BP Cites Lower Oil Prices in $3.3 Billion Loss

Source: By STANLEY REED, New York Times • Posted: Tuesday, February 2, 2016

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. Credit Martin Meissner/Associated Press 

 LONDON — Showing the effects of lower oil prices, BP on Tuesday reported a loss of $3.3 billion for the fourth quarter of 2015.

The London-based oil producer lost $4.4 billion in the comparable period in 2014, when falling oil prices led to large inventory write-offs. For all of 2015, BP said it lost $6.48 billion, compared with a profit of $3.78 billion in 2014.

BP blamed the loss primarily on sharply lower oil and gas prices. The company also said it wrote down the value of its oil and gas assets by $1.6 billion in the quarter.

BP repeated a commitment it made last month to cut 4,000 jobs this year in the 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.

Despite the losses, BP said 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.

Although oil and gas prices have recovered a bit from recent lows, they are still far below the $65 a barrel seen as recently as May. Brent crude, the international benchmark, was down 43 percent in the fourth quarter of 2015 from a year earlier, and natural gas prices were also sharply lower. 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 is reacting by cutting costs. The company said last month that it would eliminate 4,000 of the approximately 24,000 jobs in its exploration and production units. Those cuts would be in addition to a reduction last year of about 4,000 jobs, which brought the global work force down to about 80,000.

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.

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.

Mr. Watson said Chevron would not start any new long-term projects like Gorgon, a $54 billion liquefied natural gas development that the company is completing in Australia. Instead, Chevron will favor efforts with quicker returns, like drilling for oil in shale formations, he said.