BP trims spending, plans to cut 7,000 jobs

BP PLC reported plans for organic capital expenditures of $17-19 billion for each of 2016 and 2017, with 2016 falling into the lower end of that range. The company spent $18.7 billion in 2015.

While targeting more capital discipline, the company expects to reduce the number of staff and contractor roles in its upstream segment by about 4,000 during 2016 and by as many as 3,000 from downstream by yearend 2017.

BP on Feb. 2 reported several executive changes that will include the elevation of Upstream Chief Executive Lamar McKay to the newly recreated position of group chief executive (OGJ Online, Feb. 2, 2016).

The company has taken about $1.5 billion in restructuring charges over the past five quarters. By yearend 2016, the total is expected to approach $2.5 billion.

For 2015, BP reported a loss of $6.5 billion, compared with earnings of $3.8 billion in 2014. During the fourth quarter, the company lost $3.3 billion, compared with $4.4 billion lost in the same period a year earlier.

A charge of $443 million related to the 2010 Gulf of Mexico oil spill was taken in the quarter—primarily reflecting additional business economic loss claims—taking the cumulative pretax charge for the incident to $55.5 billion.

A court hearing is scheduled for Mar. 23 to consider approval of the proposed consent decree in connection with the agreements in principle reached by BP Exploration & Production Inc. to settle all federal and state claims arising from the gulf spill.

The company also has completed the $10 billion divestment program announced in October 2013 and plans a further $3-5 billion during 2016.

“We will keep the capital frame under review as we move through 2016 and beyond,” said Brian Gilvary, BP chief financial officer. “Should current conditions persist for longer than anticipated, we expect that all the actions we are taking will capture more deflation and so drive the point at which we balance our organic sources and uses of cash lower than the $60[/bbl] that we indicated at last quarter’s results.”

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