bp has seen its profits fall to the lowest level since COVID, as the oil and gas giant looks to "fundamentally reset" its strategy going forward.

The firm’s revolving credit profit reached $8.91bn (£7.2bn) in its 2024 financial year, falling by 35% year-on-year.

It stated that this was a result of "weaker realised refining margins, higher impact from turnaround activity, seasonally lower customer volumes and fuel margins and higher other businesses and corporate underlying charge".

Furthermore, bp’s net debt increased by 9.97% to $22.9bn (£18.5bn).

However, the firm saw its free cash flow increase from $2.2bn (£1.78bn) to $3.7bn (£2.99bn) between Q3 and Q4 and also launched a quarterly share buyback of $1.75bn (£1.42bn), which Hargreaves Lansdown has said dispels "some speculation of a drop in shareholder payouts".

The news comes as The Guardian reported that the activist investor, Elliot Investment Management, took a stake in the UK group.

It added that the investment could lead to an "overhaul of bp’s strategy", along with changes on the board.

Chief executive officer at bp, Murray Auchincloss, said: "In 2024, we laid the foundations for growth. We have been reshaping our portfolio - sanctioning new major projects and focusing our low-carbon investment - and we have made strong progress in reducing costs. Building on the actions taken in the last 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns. It will be a new direction for bp."

Looking ahead, bp said it expects its 2025 upstream products to be "slightly lower" compared with 2024, with oil production and operations to be "broadly flat", while gas and low carbon energy production to be "lower".

It also expects growth in its customers businesses, including a full-year contribution from bp bioenergy and a "higher contribution from TravelCenters of America, in part supported by a partial recovery from the US freight recession".

Head of equity research at Hargreaves Lansdown, Derren Nathan, concluded: "The focus now shifts to the outlook. Production has been guided down, with no improvements expected for refinery downtime. Investors have been keen to see more financial discipline, especially given the tough market conditions. An expected $3bn (£2.43bn) of divestments from non-core operations in 2025 will be welcome.

"The burning question is one of capital allocation and strategy. Auchincloss promises to unveil a new direction for bp on 26 February at the Capital Markets Day. This will now be under the scrutiny of newly onboarded activist investor Elliott Investment Management. No doubt, they’ll be intensely questioning the returns profile on investments in both new and old technology."

---