Murray Auchincloss took on the role of chief executive at BP about a year ago, expressing confidence in his plan to boost the company’s value. However, the results have not reflected that promise. BP’s share price has fallen by over 7% during the past year, while leading competitors like ExxonMobil, Chevron, and Shell have seen increases of at least 8%. Investors are growing increasingly concerned about BP’s unclear strategy, high debt levels, and ongoing disappointing performance.
One investor noted, “The market is indicating something is seriously wrong at BP. It’s unclear why.” They added that while Auchincloss has many strong traits, he lacks a strategic visionary to inspire the company about its future direction.
As pressures rise for Auchincloss to improve the company’s standing, he was scheduled to present BP’s investment strategy at a capital markets day in New York next month. However, due to unfortunate circumstances regarding his health, the event has been postponed and moved to London.
Originally from Canada, Auchincloss joined BP in 1998 following its merger with Amoco, which created one of the world’s largest oil corporations. The significant difference in BP’s status then compared to now is alarming. After the merger, BP was valued similarly to Exxon, but today, Exxon is worth nearly six times more than BP, whose market capitalization stands at about £68 billion—less than half of its peak in 2001.
Since the 2010 Deepwater Horizon disaster, which left BP with a staggering $62.5 billion bill that it is still settling, Auchincloss has seen notable changes in the company’s landscape. He previously served as the chief financial officer under Bernard Looney and took over after Looney’s exit at the end of 2023.
Helge Lund, chair of BP, referred to Auchincloss as a key player behind a significant restructuring plan aimed at transforming BP into an “integrated energy company.” This plan involves dramatically cutting oil and gas production by 2030 while expanding into sustainable energy sectors. Although the oil and gas sectors have rebounded post-pandemic, Auchincloss has so far maintained the strategy established by Looney despite challenges in the renewable sector.
In his initial comments as chief executive, Auchincloss acknowledged the need for BP to focus on executing its plans rather than just brainstorming new ideas. “We have many options to move forward,” he stated, underscoring the critical need for the organization to shift gears.
Investors are eager for him to lay out a clear medium-term strategy, especially as many have become frustrated after several disappointing results compared to competitors like Shell, which has demonstrated strong performance.
During Auchincloss’s leadership, BP has underperformed in several financial metrics: the company missed expectations for net debt four times, revenue three times, and profits twice in just five quarters. In each of the last four quarters, BP had to report adverse adjustments totaling $6.6 billion, primarily due to writedowns and losses.
During the last quarterly report, Auchincloss raised eyebrows with comments about potentially reviewing BP’s planned $1.75 billion of quarterly share buybacks. His words triggered a noticeable drop in BP’s share price.
Amid these challenges, the company has already seen a decline in the percentage of analysts recommending BP as a “buy.” Meanwhile, BP continues to invest heavily in the energy transition, inadvertently increasing its debt while rivals reduce theirs. Auchincloss contends that BP must adapt by offering a diverse range of energy options to clients committed to their climate goals.
In recent years, BP has engaged in multiple “low carbon” acquisitions, investing significantly but also accruing more than $6.6 billion in net debt. Barclays analysts suggested that, without these acquisitions, BP’s net debt would have been less than $21 billion, freeing up substantial resources for shareholder returns.
Despite the challenges, Auchincloss has indicated a willingness to take actions that might stabilize BP’s finances, including the recent spinning off of its offshore wind business into a joint venture. Analysts are optimistic that if BP signals a shift in focus away from costly low carbon commitments at the upcoming event, it may be well-received by investors.
As one analyst pointed out, BP doesn’t need to become the top company but simply to improve a little. Given its current struggles, there’s potential for growth if the right measures are taken to leverage its existing assets effectively.