BP’s new CEO is an American defender of oil and gas

BP named the American former Exxon Mobil executive as its new boss in an unexpected management shake-up Wednesday. She is set to take the helm of a storied yet often troubled energy producer that is aiming to reinvigorate its fossil-fuel business after an ill-timed turn toward renewable energy.

O’Neill, who is set to join the London-based company from Australia’s Woodside Energy in April, is a dealmaker who is willing to go to bat for the oil-and-gas business. She will be the first woman to lead an oil major.

As Woodside’s CEO, the engineer was forced to confront a rowdy environmental movement that regularly staged protests at the company’s headquarters in Perth—and targeted her home.

“Our employees are subject to pressure that they really shouldn’t be," O’Neill said in an interview with The Wall Street Journal last year. “You know, the gas that we’re providing is, again, literally keeping lights on."

When activist investors rallied a majority of shareholders to vote against Woodside’s climate strategy last year, she said that the company was “determined to play our role in addressing climate change, but we won’t make promises that we can’t deliver."

At BP, O’Neill will join a company trying to steady itself after years of upheaval. Its shift to green energy—where it paid peak prices for assets—was unpopular among investors, and its debt ballooned. Now it is pivoting back to fossil fuels fast in a bid to boost profits and its languishing stock price.

Tapping O’Neill to replace company veteran Murray Auchincloss will aid BP’s efforts to “become a simpler, leaner, and more profitable company," Chairman Albert Manifold said Wednesday night.

BP is working to sell $20 billion in assets, using the proceeds to help cut debt and boost oil and gas production, particularly in the U.S.

Activist investor Elliott Investment Management turned up the pressure on the company earlier this year, disclosing in April that it held a 5% stake in BP after years of its shares underperforming the rest of Big Oil.

One of the most important decisions facing O’Neill will be the future structure of BP. Investors are closely watching to see if she will keep the company intact or pursue a major deal that would either merge BP with a competitor or split it up.

Analysts and investors praised the decision to bring in an outsider, unprecedented at BP where CEOs have always risen through the ranks, saying the move was needed to enable a thorough look at the business.

“Taking a completely fresh view, as only an outsider can do, will be critical to shaking BP up," wrote analysts at Bernstein.

O’Neill’s dealmaking at Woodside got a mixed reception. An acquisition of BHP’s petroleum business was cheered by investors, though they looked askance at the company’s decision to invest in a low-carbon ammonia project in Texas. Overall, Woodside’s shares lagged well behind all of Big Oil, including BP, during her tenure.

Few oil companies are big enough to buy BP, analysts say. One is Exxon; Chief Executive Darren Woods said this summer that the U.S. company is looking for acquisitions to put the company’s cash pile to work. Exxon has a market value of nearly $500 billion, more than five times that of its British rival.

O’Neill knows Exxon well, having spent 23 years with the company in positions around the globe. At one point, the Colorado-born executive was an adviser to then-CEO Rex Tillerson.

In 2019, she left Exxon to join Woodside. O’Neill has said that she was spending too much time in the office at the American oil giant, and wanted to get closer to the front lines of the global energy business.

Around the time of moving to Australia, she decided to come out as gay. O’Neill said times had changed since the early 90s, when she started at Exxon and antigay views were more prevalent than today.

“I took a decision that if I was going to change companies, that I would use that opportunity to be really true to myself and be open about who I am," she told the Journal last year. “It was terrifying and a relief."

Write to Matthew Dalton at Matthew.Dalton@wsj.com and Jenny Strasburg at jenny.strasburg@wsj.com