BP is to cut another 3,000 jobs after reporting a loss of $6.5bn, its worst annual loss in at least 20 years.
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“We are continuing to move rapidly to adapt and rebalance BP for the changing environment”, BP Chief Executive Bob Dudley said.
Fourth quarter underlying results were US$196mln compared with US$2.2bn for the same period a year ago. Oil prices are wallowing around a 12-year low of around US$33 a barrel for benchmark Brent crude as demand fails to keep pace with a glut in global supply. As a rule, every US$1 change in Brent crude oil prices impacts pre-tax replacement cost operating profit by US$300 million, according to BP.
“BP CEO Bob Dudley will be particularly keen to ensure that the dividend remains untouched having finally restored it in the wake of the Gulf of Mexico disaster, having made the company much leaner since taking over the reins”, said Michael Hewson, an analyst at CMC Markets. BP intends to continue to manage gearing with flexibility around the 20% level.
The total cost of the incident to BP now stands at $55.5 billion, with more costs likely to be incurred.
BP also expects to reduce the number of staff and contractor roles in the Upstream segment by around 4,000 during 2016 and by up to 3,000 from the Downstream by the end of 2017. Prices were well below this in Q4 and have drifted lower since.
The company’s ratio of net debt to equity jumped to 21.6 per cent at the end of 2015, an increase of nearly five per centage points from a year earlier.
“We expect first-quarter 2016 reported production to be broadly flat with the fourth quarter 2015”.
On an underlying basis, replacement cost profits tumbled by 51% to 5.91 billion USA dollars (£4.1 billion) in 2015.
BP announced the completion of its $10bn disposal programme and set out plans to raise a further $3bn-$5bn in the current year. BP continues to invest in a disciplined way to provide resilience and flexibility now and in the future. Three major upstream projects, one in Australia and two in Angola, began production in 2015 and another in Algeria is expected to start-up shortly.
BP on Monday announced the appointment of Lamar McKay as deputy chief executive in a reshuffle aimed at simplifying top decision making. A charge of $443 million related to the Gulf of Mexico oil spill was taken in the quarter, primarily reflecting additional business economic loss claims.
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BP started cutting costs and selling assets following the 2010 oil spill.
