By Brian Swint

With oil prices slumping on concerns that a tariff-induced economic slowdown is coming, one company has more problems on its plate than others.

BP, which reports earnings in the early hours of Tuesday morning, is currently the biggest energy producer to be under pressure from an activist investor.

Elliott Management has built a stake of more than 5% and is pushing for bigger cash flow targets, steeper cost cuts, and lower capital expenditure. All of those goals are considerably more aggressive than the plan laid out by CEO Murray Auchincloss earlier this year.

Auchincloss, who took the reins at the end of 2023, has the task of making BP stock more competitive with rivals Shell, Exxon, Chevron, and TotalEnergies after years of underperformance. His plan is to focus on more oil and gas production, a reversal of the previous strategy that called for lower fossil fuel output and more spending on low-carbon energy sources.

With Elliott breathing down his neck, Auchincloss doesn't have much time. One thing that is counting against him is that he was instrumental in coming up with BP's 2020 strategy that is now being scrapped. At BP's annual general meeting in April, almost a quarter of shareholders voted not to re-elect Chair Helge Lund. That's a symbolic gesture, since he had already made plans to leave the company, but it's a clear warning sign of discontent with management.

The median analyst estimate for earnings at BP in the first three months of the year is 9 cents per share on $45.6 billion of revenue, according to the FactSet consensus. That compares with an EPS of 16 cents a year earlier on $48.9 billion in revenue. BP's own survey of estimates of underlying replacement cost profit, the industry standard metric, is $1.5 billion, compared with $2.7 billion a year earlier.

Auchincloss is highlighting his plan to accelerate compound annual cash flow growth to 20% over the next three years, which would bring the yearly figure to about $14 billion in 2027. Elliott thinks it can do better and get to $20 billion by then. The hedge fund is also pushing for cost savings of more than $6 billion, according to people familiar with the demands.

BP American depositary receipts have dropped 1.3% since Jan. 1 and are down 26% over 12 months through Friday's close. Oil prices have declined more than 20% in the past year.

BP stock yields a healthy dividend of 6.52%, the highest among oil majors Exxon, Chevron, Shell, and TotalEnergies.

Write to Brian Swint at brian.swint@barrons.com

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April 28, 2025 17:00 ET (21:00 GMT)

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