U.K.-based oil explorer Cairn Energy, battling challenges to two major projects in Greenland and India, said its chief executive officer will step into the chairman role amid a sweeping board shake-up.
The company said on Thursday that Bill Gammell, who founded the company, will move into the chairman role, leaving the CEO post to be filled by Simon Thomson, the current legal and commercial director.
The U.K. corporate governance code frowns upon the practice of chief executives stepping into chairman jobs, which can make it hard for new CEOs to challenge their predecessors’ decisions.
Cairn said it had consulted major shareholders and said they were comfortable with the decision. Jonathan Copus, oil analyst at Deutsche Bank, said the move would reinvigorate the board.
“We view today’s news to be a positive step forward for Cairn’s future,” he said in a research note.
Nonetheless, the widespread board changes did come as a shock to some investors who had expected Mike Watts, Cairn’s deputy CEO and the author of the group’s exploration success, to succeed Mr. Gammell. Mr. Watts will retain his position.
Cairn is battling to complete two major undertakings. Its exploration plan in Greenland, aimed at opening up a new oil province with potentially billions of barrels, has been interrupted repeatedly by environmental campaigners.
In addition Cairn’s planned sale of most of its stake in its Indian subsidiary, Cairn India, to Vedanta Resources has also been delayed due to challenges from the government, which wants to extract higher taxes in return for approving the sale.
India’s cabinet on Thursday steered clear of discussing the transaction, as it had been expected to, further delaying what could be one of the largest deals in the Indian oil and gas sector.
A spokesman said Mr. Gammell, who will retain executive authority with respect to the Vedanta deal, had been mulling an end to his long tenure for some time and that the move was unrelated to any other issues.
Malcolm Thoms, chief operating officer, and Philip Tracy, group engineering and operations director, will stand down from the board, as will outgoing chairman Norman Murray.
Finance director Jann Brown will become managing director.
Mr. Gammell, a childhood friend of former U.S. President George W. Bush who also went to school with former British Prime Minister, Tony Blair, built the multibillion-dollar exploration business from scratch. A former rugby international player for Scotland, he has become one of the most respected figures in the British oil industry.