StockBeat: Another FTSE Titan Bows Out as Dudley Leaves BP

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By Geoffrey Smith — To paraphrase Oscar Wilde, to lose one highly respected CEO may be regarded as misfortune, but to lose three in a week is enough to send any Brexit conspiracy theorist into spasms.

Bob Dudley is to step down from the chief executive job at BP (LON:) after nearly a decade in the job, only a day after Big Tobacco’s longest-serving boss Alison Cooper was forced out from Imperial Brands (LON:) and three days after Dave Lewis announced he’d be leaving supermarket giant Tesco (LON:) next summer.

Dudley’s departure has much more in common with Lewis’s than with Cooper’s. Like Lewis, he took over at a time of unprecedented crisis, and like Lewis, he has managed to stabilize the ship and turn it around, if with (another parallel with Tesco’s savior) less obvious momentum than it had before: the shares have only eked out a modest 4% in the last three years.

In Dudley’s case, the crisis was the Deepwater Horizon disaster, which killed 11 people and created the greatest oil-related environmental catastrophe in history. After his predecessor Tony Hayward’s crass failure to recognize the gravity of the situation, Dudley acknowledged BP’s responsibility and, while he defended its shareholders’ interests legitimately in court, has complied with enough grace to at least ensure that the company can keep operating in the U.S., its most important market. Had he not done so, it’s hard to see how BP would have been allowed to buy BHP Billiton’s U.S. shale assets, as it did for $10.5 billion last year.

It’s hard to argue with the company’s statement on Friday morning that Dudley “rebuilt BP as a stronger, safer company … This company, and indeed the whole industry, owes him a debt of gratitude.”

His management of the Deepwater Horizon affair has, inevitably, overshadowed his other achievements, nowhere more than in Russia. Here Dudley made a virtue out of necessity, selling its joint venture stake at a top-of-the-cycle valuation to raise money to cover the Deepwater liabilities. He was forced to cede direct control of the company’s best cash cow, but still kept a deep and close relationship with Rosneft – including a 19.75% stake that has enormous latent value, if ever Russia is inclined to replace its current management with one more enlightened.

A further parallel with Tesco – not to be understated – is that the succession has again been smoothly planned, with a hand-picked successor – upstream operations head Bernard Looney – already in place. The key difference here is that Looney is a BP lifer, while Tesco went for an outsider in Walgreens’ Ken Murphy. Keeping an upstream expert at the very top goes against the grain these days in Big Oil, but makes plenty of sense in BP’s case, given the uniqueness of the Deepwater Horizon legacy.

BP shares were up 1.1% by 5:30 AM ET, on a day when most European stock indexes were content to wait for the monthly U.S. report. The was up 0.3%, while the was up 0.1%.

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