BP shares shrug off shock boss departure, but attention turns to successor

BP has seen its shares weather the storm caused by the shock departure of boss Bernard Looney after he admitted failing to disclose the extent of past relationships with colleagues.

Shares in the FTSE 100 oil giant dropped as much as 1.8% after the London market opened on Wednesday, but soon pared back losses to edge around 0.4% lower in morning trading.

Mr Looney resigned on Tuesday night after the group said he accepted not being “fully transparent” in his previous disclosures.

The Irishman, 53, is being replaced on an interim basis by the group’s chief financial officer, Murray Auchincloss.

Market experts said that while this was an unexpected blow to the group, investor nerves have been calmed by Mr Auchincloss stepping up to take on the role temporarily as well as the strength in BP’s wider management team.

Rising oil prices are also helping prop up BP’s share price.

But market attentions have quickly turned to who will replace Mr Looney as chief executive on a permanent basis at one of the UK’s biggest companies.

Richard Hunter, head of markets at Interactive Investor, said: “Compared to the multibillion-dollar fines following the Deepwater Horizon spill, briefly negative oil futures prices and dividend cuts during the pandemic, the resignation is a surprise but perhaps not a major chapter in BP history.

“In addition, and with a temporary replacement now confirmed, BP will be hoping for markets to regard the situation as business as usual.

“There will, however, inevitably be uncertainty until such time as a permanent replacement is found and the company clarifies whether there will be any changes to its current strategy.”

John Moore, senior investment manager at RBC Brewin Dolphin, added that Mr Looney’s resignation part-way through a major overhaul as it grapples with changes in the energy market and the shift towards renewables “isn’t ideal”.

But he said “there is depth in the management team to cope until a suitable replacement can be found”.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said BP needs to forge a clear path to replacing Mr Looney “sooner rather than later to limit negative sentiment”.

She said: “This of course all lands at a time when oil majors are already grappling to boost their ESG (environmental, social and governance) credentials, which adds weight to the problem.

“Mr Looney has spearheaded an aggressive and green-thinking strategy during his tenure, and replacing him with someone that can convince the market they’re up for carrying the mantle and sprinting with it, isn’t going to be an overnight task.”

David Hewitt, an analyst at Liberum, said the vacancy in the top job presents BP with an opportunity to possibly “be the first ‘supermajor’ to appoint a female CEO”.

“There is a wealth of quality in the current senior management team,” he said.

Mr Looney had been in the role for less than four years, having joined as chief executive in February 2020, pledging the company would become carbon neutral by the middle of the century.

In a statement on Tuesday night, BP said its board in May 2022 investigated allegations relating to Looney’s “conduct in respect of personal relationships with company colleagues” after information from an anonymous source.

It said that during that review, Mr Looney disclosed past relationships with colleagues prior to becoming chief executive, but that the probe did not find any breach of the company’s code of conduct.

But “further allegations of a similar nature were received recently, and the company immediately began investigating with the support of external legal counsel,” BP said, adding that the process is “ongoing”.

His departure follows other senior executive resignations in recent years linked to personal relationships with employees.

Former McDonald’s chief executive Stephen Easterbrook was ousted from his role at the fast food giant in November 2019 for engaging in an inappropriate personal relationship with an employee in violation of company policy.

Earlier this year, Mr Easterbrook, from Watford in Hertfordshire, was charged by US federal regulators with making false and misleading statements to investors about the circumstances of his firing.