BP tumbles to worst annual loss in over 20 years
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BP slumped to its worst annual loss in over 20 years in 2015, the British oil and gas company reported yesterday, and said it would cut thousands more jobs in the face of a deep rout in oil prices.
The company, which is still grappling with the huge costs from the deadly 2010 Gulf of Mexico oil spill, said it would cut 7,000 jobs by 2017, nearly 9 percent of its workforce.
BP shares fell on the news, dropping by around 7 percent in London to lead losers on the pan-European FTSEurofirst 300 index.
BP kept its dividend at 10 cents per share but the weak results and outlook are set to pile pressure on the company which has had to raise borrowing.
It reported a 2015 loss of US$6.5 billion, even worse than its 2010 results when it counted the costs of the Gulf of Mexico oil spill for which the total bill for criminal and civil penalties and clean-up costs reached around US$55 billion.
Fourth-quarter underlying replacement cost profit, BP鈥檚 definition of net income, was US$196 million, sharply below analysts鈥 hopes of US$730 million.
BP鈥檚 results are the latest in a round of weak fourth-quarter earnings in the sector. Chevron, the No. 2 US producer, last week reported its first quarterly loss in more than 13 years, while Royal Dutch Shell was expected to report a near halving of profits.
Benchmark Brent oil prices averaged US$43 a barrel in the fourth quarter of 2015, down from US$76 a year earlier.
The industry鈥檚 worst downturn in three decades is set to persist with Brent averaging around US$33 per barrel in 2016 so far.
鈥淭he company will need to focus on cost base and capex in order to return to profitability, with the increase in net debt a concern in the current environment,鈥 analysts at Cenkos Securities said.
A 70 percent slide in oil prices since mid-2014 has forced the oil and gas sector to cut tens of thousands of jobs and make deep spending cuts.
BP said its 2015 capital spending totaled US$18.7 billion, down from a planned US$24-$26 billion. BP said it expected its 2016 capex to be at the lower end of a range of US$17-$19 billion.
The sector is set to slash spending to its lowest in six years in 2016 to US$522 billion, following a 22 percent fall to US$595 billion in 2015, according to analysts. It will mark the first time since 1986 that the industry has cut spending for two straight years.
BP in 2015 cut operating costs by US$3.5 billion and said it expected savings of US$7 billion by 2017.
It said it would cut 3,000 jobs in its downstream unit by the end of 2017 on top of 4,000 cuts already revealed in oil and gas production.
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