$6.5B in Losses Lead to Steep BP Layoffs


While announcing a loss of $6.5 billion in the 2015 fiscal year—said to be the largest annual loss in its history—British oil and gas company BP has revealed plans to lay off 7,000 employees by the end of 2017.

BP reported its underlying replacement cost profit results, which Reuters says is what the company calls net income, in a statement released Tuesday (Feb. 2).

The underlying results for the full-year of 2015 was $5.9 billion, down 51 percent from 2014’s reported $12.1 billion.

The underlying results for the fourth quarter was $196 million, compared with $2.2 billion for the fourth quarter of 2014 and well below analyst expectations of $730 million, according to Reuters.

Oil and Gas Slump, Staff Cuts

The company pointed the blame at the “impact of steeply lower oil and gas prices” on its Upstream segment, despite what it described as “strong operational performance” and continued cost reductions.

“We are continuing to move rapidly to adapt and rebalance BP for the changing environment,” Bob Dudley, BP group chief executive, said in the company statement.

“We’re making good progress in managing and lowering our costs and capital spending, while maintaining safe and reliable operations and continuing disciplined investment into the future of our portfolio,” he added.

Some of those expense reductions directly impacts jobs. The report included language that indicates BP will continue to take “restructuring charges” to cut costs—it has taken about $1.5 billion in restructuring charges over the last five quarters and expects the number to reach $2.5 billion by year-end 2016.

“BP 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,” the statement said.

“Our plans set out a clear course for BP for the medium term and will allow us to deliver growth in the longer term,” Dudley said. “All of this underpins our commitment to sustaining our dividend and then growing free cash flow and shareholder distributions over the long term.”

Despite receiving lower revenue from oil production, BP's output rose 5.4 percent to 2.26 million barrels of oil equivalent per day, The Guardian noted.

Lingering Effects

After the loss was made public, shares in the oil company 9 percent, taking the company’s stock value down by $8.65 billion, The Guardian reported. However, Dudley implied to the paper that investors were “overreacting” and ignoring what he described as the company’s strong cash flow.

Several reports also pointed out that the company is still feeling the impact of the 2010 Gulf of Mexico oil spill, also known as Deepwater Horizon, which took the lives of 11 men and did considerable environmental damage to the Southeast U.S. coastline.

CNN reported that, in 2015, BP took charges of $12 billion related to the Deepwater incident, which brought its total bill for the disaster to $55.5 billion. According to The Guardian, analysts say the company will continue to be hit with expenses from the incident, although at a lower level.

Additionally, BP had announced the previous day, Feb. 1, a restructuring of senior staff.   

Lamar McKay, a 35-year veteran of the company and current chief executive of BP’s Upstream segment, will be advancing to the new position of Deputy Group Chief Executive.

This change follows the retirement announcement of Katrina Landis, executive vice president of corporate business activities, who will leave the company on May 1. Landis’s career with BP spanned 24 years. She will not be replaced on the executive team and her current role’s responsibilities will be assigned to other members of the team, according to the statement.

McKay will be succeeded as Upstream chief executive by Bernard Looney, currently chief operating officer, production, in the Upstream segment.

According to The Guardian, this realignment puts McKay second in line to his boss, Dudley; however, Dudley denies that the restructuring suggests he is preparing a successor to plan for his own retirement.





Tagged categories: Asia Pacific; BP; Earnings reports; EMEA (Europe, Middle East and Africa); Finance; Industry News; Latin America; North America; Oil and Gas; Personnel; Program/Project Management; Workers

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