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Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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A Record Number Of Oil CEOs Dethroned In 2019

Is this the end of the era of the all-powerful, imperious, untouchable CEO?

A record number of CEOs and other high-ranking executives have been dethroned in this volatile year. 

Nearly 1,500 chief executives vacated their posts in the first 11 months of the year--good for a 12% increase compared to last year’s corresponding period. 

Some high-profile cases include Google parent company Alphabet’s Larry Page, Nike’s Mark Parker, Best Buy’s Hubert Joly, EBay’s Davin Wenig, McDonald’s Steve Easterbrook, HBO’s Richard Plepler and  Expedia’s Mark Okerstrom.

The oil and gas industry has not been immune to this CEO melee, with scores of executives resigning or being ousted. 

Unlike their contemporaries in other industries who have mostly faced the axe due to questionable ethics or for posing a threat to a company’s mission or reputation, ousted oil and gas CEOs have mostly taken the stick due to underperformance. 

Energy prices are career killers, and these four high-profile oil and gas CEOs were ousted this year for failing--in one way or another--to adapt and improve shareholder returns. 

#1 Pat McDade--Tullow Oil

Tullow Oil Plc shares are mired in the deepest of doldrums, having plummeted 70% after the resignation of CEO Pat McDade.

McDade’s D-Day came knocking about a week ago, after the company published a disastrous production update and scrapped its dividend. The double whammy sent the shares reeling, shaving off £1.05B from the company’s valuation within the first hour of trading and £1.2B over the session. 

That marked a real nadir for the shares, their lowest level since the end of 2000 and down more than 90% since 2012 when the company hit a peak valuation of £14.5B.

Tullow pinned the blame for the downsized guidance on lower-than-expected production due to technical problems at its massive Jubilee field in Ghana.

Whilst financial performance has been solid, production performance has been significantly below expectations from the group’s main producing assets, the TEN and Jubilee fields in Ghana...” Related: Oil Prices Head Higher Despite OPEC+ Skepticism

Despite suspending the dividend, the company remained upbeat about its financial performance, reiterating its key objectives to ‘‘...restore performance, reduce our cost base and deliver sustainable free cash flow.’’

Dorothy Thompson, the company’s chair, has temporarily been installed as the new executive, but finding that diamond in the rough who can weather some of these tricky offshore venues at a time of low oil prices won’t be easy. 

#2 Bob Dudley--BP

In October, long-serving British Petroleum chief executive officer, Bob Dudley, announced that he would step down as CEO in March 2020, with current upstream chief executive, Bernard Looney, taking over. Dudley has been a BP employee for 40 years with 10 of those served as chief executive.

While Dudley is credited with helping the company to re-assert itself as one of the global energy giants, he will also be remembered for overseeing the company during the disastrous Deepwater Horizon oil spill of 2010, the biggest ever marine oil spill in history. 

The latter half of Dudley’s reign also coincided with one of the worst oil downturns in memory, with oil prices plunging from more than $100/ barrel to under $30/barrel in 2016.

Dudley could receive up to £40M in company shares after his exit, bringing his total payout during his tenure as CEO to $116.5M. It could have been considerably more had BP shareholders not voted down a pay pledge by 60% in 2016 at a time when the company was struggling with record losses, a pay freeze for employees, and thousands of job cuts.

#3 Steven Keenan--Apache Corp.

In October, oil and gas industry veteran, Steven Keenan, resigned from his position as senior vice president of worldwide exploration at Apache Corp. Keenan, who was credited with a high-profile shale discovery for Apache, was poached from shale veteran EOG Resources and handpicked to head the company’s unconventional resources technology team.

His resignation sparked fears that it could have been related to Apache’s current offshore project in Suriname despite the company going to lengths to deny the connection. 

Apache shares sunk to 18-year lows two weeks ago after the company provided a disappointing update for its first Suriname well. Suriname was supposed to be Apache’s answer to ExxonMobil right across the maritime border in Guyana, where the American giant made 14 discoveries and is starting first production before the end of this year. 

Keenan was removed right in the middle of Apache’s first drill hole in Suriname, and without so much as a basic explanation as to why, which made shareholders very uneasy because he was the man behind Apache’s 2016 Alpine High West Texas discovery. 

#4 T.M. "Roe" Patterson--Basic Energy Services Inc.

In September, Basic Energy Services Inc. president and CEO T.M. "Roe" Patterson announced that he would be leaving the company to "...pursue other business opportunities”

While not explicitly saying so, it’s highly tenable that his hand was forced by the turn of events at the company, especially during the company’s second quarter earnings call where he decried a "general lack of urgency" among the 2,000 energy industry clients that his company serves.  Related: The 5 Biggest Threats To Oil & Gas In 2020

Revenue during the quarter declined 25% to $189.9M with first-half revenue coming in $100M lower than the figure for last year’s corresponding period.

Basic Energy Services is a Texas-based oil well servicing contractor primarily in West Texas. The shares have been some of the worst performers in the industry this year, crashing nearly 95% in the year-to-date and prompting a delisting from the New York Stock Exchange after failing to maintain an average global market cap of at least $15M over a consecutive 30 trading-day period. Basic Energy now trades on the OTC Markets under the BASX symbol.

Those are the big four, but let’s not forget the change in regime at the company billed as the world’s most profitable oil outfit in the world: Saudi Aramco. 

In September, the Crown Prince of Saudi Arabia saw to it that Aramco Chairman (and Energy Minister) Khalid al Falish was replaced to make room for someone who was more of an MBS yes-man and who could simultaneously hobnob with potential Western investors. His replacement at Aramco, Yasser al Rumayyan, is a former equities trader, and the idea appeared to be that he would be better at luring in Western money when Aramco went public with a small portion of its shares. That hasn’t happened yet ...

By Alex Kimani for Oilprice.com

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