Activist Investor Elliott Tightens Grip on Oil Giants Phillips 66 and BP

It’s a CEO’s worst nightmare and, numbers suggest, a shareholder’s dream come true: Elliott Investment Management is outside with a boombox, demanding attention.

The ever-persistent gadfly of Wall Street, arguably its most feared and fearsome activist investor, disclosed a $2.5 billion position in oil refining giant Phillips 66 on Tuesday, with plans to push for operational changes. Meanwhile, another oil sector giant, British supermajor BP, announced plans to “fundamentally reset” with its own threat from Elliott looming.

Boardroom Busters

For the top brass and boards at publicly traded companies, activist investors are a routine fact of life. Elliott, on the other hand, is on something of a swashbuckling hot streak, like when Steph Curry gets in rhythm and starts hitting shots from distances unfathomable to mere mortals.

In the last year alone, Elliott has played a central role in pushing out a CEO at Starbucks over declining sales and convincing industrial conglomerate Honeywell that it needed to break up to boost its valuation. It also pressured Southwest Airlines to hand it five board seats and Tinder-owner Match Group to fork over two — no “truce” without a seat at the table.

So when Elliott made its latest slick moves in the oil sector, markets took note:

• BP shares rose 7% on Monday, the first trading day after a Bloomberg report on the weekend said Elliott had acquired a stake for an undisclosed amount. Investor optimism — BP shares are down roughly 18% from a February 2023 peak, making it one of the worst performers on the Stoxx Europe 600 Oil & Gas Index — was spurred by hope that the activist would prompt changes or else threaten to cull the boardroom, revamp management or even break up the slumping oil giant.
• A day later, BP CEO Murray Auchincloss promised to “fundamentally reset” the company’s strategy after announcing a sharp deterioration in underlying annual profits to $8.9 billion last year from $14 billion in 2023, excluding interest and tax. Auchincloss hinted the “new direction” would include a “more capital-light” approach to renewables (corporate-speak translation: BP will spend less money on them) and a doubling down on fossil fuel developments — he declined to comment on the Elliott stake.

At Phillips 66, where shares are down 11% in the past 12 months, Elliott escalated a campaign that began with a $1 billion stake acquired in 2023. On Tuesday, Elliott said management “failed” to improve operations and advocated for the spin-off of Phillips 66’s midstream business. The midstream unit makes money transporting commodities, meaning it is more insulated from price fluctuations than its oil refining or production business and could command a premium price.

No Pain, No Gain: Elliott has taken stakes in 80 companies since 2020, and just under 95% of them saw their shares climb — at an average 5.5% return — on the day the stake was disclosed, according to Bloomberg data. More than two-thirds of those companies had kept their gains a year later, rising an average of 35%.