BP CEO Halts Offshore Wind Projects, Enacts Hiring Freeze

Zacks Equity Research
·3-min read

BP plc’s (BP) 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, Sunoco LP SUN and SM Energy Company SM. 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BP p.l.c. (BP) : Free Stock Analysis Report

Hess Corporation (HES) : Free Stock Analysis Report

Sunoco LP (SUN) : Free Stock Analysis Report

SM Energy Company (SM) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

  • Up next
  • Up next
  • Up next
  • Up next

Latest stories

  • ‘I’ve lost my job and my house, but my wife and I are worth £650m – how can we pay less tax?’

    Rishi Sunak, 44, finds himself in a bind. After a highly successful career in the City of London, followed by a brief but eventful spell in politics, he has suffered a serious demotion and been evicted from his home.

  • BNM: Co-pay health insurance an incoming ‘option’, not replacing current policies

    Insurers must start offering co-payment options from September 1 in addition to existing polices. Co-payments will n...

  • Why Stocks Are On Pace For A Historic Second Half

    Stocks recently finished a fantastic first half of 2024... and the best part is that there's more upside to come! So, it's not too late to take advantage of this bull run for the ages. Kevin Matras highlights several reasons why the market will continue to advance in the second half and beyond.

  • U.S. Added 206K Jobs in June as Unemployment Rate Rose to Highest Since November 2021

    Before this morning's jobs report, market participants put nearly 70% probability of lower rates in September, according to the CME FedWatch Tool.

  • Is NVIDIA in a Bubble?

    The stock continues to make new highs. Is it a bull or a bubble?

  • Walmart (WMT) Up 14% in 3 Months: Is Now a Good Time to Buy?

    Walmart's (WMT) strategic investments in technology, e-commerce and omnichannel capabilities place it well for growth amid an evolving retail landscape.

  • Should Investors Buy Stock in These Payroll Processers After Friday's Jobs Report?

    Let's see if it's time to buy Automatic Data Processing (ADP) or Paychex's (PAYX) stock with Friday's jobs report showing US employers added 206,000 jobs in June which beat most analysts' expectations.

  • IBM Enhances AI Scalability With Twin Buyouts: Should You Buy?

    With declining earnings estimates, IBM is witnessing a negative investor perception and might not be a prudent investment at the moment.

  • EverQuote (EVER) Rallies 220% in a Year: What's Driving It?

    EverQuote (EVER) rallies on the back of higher consumer traffic, solid performance of automotive and other insurance marketplace verticals, favorable growth estimates and solid capital position.

  • Time to Buy the Dip in Bitcoin ETFs?

    Bitcoin has been moving sideways following its halving event in April. Bitcoin - and potentially Bitcoin ETFs - may hit new highs by the year-end, analysts say.

  • Best Income Stocks to Buy for July 5th

    TRN, IMMR and KRP made it to the Zacks Rank #1 (Strong Buy) income stocks list on July 5, 2024.

  • 4 Stocks Worth Buying Now on Solid Net Profit Margin

    Here, we present four stocks, SCS, SGRP, OSW and BRC, with solid net profit margins that can contribute toward making a strong portfolio.

  • Housebuilders rally as investors bet on Starmer’s new homes pledge

    Labour’s planning reforms ‘positive’ for sector while currency markets had priced in the election landslide

  • Asian markets down as traders await US jobs report

    Asian markets were largely down on Friday, a day after Tokyo's indexes hit record highs, with traders preparing for a key US jobs report.Investor sentiment was also lifted Thursday as softer US labour market data gave the Federal Reserve room to cut interest rates, with another key jobs report due Friday.

  • Labour is coming for your wealth – here’s where to escape their taxes

    Following Labour’s historic election win, many middle-class Britons have been left worried about what the new government will mean for their money – and are already rearranging their financial affairs accordingly.

  • 4.1% unemployment indicating 'slack' in US labor market

    June's jobs report is yet another sign pointing to the US job market cooling. PNC Financial Services Group chief economist Gus Faucher joins Market Domination to discuss the reading and what it means for the overall economy. "I read this report as being very positive. The job market continues to improve, but the pace of job growth is slowing towards a more sustainable pace over the longer run. We saw slower wage growth, which is reducing inflationary pressures from the labor market. But at the same time, wages are increasing more quickly than inflation. So household incomes are going up and the economy should continue to expand. So I think if you're at the Fed, this is what you want to see," Faucher explains. He notes that the unemployment rate at 4.1% indicates "a bit more slack in the labor market." He explains that the Federal Reserve is balancing the right time to cut without stoking inflation. He anticipates the Fed's first interest rate cut to come in November since they risk political criticism if they cut in September. For more expert insight and the latest market action, click here to watch this full episode of Market Domination. This post was written by Melanie Riehl

  • Here's Why Investors Should Retain J.B. Hunt (JBHT) Stock Now

    Consistent shareholder-friendly initiatives bode well for J.B. Hunt (JBHT). However, lower revenues across segments and higher net interest expenses are likely to weigh on the company's bottom line.

  • Musk asks judge to dismiss shareholder lawsuit, argues delayed Twitter disclosure a ‘mistake’

    Elon Musk has asked a federal judge in New York to dismiss a lawsuit brought by shareholders of Twitter, the platform now known as X, arguing the delayed disclosure of his stake in the social media company was a “mistake.” The billionaire was sued by Twitter shareholders in April 2022 after revealing he had acquired…

  • Pound climbs after Labour's UK election win

    The pound advanced Friday after Britain's center-left Labour Party clinched an expected landslide election victory to end 14 years of right-wing Conservative rule.London's benchmark FTSE 100 index gave up early gains made following news that Keir Starmer would become Britain's new prime minister, after Labour trounced Rishi Sunak's Conservatives as Wall Street opened.

  • Is America saving enough for retirement?

    Despite high inflation, Vanguard found that Americans set aside funds for retirement at the highest rates ever.