BP taps Woodside's Meg O'Neill as CEO after abrupt Auchincloss exit

By Sheila Dang and Stephanie Kelly

Dec 18 (Reuters) - BP BP.L has tapped Woodside Energy's WDS.AX Meg O'Neill as its next CEO, its first external hire for the post in over a century and the first woman to lead a top-five oil major as the firm pivots back to fossil fuels.

O'Neill, an Exxon veteran, will take over in April following the abrupt departure of Murray Auchincloss, the second CEO change in just over two years as the British oil major strives to improve its profitability and share performance which for years has lagged competitors like Exxon XOM.N.

The company embarked on a major strategy shift earlier this year, slashing billions in planned renewable energy initiatives and shifting its focus back to traditional oil and gas. BP has pledged to divest $20 billion in assets by 2027, including its Castrol lubricants unit, and reduce debt and costs.

"Progress has been made in recent years, but increased rigor and diligence are required to make the necessary transformative changes to maximise value for our shareholders," new BP Chair Albert Manifold said in a statement.

When Manifold took up his post in October, he emphasised the need for a deeper reshaping of BP's portfolio to increase profitability and faced pressure from activist investor Elliott Investment Management, one of BP's largest shareholders, which called for him to urgently address the company's shortcomings.

Elliott saw the change of CEO as a sign of BP's willingness to act swiftly to deliver cost cuts and divestments, a person familiar with the situation said.

'HIGH-PROFILE HIRE'

O'Neill, a 55-year-old American from Boulder, Colorado and the first openly gay woman to helm a FTSE 100 company, headed Woodside since 2021 having previously spent 23 years at Exxon.

Under O'Neill's leadership, Woodside merged with BHP Group's BHP.AX petroleum arm to create a top 10 global independent oil and gas producer valued at $40 billion and doubled Woodside's oil and gas production.

The acquisition took the company to the U.S., where it embarked on a major Louisiana liquefied natural gas project, which it is progressing in an LNG market braced for oversupply.

BP spent more than 40% of its $16.2 billion investment budget in the United States last year and plans to boost its U.S. output to 1 million barrels of oil equivalent per day by the end of the decade while keeping overall production broadly steady at around 2.4 million boed.

Woodside shares fell as much as 2.9% after news of O'Neill's departure. At 1312 GMT BP shares were up 0.3%, compared with a broader index of European energy companies .SXEP rising 0.7%.

Like BP, Woodside shares have underperformed rivals. In absolute terms, though, the stock has risen around 10% during O'Neill's tenure.

BP's executive vice president, Carol Howle, will serve as interim CEO. Auchincloss, 55, will step down on Thursday and serve in an advisory role until December 2026.

BP said O'Neill's appointment was part of its long-term succession planning, though it had not publicly announced a search process.

Auchincloss became CEO in 2024, taking over from Bernard Looney, who was fired after lying to the board about personal relationships with colleagues.

After an ill-fated foray into renewables under Looney, BP has vowed to increase profitability and cut costs while re-routing spending to focus on oil and gas, launching a review in August of how best to develop and monetise oil and gas production assets.

During BP's third-quarter earnings call last month, the company did not give an update on the closely-watched sale process for its Castrol lubricants unit, the centrepiece of its $20 billion asset-sale drive to slash its debt pile.

"We question whether this is set to change BP’s thinking once again on key strategic initiatives – should they defer the sale of Castrol? We think yes. Should they cut the buyback to zero and repair the balance sheet further? We think yes," said RBC analyst Biraj Borkhataria.

Woodside said in a separate statement that O'Neill was leaving immediately and it had appointed executive Liz Westcott as acting CEO, while intending to announce a permanent appointment in the first quarter of 2026.