Murray Auchincloss has resigned as CEO of BP, with Carol Howle stepping up to take the role on an interim basis. She was previously executive vice president, supply, trading & shipping.
Meg O’Neill, currently the CEO of Australia’s Woodside Energy, will take over on 1 April 2026.
The shares were flat in early trading.
Our view
Markets have taken the sudden departure of BP’s CEO in their stride. With successor Meg O’Neill already lined up to join from Woodside in the Spring, the news clearly wasn’t a huge surprise to the board either. We think her key areas of attention should be shoring up the balance sheet, improving profitability and defining the company’s role in the energy transition.
BP’s already refocussing on its core competencies of oil & gas extraction and has made some notable progress on fresh discoveries and new project start-ups. Modest plans to increase production combined with a fresh efficiency drive should help to boost performance, but it will take some time until output moves into positive territory.
As with all natural resource extraction, there’s never any guarantee that new sources of production perform as expected. It also means the company’s future profits remain intrinsically linked to oil & gas prices, over which it has no control. Prices are close to four-year lows, but economic and geopolitical uncertainty means there’s still some downside risks to be wary of.
One of O’Neill’s milestones was Woodside’s acquisition of BHP Petroleum. With oil prices under pressure, further consolidation in the sector can’t be ruled out. BP is most frequently seen as prey rather than the hunter. But in either case, operational improvements are what’s required for a strong position at the negotiating table.
In the near term, shareholder distributions look to be taking a back seat as BP focuses on bringing down its debt levels. While the dividend yield of 5.8% looks to be sustainable, buybacks are tracking below the levels that shareholders have become accustomed to. As ever, no payouts are guaranteed.
With a clear financial framework now in place, there is scope for distributions to pick up materially further down the line. But that’s not guaranteed as there’s still a way to go to achieve a targeted reduction of net debt to below $18bn by 2027. The $20bn targeted from disposals by 2027 will help, but its underlying progress in cash generation from the business we’d really like to see.
All in, BP’s valuation has strengthened on the hopes it gets back to basics, with its earnings multiple now ahead of some more financially robust peers. We think the strategic shift has some legs but until the new boss outlines her vision for the company, there’s a higher than usual level of uncertainty about the future.
Environmental, social and governance (ESG) risk
Environmental concerns are the primary driver of ESG risk for oil and gas producers, with carbon emissions and waste disposal being the main issues. Health and safety, community relations and ethical governance are also contributors to ESG risk.
According to data from Sustainalytics, BP's overall management of material ESG issues is strong.
It appears to have strong oversight over its key ESG issues. Notably, the company aims to reach net zero emissions across its entire operations (Scope 1 & 2) on an absolute basis by 2050, and net zero for the carbon intensity of sold energy products by 2050.
BP’s recent strategy reset signals a change in approach to the transition. This includes increasing oil and gas investment by around 20% and decreasing investment in the transition business by more than $5bn. The company still aims to meet the net zero targets above.
Persistent controversies relating to environmental breaches continue to expose BP to legal and compliance risks, including significant financial penalties.
BP key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.