With the April leadership transition looming, BP is clearing the decks by taking a massive $5 billion hit on its green energy assets. The company is racing to tidy up its affairs before Meg O’Neill replaces Murray Auchincloss as CEO.
The writedown is the centerpiece of this pre-transition cleanup. By writing off the value of underperforming transition businesses now, the company removes a major headache for the incoming CEO. The cancellation of hydrogen projects is part of this process.
The company is also dealing with operational issues before the handover. The warning on weak oil trading and falling prices ensures that all the bad news is out in the open. This allows O’Neill to start her tenure without any hidden surprises.
Crucially, the company is handing O’Neill a healthy balance sheet. The reduction of net debt to the $22-$23 billion range is a significant achievement. It gives the new CEO the financial flexibility she needs to implement her own strategy.
The industry is watching closely to see how O’Neill uses this clean slate. The clearing of the decks signals a fresh start, but the pressure will be on the new leadership to deliver results quickly.