BP: CEO Resignation Could Open the Door for Strategic Change, but No Fair Value or Moat Impact Now

BP BP. CEO Bernard Looney has resigned effective immediately after failing to fully disclose previous personal relationships with company colleagues. CFO Murray Auchincloss will step in as CEO on an interim basis.

We do not anticipate any near-term changes to the company’s strategy or outlook and as a result, our fair value estimate and moat rating are unchanged.

The longer-term outlook is more uncertain, however, as Looney was the driver of BP’s relatively aggressive energy transition strategy. Despite some alterations earlier this year, including maintaining oil production for longer than previously planned, Looney has largely left the strategy in place despite a lagging share price. In fact, Looney recently said in a Reuters interview that “We’re holding our nerve on the transition.”

This could change with a new CEO though. As we saw with Shell this year, when a new CEO takes the reins, strategies can change materially. BP’s board may take the opportunity to appoint a new CEO who is more returns-focused as opposed to pursuing a move away from hydrocarbons. That said, Looney’s strategy appeared to have the full support of the board, suggesting a change may not be desired. Until a new CEO is appointed and has time to assess the situation, we anticipate BP will stay the course.