- Sources say there is growing frustration over the firm’s direction
- Investor update on February 26 is now a huge day for Auchincloss
- He was viewed as a safe pair of hands when he took charge in January 2024
BP chief executive Murray Auchincloss faces a crunch meeting with shareholders next month that may decide his fate.
Sources close to the company say there is growing frustration over the firm’s direction, adding that the investor update scheduled for February 26 is now a ‘huge day for him personally’.
Auchincloss took over the top job on a permanent basis in January last year after the shock departure of his predecessor Bernard Looney following undisclosed relationships with staff.
He was viewed as a safe pair of hands and promised investors he knew ‘exactly what we need to do to grow the value of BP’.
But shares have languished – down 7 per cent under his tenure – while BP’s biggest rival Shell has made significant progress under Wael Sawan, who is hunting for acquisitions after cutting the company’s debt.
One source close to BP said: ‘It’s difficult for Murray to introduce a new strategy. He’s been at BP for 25 years and was Bernard’s right-hand man in 2020 when they decided to cut hydrocarbons by 40 per cent by 2030.
Scrutiny: Murray Auchincloss took over the top job on a permanent basis in January last year
‘How can he undo all that now? It’s made harder by the fact Sawan at Shell is doing so well.’
There are mounting fears that Auchincloss is not the person to turn the company around.
Some investors believe the company instead needs a turnaround specialist, somebody in the mould of Tufan Erginbilgic, who took over at Rolls-Royce in January 2023 and shook up the ailing engineering giant after years of malaise.
The source added: ‘I can understand why Murray was picked, but is he really the man for the job? He is a continuity hire and what the company requires is a turnaround specialist.’
The major issue for Auchincloss has been rolling back Looney’s green agenda, which has hampered the company after oil prices rose due to war in Ukraine and tensions in the Middle East.
Looney’s plans in 2020 to slash oil and gas production by 40 per cent by 2030 spooked investors and made BP an outlier among its energy peers.
Some investors at the time considered Looney a green evangelist and feared his strategy would come back to bite BP.
Auchincloss is understood to be keen to abandon many of Looney’s plans, but he has not yet made his strategy public.
Investors are hoping he will make cutting debt a priority and announce disposals in order to fund buybacks and dividends.
Last week the firm announced it was postponing the capital markets event from February 11 to 26. It changed the location from New York to London so Auchincloss could recover from a ‘planned medical procedure’.
BP also said it was cutting 8,000 jobs after warning that fourth quarter profits would be down by as much as £246 million. The company’s third quarter profit tumbled to the lowest level since the pandemic, falling 30 per cent year-on-year to £1.8 billion between July and September last year.
Auchincloss is understood to be well and answering emails, but the news did little to dispel fears that BP is lurching from one mini-crisis to the next.
At the same time, morale at the company is understood to be low, after last year BP ordered senior managers to disclose intimate relationships with colleagues or risk losing their jobs.
The move was not received warmly, particularly as Auchincloss is in a relationship with BP high-flyer Julia Emanuele.
But others have leapt to his defence saying he is the right man for the job, adding this year he will show his credentials.
He has already begun to undo some of Looney’s initiatives including scrapping targets to slash oil production by the end of the decade.
Other signs that he is planning to water down BP’s renewables strategy include reports that he is eyeing major investments in the Middle East and the Gulf of Mexico to boost BP’s oil output, in a move that could see BP return to its core strengths, in particular exploration.
However, if Auchincloss moves too slowly the fear is the matter could be taken out of his hands.
The share price has made BP vulnerable to a takeover, something Auchincloss and the executive team would struggle to defend against. The most likely bidders are the American oil giants Chevron and ExxonMobil, but Shell could also muscle in.
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