Liam Denning is a Bloomberg Gadfly columnist covering energy, mining and commodities. He previously was the editor of the Wall Street Journal's "Heard on the Street" column. Before that, he wrote for the Financial Times' Lex column. He has also worked as an investment banker and consultant.

Here's how strange things are for Big Oil. On Tuesday, BP said its head of exploration would be stepping down. In response, its shares did this:

Source: Bloomberg
Note: Prices are for BP's American Depositary Receipts. Intraday times are displayed in ET.

"Did what?" you might ask. And that's the point: Nothing, really.

Which is odd when you consider that exploring for oil and gas is kind of a big part of being a major oil and gas company. Also when you consider that Richard Herbert had only been in the job for about two years. He took the job at a time when, having sold a slew of assets to fund payouts related to 2010's Macondo disaster, BP could use some topping-up. After all, aside from 2013, the company hasn't had a great track record of finding oil and gas lately.

BP's organic reserves replacement rate has slipped well below 100%, like many of its peers
Source: Sanford C. Bernstein
Note: Excludes Rosneft stake.

To be fair, BP's 68 percent reserve-replacement rate in 2015 wasn't as bad as Exxon Mobil's 58 percent or close rival Royal Dutch Shell, which turned in a negative number, according to figures from Sanford C. Bernstein. Even so, chapter 1, verse 1 of the Gospel According to Big Oil says, "Thou shalt replace at least every barrel produced (and even more, if thou canst help it)."

The old script(ure) doesn't count quite as much these days. What's the point in spending money on finding more oil and gas when the prices for the stuff you produce already isn't high enough to pay other important bills -- like dividends, for instance.

Balancing Petroleum
BP has slashed its investment budget but leverage is rising fast to cover dividend payments
Source: Bloomberg

BP cut its capital expenditure budget again when it reported quarterly results last month, with exploration bearing some of the brunt. Hubbert's departure is couched in the language of streamlining the organization. These days, though, being head of exploration isn't quite the priority position it used to be -- and shareholders focused on payouts probably prefer it that way.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Liam Denning in San Francisco at

To contact the editor responsible for this story:
Mark Gongloff at