are still fully paid up members. They even lobbied against U.S President Donald Trump’s plan to roll back Obama-era emission standards.The fundamental difference with European peers, however, is that neither is reducing commitment to their oil and gas business by chasing the crowd into lower-margin renewables such as wind and solar.When asked about potentially following Shell into the power sector, Chevron CEO Mike Wirth was clear in an interview with Bloomberg News last year.“We don’t see distinctive differentiating capabilities that would say, ‘wow we can do this better,’” he said. “And it’s inherently lower return than the other things we could invest money in.”Chevron is investing in early-stage technologies that could help aid carbon capture and energy storage, but that’s a small fraction of its budget. The company helps customers clean up their energy usage by supplying gas for power generation that’s cleaner than coal, developing biofuels and adding renewable energy sources like wind and geothermal, it said in a statement.Exxon CEO Darren Woods says the real answer to climate change will come through technologies that haven’t yet been invented. The company said in a statement it has invested more than $10 billion over the past 20 years in researching and developing low emissions technologies.The oil giant is working on proprietary technologies that would reduce emissions in areas like aviation, heavy duty vehicles and industrial processes. “We can bring more value in the space where we don’t know what the solution is but we need one,” Woods said in an April interview. Exxon has pedigree in this field. It invented the lithium-ion battery in the 1970s.This approach will likely come under attack at this year’s round of shareholder meetings in May. Both companies are being asked by Dutch activist investor group Follow This to align their strategies with the Paris Agreement. Exxon is asking the Securities and Exchange Commission to exclude that proposal from a shareholder vote, arguing it “seeks to micromanage” the company.To contact the reporter on this story: Kevin Crowley in Houston at email@example.comTo contact the editors responsible for this story: Simon Casey at firstname.lastname@example.org, Carlos Caminada, Dan ReichlFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
BP has been a laggard in the race among oil and gas majors to reposition themselves in the battle against climate change. Now Bernard Looney, its new chief executive, is living up to his promises to be bold. — that is, its own operations will produce no net carbon dioxide emissions.
The following are the top stories on the business pages of British newspapers. - British oil major BP Plc has vowed to reduce the carbon footprint of the oil and gas it produces to "net zero" by 2050 in a pledge to tackle climate change. - Canada's Bombardier Inc has been accused of exploiting its suppliers by the UK payment watchdog, small business commissioner.
(Bloomberg) -- BP Plc’s new boss set out the oil industry’s boldest plan to tackle climate change. All that’s missing is the map for how to get there.Bernard Looney, who has been chief executive officer for just a week, committed BP to eliminating all emissions from its own operations and production by 2050. That’s a radical shift for one of the world’s largest and oldest oil companies, and he gave a blunt admission that he didn’t know how to achieve it.“Every journey has to begin with a destination,” Looney said as he presented his new strategy in London on Wednesday. “I appreciate you want more than a vision -- you want to see milestones, near-term targets, some ways to measure progress. We do not have those for you right now.”One thing was clear from Looney’s plan -- and it’s a big deal for a company that tapped the first fields in Iran in the early 20th century and drilled wildcat wells on the Alaskan frontier more than 60 years ago.In an industry obsessed with finding the next barrel, BP has accepted that its oil and gas production will decline. The company will reconsider its exploration strategy, sell its most carbon-intensive assets and divert spending from fossil fuels to other things.“I get it. The world does have a carbon budget. It is finite and it’s running out fast,” Looney said, adopting the language of climate activists in his pitch. “We have got to change, and change profoundly.”BP’s own operations emit the equivalent of about 55 million tons a year of carbon dioxide, while the oil and gas it pumps from the ground adds another 360 million tons. Looney said both categories of greenhouse gases will be eliminated on a net basis by 2050 or earlier.That goes further than pledges from Royal Dutch Shell Plc and Total SA, and is far ahead of U.S. peers Exxon Mobil Corp. and Chevron Corp. Only Spain’s Repsol SA has gone further by pledging to fully eliminate “Scope 3” emissions, including fuel it buys from other producers and sells to consumers.BP will reduce by half the carbon intensity of the fuel it sells but doesn’t produce itself, Looney said.Deep reductions in Scope 3 emissions are a big step for an industry that produces the bulk of the world’s planet-warming gases. To fulfill that pledge, Looney or his successors may one day face a hard reckoning -- either shift energy production completely to renewables, invent a commercially viable technology to store the carbon emitted from burning oil and gas, or shut down the business.Looney was clear that he had no intention of choosing the third option.“BP is going to be in the oil and gas business for a very long time,” he said in a question and answer session after the presentation.Whatever hydrocarbons BP is still pumping in 2050 will have to be subject to carbon capture and storage, a technology that’s been touted for decades but hasn’t yet been implemented on a broad commercial scale.“I’m not going to get drawn into how much oil we’re producing in 30 years time,” Looney said. “I do believe the technology exists” for carbon capture, he said.On clean energy investments, the CEO was intentionally vague. “We don’t plan to commit to an arbitrary or pre-set number,” he said. “The goal is not just to spend more money, it is to invest wisely.”In one of his last interviews before leaving office, Looney’s predecessor Bob Dudley warned against Big Oil moving too fast on new technologies to counter climate change, because their failure could lead to financial ruin.Still, 49-year-old Looney is clearly embracing a different style and agenda to Dudley. He’s often seen in jeans and open-necked shirts with his sleeves rolled up. He recently joined Instagram, where he talks about climate change.Unanswered QuestionsBP’s ultimate goal to be a thriving and sustainable energy company, Looney said.“BP will have a very high quality oil and gas business” that over time is likely to get smaller and be de-carbonized, he said in an interview with Bloomberg television. “At the same time, I see us building and growing new low- or zero-carbon businesses.”Looney said he will offer greater detail in September “and in the months and years to come.”BP’s bold plan drew wide support, with industry insiders, major investors and even environmental pressure groups voicing their praise.“Looney made an outstanding decision,” said Mark van Baal of Follow This, an activist investor that’s been pressing oil companies to set carbon targets. “We, the shareholders, have to support him through thick and thin now.”Yet the lack of detail left BP open to criticism, suggesting it will remain in the cross-hairs of some environmental groups.BP’s ambitions “leave the urgent questions unanswered,” Charlie Kronick, oil adviser from Greenpeace U.K., said in a statement. “What is the scale and schedule for the renewables investment they barely mention? And what are they going to do this decade, when the battle to protect our climate will be won or lost?”\--With assistance from Alix Steel.To contact the reporter on this story: Laura Hurst in London at email@example.comTo contact the editor responsible for this story: James Herron at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- BP Plc’s ambitious plan to go green is winning accolades from at least one high-profile investor.ValueAct Capital Management started building a position in BP after an “inspired” presentation Wednesday from the energy giant’s new boss about his plans to eliminate almost all its carbon emissions, according to ValueAct Chairman Jeff Ubben.The bet is on BP Chief Executive Officer Bernard Looney’s vision for the oil and gas company, which goes far beyond any of its peers, Ubben said in an interview. While Ubben had been studying the company for a while, he was inspired to buy shares during Looney’s pledge to cut greenhouse gas emissions from operations and production to net zero within 30 years.“I just started buying while I was watching,” Ubben said. “Someone needs to stand up and reward these guys.”The investment was made through the $1 billion ValueAct Spring Fund, which is focused on social and environmental investing, Ubben said. BP’s strategy is exactly the sort of investment the fund is looking for, he said. He didn’t disclose the size of his stake.While peers including Royal Dutch Shell Plc, Total SA and Equinor ASA have responded to investor pressure by adopting targets for emissions curbs, none has promised to zero them out like BP.It highlights the perils of investing in companies with so-called environmental, social and governance agendas, Ubben said.“ESG is total crap,” Ubben said, noting that the five most owned stocks in ESG funds are Microsoft Corp., Alphabet Inc., Visa Inc., Apple Inc. and Cisco Systems Inc.. “It is worse than greenwashing, since these investors ignore the externalities of Google mining your privacy; Visa earning monopoly rents on the back of small business; and Apple’s extractive business model of selling you a new phone full of mined materials as often as possible.”He said to actually have an impact, investors have to get involved with the companies where their core business deals directly with the biggest problems of the day, which he said is climate change. To that end, he said the ValueAct Spring Fund has joined the board of power producer AES Corp. to help facilitate its move away from fossil fuels and the private board of Nikola Corp.Representatives for Apple, Visa, and Alphabet weren’t immediately available for comment.ValueAct on Wednesday also was granted a seat on the board of Hawaiian Electric Industries Inc. Eva Zlotnicka, managing director of the Spring Fund, will join the board and also sit on its compensation committee.ValueAct, which owns a 1.5% stake in the utility, had urged Hawaiian Electric to look externally for a successor to CEO Constance Lau in a November letter to stakeholders, arguing it needed a shift in corporate culture. ValueAct also raised concerns that the company wouldn’t reach its renewable targets.“As an island economy, sustainability is must,” Ubben said. “It is an inspired place, with legislative and regulatory leadership that wants to reward innovation. Hawaiian Electric management and board have taken on the challenge to move faster off of base-load oil.”The San Francisco-based hedge fund disclosed its original stake in Hawaiian Electric in October 2018 through the Spring Fund. Total shareholder returns since ValueAct disclosed its position have been about 38%, according to data compiled by Bloomberg.Last month, Ubben, the founder of ValueAct, was replaced as CEO of the activist firm by Mason Morfit. Ubben remains chairman and will continue to help run the Spring Fund.\--With assistance from Laura Hurst.To contact the reporter on this story: Scott Deveau in New York at email@example.comTo contact the editors responsible for this story: Liana Baker at firstname.lastname@example.org, Matthew Monks, Michael HythaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Joining the ranks of BlackRock and Microsoft, BP has come out with a plan to address climate change, and that gives it added appeal.
BP PLC, under new leadership and following Shell and others, has set an ambitious plan to eliminate or offset all carbon emissions from the oil and gas it produces by 2050.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.BP Plc’s new boss set out the boldest climate plan of any major oil company, pledging to eliminate almost all of the carbon emissions from its operations and the fuel it sells to customers.Bernard Looney, the company’s chief executive officer for just a week, set an ambitious agenda for what’s becoming an existential challenge for the oil industry. While peers including Royal Dutch Shell Plc, Total SA and Equinor ASA have responded to investor pressure by adopting targets for emissions curbs, none has promised to zero-out all emissions from the fossil fuels they pump from the ground.“The world’s carbon budget is finite and running out fast; we need a rapid transition to net zero,” Looney said in a statement on Wednesday. “We have got to change -- and change profoundly.”Only Spain’s Repsol SA, a smaller refiner and energy producer, has gone further by pledging to fully eliminate “Scope 3” emissions, which include fuel it buys from third parties and sells to consumers.While Looney struck a confident tone, he faces an enormous task. The new CEO didn’t have detailed answers to questions about how to eliminate carbon from one of the world’s largest oil companies, which tapped the first fields in Iran in the early 20th century and drilled wildcat wells on the Alaskan frontier more than 60 years ago.“I appreciate you want more than a vision -- you want to see milestones, near-term targets, some ways to measure progress,” Looney said in a question and answer session posted on BP’s website. “We do not have those for you right now,” but will announce more measures in September, he said.Radical ChangeFor BP to survive the energy transition in a world that’s gradually falling out of love with oil, it will need to make big investments in new sources of clean energy, ensure cash keeps flowing from its fossil fuel assets, while also funneling generous returns to investors. It’s a tricky balancing act that its closest peer Shell is already struggling to master.BP’s commitment to do all this while still boosting free cash flow and shareholder returns is “really the key challenge,” said RBC Capital Markets analyst Biraj Borkhataria.As he presented his strategy in London, Looney said BP will remain an oil and gas business “for a very long time,” while also acknowledging that production will decline in the long term. Whatever is pumped in 2050 “will have to be de-carbonized” and the CEO said he’s big believer in the viability of the technology to capture and store CO2 emissions.BP also announced structural changes alongside its emissions target. Looney will dismantle its upstream and downstream businesses and reorganize them into a an entity made up of 11 new teams that will be more integrated and focused.“For us the statement represents a step change in terms of vision for the company and one that moves the group toward the biggest reorganization and modernization in at least two decades, if not a century,” analysts at Barclays Bank Plc said in a note. “The magnitude and radical nature of this shift should not be underestimated.”Targeting Scope 3 emissions is a big step for an industry that produces the bulk of the world’s planet-warming emissions. To fulfill the pledge, Looney or one of his successors may one day face a hard reckoning -- either shift energy production to renewables, invent commercially viable technology to store the carbon emitted from burning oil and gas, or stick with fossil fuels and accept that production will have to drop.BP’s own operations emit the equivalent of about 55 million tons a year of carbon dioxide, while the oil and gas it pumps from the ground adds another 360 million tons, the company said. Looney plans to eliminate both those sets of emissions on a net basis by 2050 or earlier.“This is what we mean by making BP net zero,” Looney said. “It directly addresses all the carbon we get out of the ground as well as all the greenhouse gases we emit from our operations. These will be absolute reductions, which is what the world needs.”Trans-Atlantic DivideBP also aims to reduce by half the carbon intensity of the products it markets -- crude and fuels it purchases from other companies and sells to its customers -- by offering people more choice of low- and no-carbon products. BP’s own upstream operations produced 1.14 million barrels a day of liquids in 2018, but it actually refined 1.7 million a day and its total sales to consumers were 2.74 million barrels a day, according to its annual report.The move increases the divide between oil companies on either side of the Atlantic. The European majors are heeding societal and investor pressures to drastically reduce their carbon footprint. Pledges from their American counterparts ExxonMobil Corp. and Chevron Corp. are more modest, focusing on reducing methane emissions and more generally aligning themselves with the Paris Climate Agreement.In the early 2000s, the company re-branded itself as “Beyond Petroleum” under another visionary CEO, John Browne. But big investments in solar power largely failed. In one of his last interviews before leaving office, Looney’s predecessor Bob Dudley warned against Big Oil moving too fast on new technologies to counter climate change, because their failure could lead to financial ruin.However, circumstances are changing. Becoming greener is no longer a choice for the world’s largest polluters.The damaging effects of rising global temperatures are increasingly evident and established investors are starting to worry about the vulnerability of their portfolios to a climate crisis. It was among the most debated subjects in this year’s World Economic Forum in Davos. Last month, BlackRock Inc. added its significant weight to a $41 trillion investor group that’s pressing the biggest emitters to change their ways.The Church of England Commissioners, one of the activist investors that has been pressuring Big Oil, praised BP’s move. “This is the ambition that the world needs,” Edward Mason, head of responsible investment, said in a tweet.(Updates with CEO comments in ninth paragraph.)\--With assistance from Julian Lee and Akshat Rathi.To contact the reporter on this story: Laura Hurst in London at email@example.comTo contact the editors responsible for this story: James Herron at firstname.lastname@example.org, Christopher SellFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.