Elliott Builds More Than $2.5 Billion Stake in Phillips 66
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Elliott Investment Management has built a more than $2.5 billion stake in oil refiner Phillips 66, and plans to push the company to sell or spin off its midstream business, according to a person familiar with the matter.
The activist investor plans to seek a number of changes to simplify the oil refiner, and believes Phillips 66 has not fulfilled its commitment to further board changes, the person said, asking not to be named as the matter is not public.
The fund, controlled by billionaire Paul Singer, first disclosed a stake in Phillips 66 in 2023, revealing an investment of about $1 billion and saying the company could increase its stock price 75% by focusing more on refining and taking other measures.
Since then, the company appeared to be working with the activist firm. One year ago, the investor and Phillips 66 announced the refiner would name Robert Pease, a former president of Shell Trading Co., to its board to provide more refining experience.
Phillips 66 has also been in the midst of a multiyear cost-cutting initiative targeting $3 billion in asset sales as a result of pressure from Elliott. In October, Phillips 66 said it had sold about $2.7 billion in assets since 2022.
As of September, Elliott controlled about 0.2% of Phillips 66’s outstanding shares. The larger Elliott stake in the refiner was first reported by the Wall Street Journal.
Phillips 66 did not immediately respond to a request for comment.
BP Promises ‘Fundamental Reset’ as Activist Elliott Builds Stake
BP Plc promised major changes at its upcoming strategy update, seeking to reverse a prolonged period of under-performance that has now drawn in activist Elliott Investment Management.
The pledge, which came as the company reported a sharp drop in fourth-quarter profit, raised expectations for the Feb. 26 investor day. Analysts see BP pivoting away from ambitious plans for low-carbon energy and a pursuing higher growth in oil and gas production.
They also predicted that BP — alone among the major oil companies — would cut share buybacks because of its weaker balance sheet.
“We now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns,” CEO Murray Auchincloss said in a statement Feb. 11. “It will be a new direction for BP, and not business as usual.”
The investor day has long been seen as a crucial test of Auchincloss’s vision for BP, even before Bloomberg reported that Elliott had built up a stake in the company. After several years of falling further behind peers, investors want to see significant change.
“They have set a high bar,” Allen Good, an analyst at Morningstar, said in a note. Investors will be expecting “a reduction in low-carbon spending, robust cost reduction targets and increased hydrocarbon investment that could lead to production growth.”
While Elliott’s full plans for its BP investment are yet to be learned, news of its stake on Monday had a big effect on shares, which rose 7.4%, the most in two years.
BP’s adjusted net income for the fourth quarter was $1.17 billion, down from $2.99 billion a year earlier and missing the average analyst estimate of $1.3 billion. Net debt fell to $23 billion, down from $24.3 billion three months earlier.
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The company reaffirmed its plan to repurchase $1.75 billion of shares in the current quarter, matching the pace seen in prior periods. RBC analyst Biraj Borkhataria predicted BP would cut this figure for the coming quarters. “Relative to market expectations, the forward-looking guidance looks a little soft,” he said in a note.
The downstream business, which includes refining and selling fuel to customers, lost $302 million on an adjusted basis, according to the statement. The company expects refining margins to remain low in the first quarter.
BP’s large but opaque trading business, which has often helped the company ride out periods of market weakness, didn’t come to the rescue this time. The contribution was weak for oil trading and average for natural gas, according to the statement.
“The 2025 outlook provided by the company today is incrementally negative, mainly due to the guidance for falling production,” Jefferies analyst Giacomo Romeo said in a note.
Phillips written by Crystal Tse and Sing Yee Ong; BP by Mitchell Ferman
