Billionaire investor and boss Berkshire Hathaway Warren Buffett recently put in oil actions as Bishop (LSE: bp.) He hit the headers headers.
There were news that Elliott Management has built a participation in BP with a value of nearly 3.8 billion GBP. The hedge fund calls the company to relieve some of its green energy goals and turn it to raucous oil and gas. Has anyone said “Drill, child, drill“??
Warren Buffett may not be such an open activist. But he just put another $ 409 million in Berkshire Occidental petroleum. Berkshire is now owned by as much as 28% of the oil giant worth USD 45 billion. If he has invested to the British stock market, I can’t stop thinking that he may look at the valuation of BP today.
Falling profits
The price of BP shares increased by 6.5% since the message about Elliott management. But a 61% decrease in profits in the fourth quarter reported on February 11 may not quite make it look like screaming oil.
A rival throughout the year 2024 Shell Revenues sent in the amount of USD 284 billion, while BP has reached USD 189 billion. This puts Shell 50% forward on the front of the revenues, but its market capitalization is over double BP. And the corrected EBITDA Shell for 2024 appeared 73% before Bishop.
This is based on a single snapshot on the unstable market during economic changes. But on this basis, admittedly, the basis does not seem that BP also did for his shareholders as Shell.
A person who claims to be familiar with Elliott said that analysts believe that BP is currently destroying value.
Cheap oil
We look at the forecast price -profit ratio (P/E) for BP of 10 for 2025, and the analysts expected that it will fall to about 8.4 in 2026. Shell has similar ahead valuations, nine falling to around 8.1. With decent dividend profitability, these can be tempting valuations. I think that the perspective may now favor Shell, but some fresh activism can change this.
One observer, a markescreener, even thinks that Elliott may have BP and Shell with a view to. It is a sector without competitive advantages between product offers – oil is oil, gas is gas. It is probably an industry in which consolidation makes the most meaning.
If we talk about potentially low-cost oil reserves, we cannot ignore the things themselves. And this is possible, because the hopes of President Trump for ejaculation of oil taps can reduce the price of the barrel. Currently, it is just over 70 USD and has fallen so far in 2025.
Considerations of investors
Elliott’s interest can get BP in a more profitable position in a tiny period. And although it can be a political industry, one presidency may not mean much in the coming decades. Whatever we could think about the current US administration in the scope of unlimited oil activities, is the last turn of Trump behind the wheel.
The Warren Buffett approach must concern the long -term future of oil and is stubborn. I am less sure and much less competent, so I will sit down and I just watch with pleasure.
