Saturday, July 13, 2024

BP Cites Low Oil Prices in $3.3 Billion Loss, as Industry Toll Mounts


A BP refinery in Gelsenkirchen, Germany. The company said it would trim about 3,000 workers from its marketing and refining business by the end of 2017.

LONDON — The newest measure of the oil industry’s falling fortunes came on Tuesday in the form of a $3.3 billion fourth-quarter loss reported by BP.

For all of 2015, BP said it lost $6.48 billion, compared with a profit of $3.78 billion in 2014, before the plummeting price of oil began taking its full toll.

The stock of the British company plunged on the news, down more than 7 percent through midmorning trading in London. Petroleum futures were off, too, as investors and analysts awaited the fourth-quarter results later on Tuesday from ExxonMobil, the industry’s biggest player.

Despite oil’s per-barrel price being in the low $30s, down from levels above $65 as recently as May, ExxonMobil is still expected to post a profit for its fourth quarter. But analysts predict that ExxonMobil’s earnings for the period will be less than half the level of a year earlier, and for revenue to be down by about 40 percent.

The industry is reeling from the effects of a global glut of oil and slackening demand on worries of slower international economic growth. Longer term, there are questions about the value of oil still under the ground and the sea floor, as climate concerns prompt energy users of all size to seek alternatives to fossil fuels.

For big oil companies, the reduced prices translate directly into lower revenue and profitability, particularly in the units of big oil companies that find crude and produce petroleum.

BP, on Tuesday, repeated a commitment it made last month to cut 4,000 jobs this year in its exploration and production unit, which lost $728 million in the quarter. BP also said it would trim about 3,000 workers from its marketing and refining business by the end of 2017.

Before those cuts, BP had a global work force of about 80,000.

The company also said that, in response to plunging prices, it wrote down the value of its oil and gas assets by $1.6 billion in the quarter.

Hoping to keep more investors from fleeing, BP said on Tuesday that despite its financial losses it would keep its dividend unchanged at 10 cents per share.

“All of this underpins our commitment to sustaining our dividend,’’ the company’s chief executive, Robert W. Dudley, said in a news release.

BP has sought to streamline its operations by selling some businesses — a strategy in some ways forced by its need to raise money to help pay damages from its oil well blowout in the Gulf of Mexico in 2010. The company took a charge of $443 million in 2015 for that spill, bringing total provisions for the disaster to $55.5 billion.

Since 2010, the company has raised about $60 billion through sales of assets including stakes in three large Gulf of Mexico oil fields in 2012 and a Texas refinery in 2013.

Most of those sales were made when oil prices were much higher than today. Other companies, needing to scale back and increase efficiency in response to plunging oil prices, are finding it hard to find buyers for businesses or operations they might want to sell.

The American oil major Chevron, for example, cited that problem last week when it reported its first quarterly loss since 2002.

“It is a terrible market to be trying to sell most assets out there,” John S. Watson, the chairman and chief executive of Chevron, said on Friday during a conference call with analysts.

Chevron’s $588 million loss for the last quarter of 2015 compared with a $3.5 billion profit in the period a year earlier.

In a management move announced on Monday, BP has promoted Lamar McKay, the head of exploration and production, to deputy chief executive. Like BP’s chief executive, Mr. Dudley, Mr. McKay is an American who came to the company when BP acquired Amoco in 1998.


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Author: Red

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