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BP CEO Halts Offshore Wind Projects, Enacts Hiring Freeze
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BP plc’s (BP - Free Report) new CEO Murray Auchincloss has announced a hiring freeze and paused new offshore wind projects, signaling a shift in focus toward oil and gas. This move followed investors’ dissatisfaction with BP’s energy transition strategy, according to a Reuters report.
Auchincloss' approach marks a significant departure from the rapid transition to renewables championed by his predecessor, Bernard Looney. The latter's strategy had seen BP's shares decline as returns from renewable investments shrank, while oil and gas profits surged following the COVID-19 pandemic and the Russia-Ukraine conflict.
According to the report, many employees who were previously focused on new renewable opportunities are now reassigned to ongoing projects in offshore wind in Britain and Germany. Meanwhile, Auchincloss and chief financial officer Kate Thomson prioritize investments in and acquisitions of new oil and gas assets, especially in the Gulf of Mexico and U.S. onshore shale basins, where BP already has substantial operations.
BP will also consider short-term profitable investments in biofuels and certain low-carbon businesses. Recently, BP agreed to purchase grain trader Bunge’s 50% stake in the Brazilian sugar and ethanol joint venture, BP Bunge Bioenergia, for $1.4 billion.
The company-wide hiring freeze, with few exceptions for frontline and safety personnel, is expected to be accompanied by job cuts in the renewables sector, though specific targets have not been disclosed. Auchincloss, who took over in January after Looney's resignation, has emphasized a pragmatic approach and aims to cut $2 billion in costs by 2026 (from the 2023 levels). He has also reduced the executive leadership team strength from 11 to 10.
BP, in a statement to Reuters, indicated that Auchincloss introduced six priorities aimed at transforming it into a more streamlined and higher-value company. These priorities emphasize business focus and the potential achievement of the next wave of efficiencies and growth projects.
Hess is a leading oil and natural gas exploration and production company that made several world-class oil discoveries in the Stabroek Block, located off the coast of Guyana. The company is currently in the process of being acquired by supermajor Chevron in an all-stock deal worth $53 billion. The merger will likely result in the creation of an energy behemoth with a massive portfolio of producing assets.
The Zacks Consensus Estimate for HES’ 2024 EPS is pegged at $10.28. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.
The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.17, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.
The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $6.53. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2025 in the past 30 days.
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BP CEO Halts Offshore Wind Projects, Enacts Hiring Freeze
BP plc’s (BP - Free Report) new CEO Murray Auchincloss has announced a hiring freeze and paused new offshore wind projects, signaling a shift in focus toward oil and gas. This move followed investors’ dissatisfaction with BP’s energy transition strategy, according to a Reuters report.
Auchincloss' approach marks a significant departure from the rapid transition to renewables championed by his predecessor, Bernard Looney. The latter's strategy had seen BP's shares decline as returns from renewable investments shrank, while oil and gas profits surged following the COVID-19 pandemic and the Russia-Ukraine conflict.
According to the report, many employees who were previously focused on new renewable opportunities are now reassigned to ongoing projects in offshore wind in Britain and Germany. Meanwhile, Auchincloss and chief financial officer Kate Thomson prioritize investments in and acquisitions of new oil and gas assets, especially in the Gulf of Mexico and U.S. onshore shale basins, where BP already has substantial operations.
BP will also consider short-term profitable investments in biofuels and certain low-carbon businesses. Recently, BP agreed to purchase grain trader Bunge’s 50% stake in the Brazilian sugar and ethanol joint venture, BP Bunge Bioenergia, for $1.4 billion.
The company-wide hiring freeze, with few exceptions for frontline and safety personnel, is expected to be accompanied by job cuts in the renewables sector, though specific targets have not been disclosed. Auchincloss, who took over in January after Looney's resignation, has emphasized a pragmatic approach and aims to cut $2 billion in costs by 2026 (from the 2023 levels). He has also reduced the executive leadership team strength from 11 to 10.
BP, in a statement to Reuters, indicated that Auchincloss introduced six priorities aimed at transforming it into a more streamlined and higher-value company. These priorities emphasize business focus and the potential achievement of the next wave of efficiencies and growth projects.
Zacks Rank & Key Picks
BP currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like Hess Corporation (HES - Free Report) , Sunoco LP (SUN - Free Report) and SM Energy Company (SM - Free Report) . While Hess and Sunoco currently sport a Zacks Rank #1 (Strong Buy) each, SM Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hess is a leading oil and natural gas exploration and production company that made several world-class oil discoveries in the Stabroek Block, located off the coast of Guyana. The company is currently in the process of being acquired by supermajor Chevron in an all-stock deal worth $53 billion. The merger will likely result in the creation of an energy behemoth with a massive portfolio of producing assets.
The Zacks Consensus Estimate for HES’ 2024 EPS is pegged at $10.28. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.
The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.17, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.
The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $6.53. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2025 in the past 30 days.