BP reports worst annual loss in at least 20 years and further job cuts

worldtraveller

BP reported its worst annual loss in at least 20 years and thousands more job cuts as the British oil and gas company grappled with a collapse in oil prices.

The energy company reported an annual loss of $6.5 billion for 2015, even worse than its 2010 results when it counted the costs of the deadly Gulf of Mexico oil spill.

BP said it would cut 3,000 jobs in its downstream unit by the end of 2017 on top of 4,000 cuts already announced in oil and gas production as part of a $2.5 billion restructuring program announced last year.

Reuters

Generali

worldtraveller wrote: »

BP reported its worst annual loss in at least 20 years and thousands more job cuts as the British oil and gas company grappled with a collapse in oil prices.

The energy company reported an annual loss of $6.5 billion for 2015, even worse than its 2010 results when it counted the costs of the deadly Gulf of Mexico oil spill.

BP said it would cut 3,000 jobs in its downstream unit by the end of 2017 on top of 4,000 cuts already announced in oil and gas production as part of a $2.5 billion restructuring program announced last year.

Reuters

The FT has an article about 50 oil fields in the North Sea closing this year potentially.

There needs to be a big shake out in the oil market before oil prices can return to a more reasonable long term norm of say $50/bbl.

Pair trades are normally the best way to play this sort of market: find an absolute dog to short and go long a better stock. That way even if both go down or both go up you make a profit from the long stock rising more/falling less than the short stock.

purch

BP has been a basket case ever since Deep Water Horizon.....the Oil price slump has only hastened the day of reckoning.

westernpromise

Even before Deep Water Horizon, in fact. There was Thunder Horse, which started to topple over because they had stinted on the undersea components, all of which had to be retrieved and replaced:

https://jackhbarnes.files.wordpress.com/2012/04/442590832ltqsnu_fs.jpg

There was Texas City Refinery, which blew up in 2005 wth 15 deaths:
https://bobhiggins.files.wordpress.com/2010/09/bp-texas-city.jpg

In all cases the problem was caused by excessive cost cutting and the man most responsible was Tony Hayward, who was nonetheless appointed BP CEO.

kabayiri

Generali wrote: »

The FT has an article about 50 oil fields in the North Sea closing this year potentially.
...

There were renewed calls to protect jobs through state subsidy again this morning.

At what point does the state consider enough is enough?

Generali

kabayiri wrote: »

There were renewed calls to protect jobs through state subsidy again this morning.

At what point does the state consider enough is enough?

To be fair there are two sorts of state subsidy from the status quo:

1. Stop taxing something at a higher rate than most other things
2. Actively feed money into a sector

AIUI the oil industry in the UK is still at 1 not 2.

If I was to take water out of the ground and use that to make coffee then I'd pay a lot less in extractive tax than if I took oil out of the ground and used it to make petrol or even very, very bad coffee.

Crashy_Time

Generali wrote: »

The FT has an article about 50 oil fields in the North Sea closing this year potentially.

There needs to be a big shake out in the oil market before oil prices can return to a more reasonable long term norm of say $50/bbl.

Pair trades are normally the best way to play this sort of market: find an absolute dog to short and go long a better stock. That way even if both go down or both go up you make a profit from the long stock rising more/falling less than the short stock.

I thought the long term norm/average was about $35?

Thrugelmir

1997 $18.64
1998 $11.91
1999 $16.56

Interesting when you look back at Brent Crude prices.

Shale has rocked the industry into a new era

Crashy_Time

Thrugelmir wrote: »

Interesting when you look back at Brent Crude prices.

Shale has rocked the industry into a new era

Got to be some bank/credit stress coming along on the back of this price drop, surely. How many banks/hedge funds have made bad bets on the high oil price?

Thrugelmir

Crashy_Time wrote: »

Got to be some bank/credit stress coming along on the back of this price drop, surely. How many banks/hedge funds have made bad bets on the high oil price?

US banks are into shale to the tune of $150 billion.

Vultures have war chests of $60 billion.

Maybe some stress but many of the assets will continue to pump out oil and gas.

cells

Crashy_Time wrote: »

Got to be some bank/credit stress coming along on the back of this price drop, surely. How many banks/hedge funds have made bad bets on the high oil price?

BP has debt to equity of about 20%.

That's like buying a house with an 80% deposit.

Not a lot that can go wrong lending at those levels

Maybe some oil companies have debt to equity much worse than that but those oil companies will be very tiny conlarrd to BP in the range if 1/100th the size