BP Announces Massive Layoffs - What's Next?

Jan. 13, 2016 11:18 AM ETBP p.l.c. (BP)10 Comments
Sarfaraz A. Khan profile picture
Sarfaraz A. Khan


  • For the energy industry, it was “déjà vu all over again this year as BP announced massive layoffs.
  • Oil price environment has worsened, with WTI briefly slipping to under $30 a barrel.
  • BP is the first oil producer to announce significant job cuts this year; others will likely follow.
  • But BP may also have to adjust its oil price outlook and cash flow neutrality plans.

The beginning of 2015 was marred by thousands of layoffs in the energy industry which was bracing for a tough oil price environment as the US benchmark WTI crude slipped to around $45 a barrel in last January. But that was just the beginning.

Energy companies all over the world, ranging from oilfield service providers like Halliburton (HAL) and Schlumberger (SLB) to independent producers like Apache (APA) and EOG Resources (EOG) to oil majors such as Royal Dutch Shell (RDS.A) (RDS.B) axed more than 250,000 jobs in 2015. It was "déjà vu all over again this year when the European oil major BP (NYSE:BP) announced that it is going to slash 4,000 jobs over the next year or two as it braces for even lower oil price environment.

The London-based oil producer said that the layoffs, which represent 5% of its total global workforce, will occur at the exploration and production division which is bearing the brunt of oil's collapse. The unit has seen its adjusted earnings plunge 85.2% (excluding Rosneft) in the first nine months of 2015 as compared to the prior year. The cuts will happen mainly in regions where BP has significant oil and gas production business, such as the North Sea, the US Gulf of Mexico, Angola and Azerbaijan. As a reminder, BP eliminated 4,000 jobs last year.

BP has said that the current cuts are a direct result of low oil prices and the ongoing restructuring activity, though I believe the job cuts have more to do with oil prices than anything else. On Tuesday, WTI briefly fell below $30 a barrel for the first time in 12 years, just hours after BP announced its plans. The drop has come on the back of heightened concerns regarding slowdown of Chinese economy which has driven much

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Sarfaraz A. Khan profile picture
Hey there, I'm Sarfaraz A. Khan - a seasoned financial writer and investor with a passion for uncovering hidden gems. I have a deep understanding of fundamental analysis and I specialize in writing about mid-cap and small-cap companies that are poised for significant growth. My investment philosophy is heavily influenced by the strategies of legendary investors like Warren Buffett and Benjamin Graham. I look for investment opportunities in companies that have strong fundamentals and can grow substantially over the long-term. I'm not afraid to venture into other areas of the market either. While I primarily write about mid and small-cap stocks, I also delve into ETFs and economic trends occasionally. I always aim to provide a balanced view and discuss risk factors in my articles so investors can make better decisions. Although I've been away from Seeking Alpha for a while, I'm excited to get back to writing and sharing my expertise with the community. Moving forward, you can expect to see two to three articles a week from me. When I'm not analyzing stocks or writing about finance, I enjoy reading about history, religion, science, economy, and following the latest developments in the energy and technology sectors.

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