BP reported its full year and fourth quarter 2015 results today, Feb. 2, and the news isn’t good for the oil giant. Final quarter 2015 earnings dove a staggering 91 percent, with annual earnings spiralling down over 50 percent over the same period for 2014.
The underlying result for the fourth quarter was $196 million compared with $2.2 billion for the same period a year earlier. Underlying operating cash flow for the fourth quarter of 2015 was $5.9 billion, which brought the total for the year to $20.3 billion, compared to $32.8 billion for 2014, down 38 percent.
CEO Bob Dudley tried to put a good face on it, saying in the company’s press release, that, “We are continuing to move rapidly to adapt and rebalance BP for the 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.”
Huge job losses are to follow, as the company struggles to deal with both the aftermath of the 2010 Gulf of Mexico spill-billions bled and the world oil glut. Three thousand more cuts will be made globally by the end of 2017, BP said, adding to the 4,000 layoffs planned in its exploration and production sectors.
The company said that oil prices hit its Upstream segment particularly hard.
“Despite strong operational performance and growing cost reductions, the lower underlying result was predominantly driven by the impact of steeply lower oil and gas prices on BP’s Upstream segment, which reported a pre-tax loss for the quarter. This was partially offset by a strong set of counter-cyclical results from the Downstream segment,” the company stated in its press release.
BP pointed out that, “The Brent crude oil marker price averaged $44 a barrel in the fourth quarter of 2015 compared with $77 a year earlier, and the average Henry Hub US gas marker price was $2.27 per million British thermal units compared with $4.04 in the fourth quarter of 2014.”
The dividend remains unchanged for now, at 10 cents per ordinary share, to be distributed in March.
That did little to placate investors, though, who didn’t take the results well. By midday, BP’s stock price had slipped almost 10 percent, trading around 335.
On the company conference call today, Dudley said he was “a little surprised at market reaction” to this news, seeming to indicate that BP is hardly alone in reporting bad news. He touched briefly on the attrition of staff at the company, as positions are jostled about some, including for its alternative energy sector.
To its credit, BP did attend the recent climate conference in Paris, COP21, and has started pushing alternative energies a bit. It’s unclear what today’s results might show in that regard, or prompt the company to do.
However, a spokesperson for the company did tell the Examiner, in part that, “In 2005 BP made a commitment to invest $8 billion in alternative energy by 2015, and we achieved this two years ahead of schedule in 2013. In renewable energy, our activities are focused on biofuels and wind. We invest in low-cost, low-carbon biofuels. We doubled the capacity of our largest sugar cane ethanol facility in Brazil in 2014. [And] in the United States we have interests in 16 wind farms, which have a total generating capacity of 2,600 megawatts of electricity.”
Yet, its oil sector is clearly the cause of its troubles.
A charge of $443 million related to the 2010 oil spill was taken in the quarter, primarily reflecting additional business economic loss claims, the company said.
A court hearing to consider approval of the proposed consent decree in connection with the agreements in principle reached by BP Exploration & Production Inc. to settle all federal and state claims arising from the spill is scheduled for March 23.
It’s been reported that some of the job losses will occur here in the Gulf.