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Donald Trump's inauguration speech as President of the United States this week included a eulogy for fossil fuels and “liquid gold under our feet.” Despite BP's large oil and gas operations and reserves in Texas and the Gulf of Mexico (or America), you have to dig deep to find the gold in its finances.
British company now Paths And other major multinational energy companies owned by investors by market capitalization: it is not only one-sixth the value of ExxonMobil, but less than half the value of its old Anglo-Dutch rival Shell. He – she Announce Last week, it cut 4,700 jobs in a renewed effort to become a “simpler, more focused and more valuable company.”
But BP has made a lot of statements about its future over the years, and it has a record of disappointments. It's also gone through a few CEOs, most recently Murray Auchincloss, who just had to Postpone A long-awaited strategy update for investors next month on recovering from a medical procedure.
Auchincloss succeeded Bernard Looney, who was Fired in 2023 amid allegations of misconduct regarding his past relationships with colleagues. “It's almost Shakespearean. “This company is superior,” reflects one BP veteran. To be sure, it has suffered a series of unfortunate events as it tried to please investors and respond to climate change.
Its worst setback was the Deepwater Horizon oil spill in 2010, which killed 11 workers, polluted the Gulf of Mexico, and forced it to sell assets to cover a $65 billion bill. It took the company a long time to recover, and arguably never did: it still has net debt of $24 billion, and only… consent A sixth platform was in the Gulf last year, in a field that was first discovered in 2006.
Then came Looney's promise five years ago that BP would cut its oil and gas production by 40 percent by 2030 and “reimagine energy for people and our planet.” This was bolder in rhetoric than in substance, and BP has been moving away from it ever since, as high interest rates negated its vision of being able to build wind farms cheaply.
The most notable event was Vladimir Putin's large-scale invasion of Ukraine in 2022, which forced BP to divest its minority stake in Russian oil company Rosneft at a cost of $25 billion. After making a lot of money during the mid-2000s from TNK-BP, her original joint venture with a group of oligarchs, she was finally fired. As with others, Russia was taken by surprise.
But companies make their own fortunes, and BP cannot simply claim to have been unlucky. The thread that runs through her recent history is her great sense of ambition and purpose, which outstripped her ability to put plans into action. While ExxonMobil is committed to dealing with the world as it is, BP tends toward wishful thinking.
This is down to Lord John Browne, who turned the company around as CEO by acquiring the US companies Amoco and Arco and concluding the TNK-BP deal. He also brought intellectual luster to the strategy, including the weakly evidenced idea that BP would go “beyond oil.” The slogan did not last, but its legacy is one that every BP leader yearns to see.
BP is not a cowboy outfit. Its operations are generally well managed, despite the Deepwater Horizon blunder, and it takes compliance seriously. But he has more intelligence than instinct (“There are a lot of smart people out there,” says one observer, not entirely as a compliment). Another describes it as “more like a state than a business,” lacking the aggressive drive for profit enjoyed by competitors.
Its pledge to decarbonise was partly driven by social and governmental pressures in the wake of the 2016 Paris Agreement to limit global warming. It also hopes to attract investments from environmental, social and governance funds and benefit from the financial transformation. But that failed and it did not react as quickly as Shell Change course. They have been stranded by weak financial results, executive turmoil and strategic indecision.
BP now faces a world where Trump tells oil companies to “drill, drill, drill” and then withdraws the United States from the Paris Agreement. Meanwhile, Greenpeace accuses it of greenwashing for not removing carbon fast enough. If the past few years have proven anything, it's that it's impossible to please both sides, especially as an energy company headquartered outside the United States.
Three months before Deepwater Horizon, BP's market capitalization I overtook it briefly Those of Shell but are now far behind. There will be many bankers wondering if they can fix a merger or acquisition. If BP wants to remain independent, it must show investors that it can make things happen, rather than looking to the future. There is such a thing as being too smart.
