Shares in British energy major BP sank Wednesday after chief executive Bernard Looney resigned unexpectedly over his failure to disclose past relationships with colleagues. BP’s stock slid 2.8 percent to close at 508.20 pence on London’s flat FTSE 100 index, despite rising oil prices that normally boost energy firms.
The company announced late Tuesday that Looney, 53, resigned “with immediate effect” after admitting he had not been “fully transparent” about historical relationships with colleagues. The Irishman is leaving after less than four years in the role, having steered the energy major through a tumultuous period that included huge swings in prices owing to the Covid pandemic and Russia’s invasion of Ukraine.
“The higher oil price might limit some of the fallout from the shock resignation… but this is a highly unwelcome turn of events for investors given his long tenure at the company and his pivotal role at the helm as it navigates the tricky transition to greener energy,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“Change at the top is always unsettling and the abrupt nature of his departure will intensify reactions, particularly as it comes at such a sensitive time in the company’s strategy,” she said.
Looney took the top job in February 2020, shortly before the 10th anniversary of the explosion on the BP-leased Deepwater Horizon rig in the Gulf of Mexico that triggered the worst oil spill in US history.
The disaster killed 11 employees and cost the British firm tens of billions of dollars in damages and compensation. Looney’s arrival also came shortly before oil prices briefly turned negative as Covid lockdowns slashed energy demand and slammed the sector. Finance chief Murray Auchincloss will now act as interim CEO while the group seeks a permanent successor.
Auchincloss sought to reassure shareholders. While the person in the CEO’s chair has changed, the fundamentals have not changed,” he said in comments carried on the BBC. Auchincloss added that the company’s strategy hadn’t changed either. Our focus remains on performance — quarter by quarter. Interactive Investor analyst Richard Hunter tried to put the events in perspective.
“Compared to the multi-billion-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,” said Hunter. With Auchincloss named a temporary replacement, he said BP will be hoping that markets 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,” said Hunter.
Looney had also come under fierce criticism from environmentalists, who have accused BP and rivals of not going far enough in transitioning away from fossil fuels. He is not the first head of a major global company to resign or be ousted over relationships with employees.
Steve Easterbrook was ousted as CEO of McDonald’s in 2019 for having a “consensual relationship” with an employee, in violation of company policy. A year earlier, Brian Krzanich stepped down as chief executive of US computer chip giant Intel over a “past consensual relationship” with an employee in violation with the company’s non-fraternisation policy.
Source: eNCA
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