Geoff Cutmore - Morning Thoughts

Goodbye Lord John Browne!

Although the good Lord had already told markets he would be leaving 17 months early, the latest earnings news has underlined the need for a new broom at BP. We already knew about the safety, environmental and legal problems in the U.S. Now investors have to conjure with a disappointing outlook for production in 2007 and higher than expected capital expenditures.

Just last week I struck up a conversation in my gym with a now retired BP employee. He worked for the company during the 70s and 80s in far flung outposts of the oil major’s empire - mostly in the less developed parts of the world where oil was being discovered. He remembers meeting a young John Browne, a man he described as usually the smartest person in the room. When he came to town (wherever that was) they would use various wiles to surround him with non-English speaking locals to divert the intense questioning. He was interested in the engineering and the profits. Mr Browne was, says the ex-employee, master of his brief.

Today shareholders want a change, and they want the markets to properly reflect the value they feel is still locked up in the company. Herman Bots, analyst at Theodore Gilissen Bankiers, expressed it neatly this morning when he described today’s earnings release as ‘mostly bad news,’ but suggested the stock should be worth another 100 pence a share.

Tony Hayward, incoming CEO at the end of July has his work cut-out.

Feedback welcome - here.