BP CEO: curtains for Looney should not open wide window of opportunity

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No company should understand the need for clear chief executive succession plans better than BP. Since 2007, John Browne, Tony Hayward and Bernard Looney have all suffered defenestration. Looney left three months ago. Reports that BP will pick a successor from a shortlist that includes external candidates suggest a degree of complacency from chair Helge Lund.

The UK oil major has made quick replacements in the past. It announced Hayward’s resignation on the same day it appointed Bob Dudley’s following the Deepwater Horizon oil spill. TotalEnergies replaced Christophe de Margerie in a couple of days after his death in an air crash. Patrick Pouyanné, his replacement, remains in charge nine years on.

Mooted internal candidates Murray Auchincloss (the interim CEO), Emma Delaney and Carole Howle, are all BP lifers. External candidates, bar maybe a former BP executive such as Brian Gilvary, would surely lack an intra-company network. Fossil-fuel specialists appear to have won out over low-carbon candidates such as Anja-Isabel Dotzenrath.

The situation suggests Lund may not have taken succession planning seriously given Looney’s rock star status. But no matter how charismatic a boss is, a board should remember that a fatal flaw may bring them down. In this case, it was Looney’s lack of frankness in disclosing past relationships with employees.

In mitigation, Auchincloss did take over Looney’s duties quickly. Shortly after, he led an investor conference in Denver.

Investors are unhappy. BP’s share price has trailed the MSCI Europe Energy index since the resignation. Rivals Shell and TotalEnergies now earn a valuation premium of 12 per cent to BP’s 3.2 times enterprise value to ebitda. A 14 per cent drop in the Brent oil price since mid-September does not help.

Looney’s strength was his ability to front up a shift to lower-carbon energy sources while keeping investors on board. Pouyanné at TotalEnergies has extolled a similar green agenda but without embroilment in other public controversies. BP needs to pick a chief executive with similar credentials — and fast.