Recent Trends in E&P Shareholder Activism

What is Shareholder Activism?

Activist shareholders target publicly-traded companies and look to bring about organizational change through their campaigns. Activist campaigns have steadily increased in the last decade and in 2018 alone, more than 200 companies were targeted by campaigns according to Activistmonitor data. The energy industry has not been spared by the rising trend, and 2018 saw an increased number of activists targeting energy companies of all sizes varying from large and mid-cap to small-cap.

What Demands are Activist Shareholders Targeting Energy Companies Making?

Specific activist demands vary in each campaign, but common requests we saw in 2018 campaigns against E&P companies include: 

• Requesting strategic alternatives, including mergers and acquisitions; spin-offs and divestitures of oil and gas assets
• Seeking board member appointments and representation
• Capital allocation or structural changes
• Management changes
• Cost reductions and operational improvements

What Can E&P Companies do to Prepare?

It is crucial for all public energy companies to be on the look-out and prepare for an activist campaign so that an effective response to a campaign can be delivered if initiated. Board and management teams are advised to actively monitor the shareholder base, have an ongoing shareholder outreach program and continuously evaluate the company’s performance relative to its peers. It is beneficial to anticipate how an activist might criticize the company so the company can develop a shareholder engagement plan tailored to the issues the company faces.

Recent Campaigns

The following table shows select activist campaigns in 2018 targeting energy companies and a summary of the related demands.