Biggest annual loss for BP oil group in 20 years

The Guardian

BP is to cut another 3,000 jobs after reporting a loss of $6.5bn, its worst annual loss in at least 20 years. The latest job cuts are in addition to the 4,000 job cuts already announced.

The group also said it has set aside a further $440m (£305m) over the last three months for liabilities associated with the Deepwater Horizon disaster, bringing the total bill so far to $55bn.

The latest financial blow from the US Gulf accident nearly six years ago helped to drag BP into a fourth quarter loss of $2.2bn and an annual loss of $6.5bn.

Shares in the group fell by more than 5% as the results underlined the impact of falling oil prices.

Despite this, Bob Dudley, BP’s chief executive, blamed low oil prices for the losses but gave an upbeat message saying the company was continuing to move rapidly to “adapt and rebalance” to cope with a changing environment.

“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.”

The underlying profit for the last three months, not counting the Gulf and other factors, was down from $2.2bn last time to $196m, much worse than analysts had expected.

A consensus among 17 analysts ahead of the results predicted that underlying profits would fall in the final three months to $730m down almost 70% on the same period a year earlier.

The biggest problem for BP has come from low crude prices with Brent averaging $44 a barrel across the fourth quarter compared with $77 for the same period 12 months earlier. Brent is now down to just above $33, 42% less than a year ago.

BP said it had seen claims that an annual loss of $6.5bn was the lowest for two decades but said it could not confirm this. Oil company profits are measured in a variety of ways making comparisons sometimes difficult.

BP is expected to wrack up even more losses in future – but at a lower level – from the Deepwater Horizon accident that occurred in April 2010. It led to 11 men losing their lives and massive environmental damage was done to the beaches of the southern US.

BP’s share price has been hammered by the Macondo liabilities and more recently the fall in crude prices. The shares, worth 650p pre-Macondo, were trading at 520p five years ago but were trading at 346p on Tuesday.

On Monday BP announced a reshuffle at the top of the group with Lamar McKay being moved from head of exploration to deputy chief executive, putting the American second in line to the boss, Bob Dudley. Bernard Looney has taken over McKay’s old job.