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BP reports worst annual loss in over 20 years, announces further job losses

02 February 2016

On February 2, UK-based oil and gas group BP reported a loss of $6.5 billion for 2015, mainly due to the continuing slide in the oil price, now down to under $35 a barrel for benchmark Brent crude. The group also set aside a further $440m over the last quarter of 2015 for liabilities associated with the Deepwater Horizon disaster, bringing the total bill so far to $55bn.

These are its worst results for at least 20 years, BP said. The group also announced the loss of a further 3,000 downstream jobs by 2017 in addition to the 4,000 already announced in its upstream business, representing in total 9% of its workforce. This is part of the ongoing $2.5 billion restructuring programme announced last year.

A 70% 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's results are the latest in a round of weak earnings reports across the sector. Chevron, the second largest 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.

Brent oil prices averaged $43 a barrel in the fourth quarter of 2015, down from $76 a year earlier, and have averaged around $33 so far in 2016.

BP CEO Bob Dudley blamed low oil prices for the losses but in an upbeat message said the group was continuing to move rapidly to “adapt and rebalance” to cope with a changing environment.

Initially, BP’s restructuring programme had targeted cost reductions to allow its balance sheet to break even below $60 a barrel, but if current market conditions persist, it will need to aim for below $40 if spending and dividends are to be maintained without a major increase in debt.

BP said its 2015 capital spending totalled $18.7 billion, down from a planned $24-$26 billion, and expects its 2016 capex to be between $17 and $19 billion. This could be cut to $14 billion if oil averages about $40 a barrel, according to analysts.

BP maintained its quarterly dividend at 10 cents a share and there were no plans to cut the payout, Dudley said. “Unless it looks like it’s going to go down to $20, I think we are in good shape,” he told Bloomberg Television.

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