In a move that has raised eyebrows across the City, BP has announced a sudden change in leadership, appointing Meg O'Neill, the current chief of Australian energy group Woodside, as its new chief executive. She replaces Murray Auchincloss, who is stepping down after less than two years in the top job.
A Puzzling Decision on Two Fronts
The timing of the switch, orchestrated by new chair Alfred Manifold who joined the board in July, is seen as curious by market observers. Firstly, Auchincloss appeared to be making headway with investors following his strategic 'reset' in February, which pivoted the company back towards oil and gas investment while scaling back on some clean energy ambitions.
This shift, a reversal of his predecessor's greener approach, had begun to pay off. BP's share price has climbed 10% this year, performance on par with Shell and ahead of Chevron, bolstered by a significant oil and gas discovery in Brazil.
Secondly, O'Neill's track record at Woodside does not immediately scream 'turnaround specialist'. While she has overseen active deal-making and maintained dividend payments, Woodside's share price performance since April 2021 has actually been weaker than BP's. Her appointment signals a firm commitment to BP's hydrocarbon-focused U-turn, but that direction was already firmly established.
The Challenge of Acceleration
Chairman Alfred Manifold framed the leadership change as "an opportunity to accelerate" plans for a "simpler, leaner and more profitable" company. However, the market's initial reaction was muted, with BP's share price showing little movement on the news.
The central question is how this acceleration will be achieved. BP carries a heavier debt load than many of its rivals, which inherently restricts the pace of any strategic shift. Current plans involve the sale of its Castrol lubricants business and a stake in solar developer Lightsource BP, but the full shape of the balance sheet won't be clear until 2027.
Furthermore, the company, like the entire sector, now faces the fresh challenge of falling oil prices. It is speculated that O'Neill, who spent 23 years at ExxonMobil before leading Woodside, may be tasked with driving a deeper round of cost-cutting and disposals, potentially even looking at BP's vast network of petrol stations, referred to internally as 'mobility'.
Waiting for the Hard Numbers
For now, shareholders are left in a holding pattern. Auchincloss was already championing the 'leaner' mantra, so the tangible difference O'Neill will bring remains undefined. She is set to start in April, with new hard targets expected several months later.
Her appointment undoubtedly represents a culture shock for BP, marking the first time it has hired an external CEO. The board and activists like Elliott Management clearly hope she can be the catalyst to boost returns and finally quell persistent speculation about a potential takeover by a larger rival. Whether she can deliver that knockout performance, based on her Woodside tenure, is the multibillion-pound question now hanging over the oil giant.
