Investor Wants BP To Pollute More

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Usually, activist investors trying to get oil companies to change their operations or management want those companies to move in a “green” direction. Not so with a small activist firm that has begun to lobby for huge changes at BP, one of the largest oil companies in the world. They want more drilling and less money invested into clean energy alternatives. They argue that the world’s demand for crude is growing. Wind, solar, and nuclear technologies can be put off to the side.

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Bluebell Capital Partners is a very small hedge fund based in London. It owns .01% of the share of BP, which has a market cap of over $100 billion. The David and Goliath stories pits Bluebell against the BP board and management. For a decade, BP has generally been considered the oil company most willing to invest in next-generation fuel technologies.

Dividends or Share Buybacks

The Bluebell investment in BP has made the front page of The Wall Street Journal, which is a novelty given Bluebell’s size. The main point of the WSJ coverage–”Bluebell’s criticism could resonate because it taps into a core challenge facing BP: its commitment to shrinking oil-and-gas production while boosting investment in less-profitable green-energy sources.” Bluebell wants BP to deliver whatever cash flow it creates to investors, likely in dividends or a share buyback.

Bluebell’s view of what oil companies should do with money is echoed in some of the large M&A deals of the last year. Large energy companies are merging, or buying smaller companies to gain scale and cost savings as demand for crude surges worldwide. M&A deals in the Permian basin topped $100 billion last year. More recently, Diamondback Energy bought competitor Endeavor Energy for $26 billion.

Bluebell could find support among investors in its battle with BP if the industry’s tendency to spend more and more on oil and gas is any indication.