BP expects US$1 billion restructuring charge in 2015

BP has announced that as part of its wider ongoing Group-wide programme to simplify across its Upstream and Downstream activities and corporate functions, it expects to incur non-operating restructuring charges of circa US$1 billion in total over the next five quarters, including the current quarter. Details of these charges and further guidance on the programme are expected to be given with each quarter's results.

Group Chief Executive Bob Dudley said: "We have already been working very hard over these past 18 months or so to right-size our organisation as a result of completing more than US$43 billion of divestments. We are clearly a more focused business now and, without diverting our attention from safety and reliability, our goal is to make BP even stronger and more competitive.

"The simplification work we have already done is serving us well as we face the tougher external environment. We continue to seek opportunities to eliminate duplication and stop unnecessary activity that is not fully aligned with the group's strategy."

As an integrated group, not all BP's businesses are equally exposed to the oil price.  About one third of its Upstream projects around the world are operated under production sharing contracts and it is also investing in high quality gas projects which are typically less sensitive to oil price movements. Importantly, while BP approves projects at US$80 a barrel, it also already tests each at US$60 a barrel to understand the resilience of the portfolio at a range of prices. It will also continue to consider lower price sets as appropriate.

BP also has a strong balance sheet, with historically low gearing of 15% at the end of the third quarter of 2014, which provides time and flexibility to adjust to changes in the environment.

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/10122014/bp-expects-usd1-billion-restructuring-charge-in-2015/