Energy giant BP (BP) had a net loss of US$4.365 billion in the first quarter of 2020, and its net profit dropped significantly by 67%, a record.
The financial report shows that BP's revenue in the first quarter was 59.65 billion US dollars, a year-on-year decrease of 10%, which was higher than market expectations of 56.9 billion US dollars. Shareholders’ share of the net loss was $4.365 billion, compared with a net profit of $29.34 in the same period last year. BP pointed out that the reason for the record loss was due to the sharp drop in oil prices at the end of the quarter, resulting in a loss of $3.7 billion in its inventory.
Like many peers, in the face of the decline in oil prices in the first quarter, BP will also save itself through layoffs, expenditure cuts, and asset sales.
Bernard Looney, CEO of the oil company BP, announced Monday (June 8) that it will lay off employees worldwide due to lower oil prices and the company's accelerated transition to green energy.
At present, the total number of BP global employees is about 70,100. BP plans to lay off 10,000 employees, accounting for approximately 14.27% of its total employees. Among them, most of the layoffs will be completed within the year.
One-third of the senior management staff will be laid off, most of the affected are company office positions, oil platform engineers and other front-line employees are less affected.
BP CEO Bernard Looney said that because the epidemic has caused a huge blow to the company's profits and caused extensive losses to the entire energy industry, the company's expenditure is much higher than revenue. Downsizing is the company's strategy to accelerate its strategic transformation.
Other actions taken to cut expenses include:
Capital expenditures are reduced by 25% this year, or about US$ 3 billion
By 2021, operating costs will be reduced by $2.5 billion, and additional operating costs may be reduced
The salary increase originally scheduled for April 1 this year was postponed to October 1, 2020. And as of March 31, 2021, company executives and group leaders are not allowed to raise pay
On July 1 this year, the freeze on all promotional activities implemented in March will be lifted; the company emphasizes that the promotion can be restarted "reflecting the challenges we face in a modest manner"
Employees may not have cash bonuses in 2020
In addition to layoffs and spending cuts, BP is also selling assets to launch self-help.
Plan to sell 10% stake in Aramco natural gas project
According to people familiar with the matter, BP is currently in preliminary negotiations on the sale of about 10% of an important natural gas project in Oman as part of its debt reduction plan.
The above-mentioned insider said that London-based BP is in talks with interested parties to cut some of its 60% stake in the Aman Hazan gas field. This 10% of the shares may be sold for more than 1 billion US dollars.
The plan to sell shares will help BP achieve its goal of divesting $15 billion in assets by the middle of 2021, which is critical to reducing BP's debt burden. Because the double blow of the epidemic and the plunge in oil prices affected BP's profit in the first quarter, BP increased its financial reserves for this purpose. In April this year, BP confirmed that it will complete the sale of its Alaska business to Hilcorp Energy in accordance with the revised terms.
People familiar with the matter said that the share sale plan has not yet made a final decision, nor is it certain that these negotiations will lead to a transaction. A representative of BP declined to comment on the matter.
Source: Mobei Public Account
