BP shares pop after Elliot raises stake to over 5%, urges oil giant to boost FCF

Investing.com -- Shares in BP PLC (LON:BP) jumped 4.5% in London on Wednesday after Elliott Investment Management raised its stake in the British oil and gas giant to just over 5%, intensifying its campaign to overhaul the energy giant’s strategy and push for greater shareholder returns.

BP's U.S.-listed shares also climbed 3.5% in premarket trading.

The move positions Elliott as one of BP’s largest investors and underscores reportedly growing dissatisfaction over the company’s performance and direction under CEO Murray Auchincloss.

BP confirmed the increased stake in a regulatory filing Tuesday. A company representative told Investing.com that BP had been “notified by Elliott Investment Management that their shareholding in BP has exceeded the 5% notification threshold.” The stake is valued at approximately £2.8 billion as of current market prices, giving Elliott significant sway.

The activist investor is apparently calling for sweeping changes, criticizing BP’s February strategy reset as insufficient and urging a sharper focus on free cash flow (FCF) and capital discipline.

According to The Financial Times, citing people familiar with the matter, Elliott has set a goal for BP to achieve $20 billion in annual free cash flow by 2027, a 40% jump from current guidance.

The BP representative further stated, "Eight weeks ago, we announced a fundamentally reset strategy, and our focus now is on delivering that at pace. We welcome constructive feedback from all shareholders as we focus on delivering our reset strategy.” However, BP declined to comment on individual shareholdings.

Elliott’s proposal reportedly includes paring annual capital expenditure to $12 billion, below BP’s revised $13–15 billion range, and slashing costs by another $5 billion. It has also pushed for the divestment of BP’s solar and offshore wind businesses, which it believes dilute returns and distract from core oil and gas performance.

BP’s current strategy, described by Auchincloss as a “fundamental reset,” aims to grow adjusted free cash flow by more than 20% annually through 2027 while reducing net debt and rebasing capital allocation toward high-return upstream operations.

“We will grow upstream investment and production... to allow us to produce high-margin energy for years to come,” he said during the February update.

The company currently plans to allocate $10 billion per year into upstream oil and gas, while cutting energy transition spending by more than $5 billion versus previous forecasts. It expects this pivot to generate an additional $5.5–6 billion in upstream and downstream operating cash flow by 2027.

Despite these efforts, BP shares have fallen by 18% since the reset strategy was revealed, reducing its market capitalization and fueling shareholder frustration. Elliott’s increased stake follows broader market concerns that BP’s mix of traditional and transition-focused initiatives lacks clarity and conviction.

The timing of Elliott’s campaign is significant, as it coincides with mounting pressure on oil majors to deliver returns amid volatile commodity prices and investor skepticism toward low-return renewables. Elliott’s pitch aligns with a broader shareholder emphasis on capital returns over long-term energy transition bets.

This article first appeared in Investing.com