BP reports biggest ever annual loss

Tue Feb 2, 2016 7:03am EST
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By Karolin Schaps and Ron Bousso

LONDON (Reuters) - BP (BP.L: Quote) slumped to its biggest annual loss last year and announced thousands more job cuts on Tuesday, showing that even one of the nimblest oil producers is struggling in the worst market downturn in over a decade.

The British oil and gas company, which is still grappling with about $55 billion of costs from the oil spill in the Gulf of Mexico in 2010, said it would cut 7,000 jobs by the end of 2017, or nearly 9 percent of its workforce.

BP said it lost $6.5 billion in 2015 and its fourth-quarter underlying replacement cost profit, which is the company's definition of net income, came in at $196 million, well below analyst expectations of $730 million.

BP shares fell as much as 8.5 percent and were 8.1 percent lower at 6.36 a.m ET, the worst performer on the pan-European FTSEurofirst 300 index .FTEU3 and on track for their biggest one-day fall since June 2010.

The company's 2015 loss shows that even its "shrink to grow" strategy adopted after the Macondo rig explosion in 2010, hailed as the best preparation for a weak oil market, was unable to buffer the impact of the lowest oil prices since 2003.

"Should low oil prices prevail, they're a quarter or two away from having to cut the dividend, or divest some more assets," said Jack Allardyce, analyst at Cenkos Securities.

Dividends are considered sacrosanct among most major oil companies but BP's weak results and outlook are likely to put pressure on a company that has had to increase borrowing. BP maintained its 2015 dividend at 10 cents per share.

BP's results are the latest to show the extent large oil companies are struggling following a 70 percent slide in oil prices since the middle of 2014 that has forced them to cut tens of thousands of jobs and slash spending.   Continued...

A BP logo is seen at a petrol station in London January 15, 2015. REUTERS/Luke MacGregor/Files