New BP Chief Pledges “Consistency” after Years of Anything But

BP is betting a new leader from the Rockies can put a stop to a rocky patch.

Colorado native Meg O’Neill kicked off her first day as head of the British oil giant on Wednesday by pledging “clear direction and consistency” in a memo to employees. Shareholders of the company, which has spent years under a crude-dark cloud of strategic flip-flopping and executive turnover, would more than welcome some stability. Profitability that doesn’t lag behind rivals wouldn’t hurt, either.

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The first woman to lead one of the five biggest oil companies, O’Neill moved to London for the BP gig from Perth, Australia, where she ran Woodside Energy, the largest independent energy company down under. She is BP’s first external CEO hire in more than 100 years and, given the company burned through three of them in the preceding five years, looking outside was probably not a bad idea.

Paul Gooden, the head of natural resources at UK investment manager Ninety One, says BP got caught up in “noble cause corruption,” chasing failed green ambitions rather than creating shareholder value. In 2020, under Bernard Looney, the company pledged to slash oil and gas output by 40% and invest billions in renewables by 2030. When oil prices spiked after Russia’s 2022 invasion of Ukraine, it posted record profits, but the new strategy left it at a relative disadvantage to competitors and drew criticism that it was reducing exposure to oil and gas at the wrong time. To make matters worse, the renewables bet failed to gain traction, ultimately resulting in up to $5 billion in writedowns. Last year, BP made a full 180, announcing plans to invest billions more in oil and gas while slashing billions meant for green energy. Profits have been sliding, tumbling 16% to $7.5 billion last year, leading investors, including activist investor Elliott, which holds a 5% stake, to demand a more aggressive reset. Luckily, O’Neill’s background suggests she can deliver: 

• O’Neill led Woodside through a $40 billion merger with BHP Group’s petroleum business, doubling its oil and gas production in the process.
• “We can safely accelerate performance and drive innovation, sustainability and growth,” she told BP staff on Wednesday.

A different issue she’ll have to contend with is BP’s heavy debt load, much of which can be traced to the $65 billion fallout from the 2010 Deepwater Horizon disaster and subsequent commitments to dividends and buybacks rather than paying down debt. In February, the company suspended its buyback program and plans to cut net debt to $14 billion to $18 billion by late 2027, down from $22.2 billion at the end of 2025.

Conflict-ing Information: The oil price shock caused by the Iran war could make paying down debt much easier if crude oil continues to trade at elevated prices. It has also turbocharged BP shares, up 33% this year, which is roughly on par with Exxon and better than Shell’s 24%.