Energy Musings - April 8, 2026
Last week began the Meg O'Neil era as the CEO of BP. She offered some thoughts about the future to her colleagues on first day in office. Shareholders are awaiting her views on BP's strategy.
Iran War Helps New BP Leader
Britain’s former national oil company, BP plc, which became the first major oil company to embrace environmentalism, struggled to survive the Deepwater Horizon disaster, wandered through periods without a strategy before fully re-embracing green energy, is now plotting a new corporate strategy under new leadership. Fortunately, the Iranian war has given BP and the rest of the international oil and gas industry a tailwind, as earnings are expected to soar amid a spike in global oil and gas prices.
The European international oil companies have lagged the stock market performance of their U.S. brethren for years, partly because of their relative size differences and partly because of differences in their scope of operations. European oil companies have been forced by their host governments to modify their business strategies, embrace renewable energy, and reduce their oil and gas activities as part of their social license. For investors seeking maximum exposure to oil and gas businesses, these modifications reduced the attractiveness of investing in European companies.
For BP, events over the past half-dozen years have led to three CEOs, two chairmen, and serious questions about the company’s strategy and future. Many investors, including activists, have lobbied for BP to be acquired by another major oil and gas company. That is not surprising, coming from activists, as it is the perceived easiest and quickest way for them to capitalize on their investments.
However, the new chairman, Albert Manifold, is not one for seeking the easiest route. He wants action, which is what led him to engineer the replacement of BP’s CEO. Prior management was reluctant to engage in bold action, something Manifold and the board believed was needed to revive BP. Developing a new strategy now rests in the hands of the new CEO, Meg O’Neil.
Her hire marked a radical change for BP. She is the first female CEO to head a major international oil and gas company. (No disrespect to Vicki Hollub of Occidental Petroleum.) O’Neil is also the first external hire to lead BP in over a century, signifying a shift in the company’s leadership approach.
O’Neil’s appointment was announced in mid-December, with her taking over on April 1. She was previously the CEO of the Australian oil and gas company Woodside Energy since 2021. She joined Woodside in 2018 after 23 years at Exxon Mobil Corporation. During her tenure there, she held various technical and leadership roles across multiple countries. O’Neil was recognized at Woodside for her decision-making and strategic vision, both qualities that will be needed in her new role at BP.
O’Neill’s predecessor, Murray Auchincloss, was resistant to big strategic decisions that would shift BP away from the diversified energy group it had become and back towards its roots as a more focused – but smaller – oil and gas exploration and production company. This reluctance drove Manifold to seek the leadership change. He described O’Neil as “the right leader” to pursue “significant strategic and financial opportunities.”
Management has stated that it will work to improve the company’s operational and financial performance and to reduce net debt from $22 billion to $14-$18 billion by the end of 2027. Asset sales and improved cost efficiencies would drive that effort. Meeting that target may be accelerated by the Iran war oil price spike, assuming host governments do not tax the windfall profits away, as five European Union countries are lobbying for. Analysts project that if the war is limited in time, the combined earnings of BP and Shell plc could yield windfall profits of £5 ($6.6) billion.
Reducing debt is one step shareholders will applaud, but they also want to see the company develop a business strategy that returns BP to a long-term, sustainable growth path. More importantly, the plan must reward shareholders, especially after BP suspended its share repurchase plan amid weak oil prices and forecasts that they would remain weak through 2026.
In an internal memo to BP employees on O’Neil’s first day as CEO, she told them, “Right now, we’re operating in an environment of significant complexity: geopolitical tension, conflict, rapid technological change, and shifting global energy demand.” She went on to state, “There’s always more to do, and I believe we can safely accelerate performance and drive innovation, sustainability, and growth.”
O’Neil reiterated her belief that “…we make bp simpler, stronger and more valuable.” O’Neill wrote, “I’m committed to providing clear direction and consistency so we can move forward together with confidence.”
Shareholders will be anxiously awaiting her next report. Since O’Neil’s appointment was announced last December, BP shares are up 44%. Roughly half of that gain has come since the commencement of hostilities in Iran. In fact, since the end of February, Shell and BP have increased by more than twice as much as Chevron and ExxonMobil. That is probably because Shell and BP had lagged behind the American companies’ performance. Some of the share price gain must be attributed to O’Neil’s appointment and shareholders’ hope for improved returns in the future.
While 2026 will be a momentous year for the international oil and gas industry, it will be an especially significant year for BP, as the company begins the O’Neil era.