BP To Make Major Workforce Cut – By Todd Horwitz, Bubba Trading

 


BP will cut about 15% of its workforce in response to the coronavirus crisis and as part of Chief Executive Bernard Looney’s plan to shift the oil and gas major to renewable energy, it said on Monday. Looney told employees in a global online call that the London-based company will cut 10,000 jobs from the current 70,100. “We will now begin a process that will see close to 10,000 people leaving BP – most by the end of this year,” Looney said in a statement.

BP shares were up 3.3% by 1230 GMT, against a 2.2% gain for the broader European energy sector. The affected roles will be mostly senior office-based positions and not front-line operational staff, the company said. About a fifth of the job cuts will take place in Britain, where BP employs 15,000 people, a company spokesman said.

Like all the world’s top energy companies, BP has cut its 2020 spending plans after the coronavirus pandemic brought an unprecedented drop in demand for oil. BP has flagged a 25% cut to $12 billion this year and said it would find $2.5 billion in cost savings by the end of 2021 through the digitalization and integration of its businesses. On Monday, however, Looney said the company is likely to need to cut costs even further.

The oil industry’s history of boom and bust cycles are often reflected in staffing levels, but the pandemic has led to even more drastic measures from some, with companies including Shell and Equinor AS A cutting their dividends. BP said in April that it was maintaining its dividend, but Mr. Looney said it wasn’t yet clear whether the pandemic could cause permanent damage to oil demand. “The pandemic I believe only adds to the challenge of oil in the future,” he said on the April earnings call.

The major oil company said it is aiming to bring down its capital expenditure by 25% in the year, a reduction of around $3 billion. The cuts will introduce a flatter organizational structure, Mr. Looney said, and will mostly come from office-based roles. The majority of employees affected are expected to leave by the end of 2020.

The revised structure is expected to significantly affect senior-level management. BP said it expects the number of group leaders—the top 400 roles in the company—to be reduced by one-third. BP is due to announce its revised strategy at a three-day event starting on Sept. 14.

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Todd “Bubba” Horwitz
BubbaTrading.com

Financial Markets and Political Commentary
 

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.