BP CEO Meg O'Neill said on Thursday the British energy major needs to prioritise financial discipline by simplifying its portfolio, cutting costs and tightening capital spending, as the company refocuses on its core oil and gas investments.
O'Neill, who took over as CEO in April following the abrupt departure of Murray Auchincloss last year and the removal of Chair Albert Manifold in May over bullying allegations that he denies, has been working to rebuild investor trust by cutting costs and debt.
She said BP needed to be more selective in its investment decisions as it works through its strategy reset after an unsuccessful push into renewables.
"We need to be deliberate about where we invest and where we don’t," O'Neill said in a social media post on the 100th day of her being in the role. "We need to make fewer, better choices and hold ourselves to account."
O'Neill laid out three priorities to make BP simpler and more valuable — operational excellence, improved accountability and strong discipline in costs, cash and capital.
BP's reorganisation into two business segments — upstream and downstream — from three went into effect at the start of this month.
O'Neill said on Thursday the move will help reduce complexity at the energy major, with trading connecting the upstream and downstream businesses.
She told investors at a meeting Thursday that BP will prioritise reducing debt to improve cash flow and continue reshaping its portfolio, including an expected divestment of Lightsource BP, said RBC analysts in a note about the meeting.
"Ultimately, we expect BP to put forward a strategy which is focused on growing scale in core positions (US Gulf of Mexico, etc), but in the very first instance, the company will need to shrink the debt burden to make room for more investment," RBC analysts said.
The start of O'Neill's tenure at BP came as the US-Israeli war on Iran disrupted the global energy market with little shipping traffic going through the critical Strait of Hormuz. The crisis helped boost BP's results in the first quarter, with profit more than doubling year-on-year to $3.2 billion.
BP's trading and shipping teams worked with its refining unit to deliver an extra 50 million litres of diesel from Cherry Point refinery in Washington state to Sydney to help increase supplies in Australia, O'Neill said on social media.
Its Castellon refinery in Spain also increased jet fuel output by 30 per cent ahead of Europe's summer travel season in response to the crisis.
(Reporting by Stephanie Kelly; Editing by Emelia Sithole-Matarise and Jan Harvey)
