Incoming BP Finance Chief Faces Two-Pronged Challenge
21 Janeiro 2020 - 07:51PM
Dow Jones News
By Nina Trentmann
BP PLC's incoming chief financial officer faces a two-pronged
challenge as the U.K. oil-and-gas giant is under pressure to
increase investments in renewables without sacrificing shareholder
returns.
The company on Tuesday appointed Murray Auchincloss as its next
finance chief, effective July 1. Mr. Auchincloss, since 2015 CFO of
BP's upstream business, will succeed Brian Gilvary, who will retire
in June after more than eight years as CFO and 34 years with the
company.
Mr. Auchincloss is part of a new management team at BP led by
incoming Chief Executive Bernard Looney, currently head of BP's
upstream division, who in February will replace Bob Dudley. Mr.
Dudley is credited with steering BP through the aftermath of the
Deepwater Horizon oil-spill disaster, in part by divesting assets
and deleveraging the company's balance sheet.
Stricter international climate protocols such as the Paris
Agreement and a stronger investor focus on environmental, social
and governance criteria present a range of challenges for BP's new
management.
Executives at other major energy companies, such as Royal Dutch
Shell PLC and Total SA, are navigating similar challenges.
Mr. Auchincloss is expected to focus on BP's capital efficiency,
building on his experience as CFO of the upstream business,
analysts said. "They have to be much more disciplined with capital
allocation," said Christyan Malek, JPMorgan Ltd.'s head of
oil-and-gas research for Europe, the Middle East and Africa.
This is necessary to free up capital needed for continued
investments in the company's oil-and-gas business, as well as
increased allocations to renewable sources of energy, analysts
said.
Alongside its expansion in the renewables sector, BP must
maintain its investments in oil and gas, as short-term demand for
oil -- a high-margin business -- continues to grow and as
shareholders demand returns.
"Navigating that won't be easy," said Stuart Joyner, an energy
specialist at research firm Redburn. "This will be the most
important yardstick for this new management team."
BP plans to allocate $15 billion to $17 billion a year on
capital expenditures, but a large chunk of those funds would go
toward oil-and-gas projects, Mr. Joyner said.
Mr. Looney is expected to lay out his aims soon after he takes
the reins, a BP spokesman said.
Due to the complexity of the industry, oil companies tend to
hire internal candidates for key roles, said Pavel Molchanov, a
director at brokerage Raymond James & Associates. "BP usually
has long-serving CEOs and long-serving CFOs," Mr. Molchanov
said.
As CFO, Mr. Auchincloss is entitled to an annual base salary of
GBP695,000 ($906,985), a cash allowance and other compensation, BP
said in a filing with regulators.
Write to Nina Trentmann at Nina.Trentmann@wsj.com
(END) Dow Jones Newswires
January 21, 2020 17:36 ET (22:36 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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