By Arunima Kumar and Samuel Indyk
LONDON (Reuters) - BP shares rose 7% on Monday and are expected to grow the most daily in two years as investors expect radical shareholder Elliott Management to urge board changes and strategy shifts to boost returns.
BP CEO Murray Auchincloss was appointed last January and has been working to reverse the company's underperformance.
Expect Elliott to boost shares by 7% to 463.70p on Monday at 1223 GMT. If earnings are held, the share will mark the largest daily growth since February 2023.
Investors question BP's lack of a clear strategy to grow its oil and gas business and provide high yields to shareholders.
Stocks fell nearly 16% last year. Among other energy specialties, Shell fell nearly 4%, while Exxonmobil rose 8%.
BP is valued at about £69 billion (US$85.57 billion), which is less than half of Shell's valuation.
Poor performance also makes British companies a potential takeover target. Abu Dhabi National Oil Corporation (ADNOC) considered a purchase last year.
"In view of the changes in its former CEO, we think any activist will at least call for changes to the president," said Biraj Borkhataria, capital market analyst at RBC.
BP and Elliott declined to comment.
Restore confidence?
After his predecessor, Bernard Looney, resigned, Auchincloss has been trying to restore investors' confidence in the company's strategy because he failed to disclose his relationship with his employees.
“In terms of strategic business review, we expect to effectively divide the oil and gas segments into some transition growth engines of BP to help minimize funding into these areas,” Bolcataria said. .”
BP will report its fourth-quarter earnings on Tuesday, warning last month that the results were weaker.
As Auchincloss requires medical procedures, it also postponed the investor day until February 26.
Auchincloss is expected to use Capital Markets Day (CMD) to announce his new strategy.
Since taking office, he has slowed down his investment in renewable and low-carbon energy sources and focused on returning oil and gas projects.
Broker TD Cowen analyst said: "Reports about Elliott's position as an activist in BP emerged in an interesting moment, with its CMD coming in just two weeks. Management has already endured this The pressure of the event - If it does, the event will increase."
Elliott has become one of the most influential radical investors with assets of approximately $70 billion.
Jefferies analyst Giacomo Romeo said: “Given Elliott’s track record, we believe its involvement could lead to board changes (for BP), portfolio rationalization and CAPEX priorities for upstream projects, designed to maximize The generation of free cash flows.”
Elliott has established a stake without revealing its size, a source familiar with the matter told Reuters on Saturday.
Bloomberg News earlier reported that U.S.-based Elliott tried to increase shareholder value by urging BP to consider transformative measures, calling Elliott's stake in the company "important" .
($1 = 0.8064 lbs)
(Reported by Samuel Indyk and Arunima Kumar; Editors by Amanda Cooper and Barbara Lewis)