The sudden departure of
BP
Chief Executive Bernard Looney will create further skepticism that oil companies can lead the transition to greener, low-carbon energy.
BP’s London shares were down 0.4% on Tuesday after the announcement of Looney’s exit. Its American depositary receipts (ticker: BP) rose 2.3% in premarket trading. Looney resigned suddenly after the company found he failed to fully disclose past relationships with colleagues.
Environmental activists may have doubted that Big Oil was ever interested in cutting carbon emissions and working toward net zero. But Looney was certainly paying attention to concerns about climate change and, unlike his peers at American rivals
Exxon
(XOM) and
Chevron
(CVX), tried to set the company on a different path.
Looney, who took the CEO role less than four years ago, was an advocate of investing in renewable sources of energy and had explicitly committed to reducing the company’s carbon emissions and shifting it away from producing fossil fuels.
That may have seemed reasonable, and perhaps even commercially savvy, when Looney took the reins in 2020 and oil prices were plummeting. But he faced a backlash when crude prices spiked last year, boosted by the emergence from the Covid-19 pandemic and Russia’s invasion of Ukraine.
Investors became frustrated as BP’s valuation lagged behind Exxon and Chevron, and Looney’s green ambitions shouldered much of the blame. Looney dialed back his plans to shrink emissions in February this year.
BP is still behind. It trades at 7.1 times forward earnings, compared with 13.1 for Exxon, 11.9 for Chevron, and 7.8 for European rival
Shell
(SHEL), which has also backed away from environmental goals.
This isn’t the first time BP has tried to remake itself with a greener image. Former CEO John Browne changed the company’s name from British Petroleum to BP more than 20 years ago and suggested the initials could stand for “Beyond Petroleum.”
Looney is also the third out of the last four BP CEOs to leave under a cloud. Browne resigned in 2007 amid controversy over his personal life. His successor Tony Hayward left after the Deepwater Horizon disaster and Gulf of Mexico oil spill, which wiped out any progress BP might have made in burnishing its green credentials.
Bob Dudley served as CEO from 2010 until early in 2020, a decade in which the company sold off assets, renegotiated its position in Russia and worked to pay off the $65 billion in fines and penalties from Deepwater Horizon. Looney, a lifelong veteran of BP and previously the head of the exploration and production division, succeeded Dudley.
BP said Chief Financial Officer Murray Auchincloss will run the company on an interim basis.
Write to Brian Swint at [email protected]
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