The oil price falls below the "life line", BP p.l.c. Sponsored ADR (BP.US) reform starts off on the wrong foot.

The major strategic adjustment of BP p.l.c. Sponsored ADR (BP.US) "return to oil" has only been in effect for less than two months, but its foundation is already beginning to appear unstable. After years of poor performance, this struggling giant made a series of financial commitments in February aimed at assuring investors that dividends and share buybacks - attractive core components of the oil industry - will be secured in the coming years. However, to achieve the goal of boosting cash flow and increasing returns, a key condition is for oil prices to reach $70 per barrel. Last week, after U.S. President Trump launched a trade war and OPEC+ agreed to higher production levels than expected, Brent crude oil prices fell below this level, approaching $64 per barrel; many analysts believe that this price level, or even lower, may become the new normal in the market for the next two years. Analyst Allen Good of Morningstar Inc. said they are facing an environment where oil prices are trending downward; although peers like Shell (SHEL.US) appear to be capable of withstanding an economic downturn, BP p.l.c. Sponsored ADR is in a particularly precarious position. Analysts at UBS Group AG said, "The recent industry economic downturn makes it increasingly difficult to restore investor confidence." The bank downgraded BP p.l.c. Sponsored ADR's rating to "Neutral" this month, citing competitors like Shell, Total (TTE.US), and Eni S.p.A. (E.US) with lighter debt burdens being better equipped to handle economic downturns. According to their own estimates, for every $1 drop in oil prices, BP p.l.c. Sponsored ADR's pre-tax profit is reduced by around $340 million. Analysts question whether the company can sustain share buybacks, and the long-term downturn in the oil industry will complicate its plan to sell $20 billion in assets to curb debt. BP p.l.c. Sponsored ADR must address the dissatisfaction of its shareholders. The leadership team of BP p.l.c. Sponsored ADR will face investors' inquiries at the annual general meeting in London on Thursday; Chairman Helge Lund and CEO Murray Auchincloss are expected to face sharp criticism. One of the top ten investors in this oil giant, Legal & General Group Plc, has announced its intention to vote against Lund's reappointment. This will be a symbolic protest, as Lund is seen as a key supporter of BP p.l.c. Sponsored ADR's previous failed strategies and has announced his intention to resign "at the appropriate time". However, it underscores ongoing shareholder concerns. According to a post on its website, this asset management company is "deeply concerned about the recent substantive revisions to the company's strategy and the impact on climate commitments." Lund is also the Chairman of the weight loss drug manufacturer Novo Nordisk A/S Sponsored ADR Class B (NVO.US). Legal advisers suggest his departure should follow a "clearer and quicker timetable" than currently set by the company. Meanwhile, activist investor Elliott Investment Management remains one of the largest shareholders of the company, urging management to make bolder reforms. Sources familiar with the matter have told the media that Elliott, known for its aggressive strategies, has considered pushing for major changes in company management. However, to date, the company has not publicly criticized BP p.l.c. Sponsored ADR. Last week, BP p.l.c. Sponsored ADR provided a gloomy overview of its first-quarter performance: net debt increased by around $4 billion, upstream production decreased, and natural gas trading was weak. Since the strategic adjustment in February, the company's stock price has fallen by about 20%. This is twice the decline in Shell's stock price, suggesting that Shell is much better able to withstand falling oil prices than BP p.l.c. Sponsored ADR. Analyst Irene Himona of Bernstein said Shell's "top-notch" balance sheet means it can maintain shareholder dividends even if oil prices are at $60 per barrel. In contrast, analysts at TD Cowen warn that BP p.l.c. Sponsored ADR may have to further reduce quarterly share buybacks, as the company announced in February a cut of up to $1 billion in share buybacks. UBS Group AG said that the market downturn makes BP p.l.c. Sponsored ADR's plan to strengthen its balance sheet by selling $20 billion in assets particularly difficult. Sources say that since BP p.l.c. Sponsored ADR announced a strategic review of its lubricants business Castrol, Goldman Sachs Group, Inc. has begun the process of selling the business. The target valuation of the business is around $10 billion, but unless the current market improves, its valuation may only be $6-7 billion. Sources also add that BP p.l.c. Sponsored ADR is also seeking to sell 50% of its stake in solar energy developer Lightsource to CECEP Solar Energy. Bloomberg analyst Will Hares said that divesting non-core businesses is crucial for reducing BP p.l.c. Sponsored ADR's alarming high net debt and leverage. After a lukewarm response to the strategic adjustment, CEO Auchincloss of BP p.l.c. Sponsored ADR said that they...Believing that "stable execution over several weeks or even months" will win the support of investors. However, with Trump's tariffs disrupting the global economy and OPEC+'s internal divisions leading to an increase in oil supply, Wall Street has significantly lowered its oil price forecasts, and time may not be on his side as he had hoped for his allies.Morningstar's Good said, "The problem with BP p.l.c. Sponsored ADR is that they are now two years behind all companies." He said that the company's competitors paid off their debt when oil prices were high during the Russia-Ukraine conflict, but BP p.l.c. Sponsored ADR is now trying to restore its balance sheet in a much more difficult period as the market cycle turns bearish.