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Petroleum

BP Amoco Announces Ambitious Restructuring Plan, Investment, and Asset Disposals

Strategic Insights

— 1 min read

BP Amoco, one of the world's largest oil companies, is undertaking a significant restructuring effort, aiming to invest $26 billion over the next three years, cut costs by $4 billion, and sell assets worth $10 billion. The plan, announced yesterday, is designed to meet ambitious new financial targets, with the company aiming to improve its return on capital by five to six percentage points to 16% by the end of 2001. The restructuring involves the disposal of a third of the group's refining capacity, exploration and production assets worth $4 billion, and $2.5 billion of its chemical operations.

Key Takeaways:

  • BP Amoco plans to invest $26 billion over the next three years, cut costs by $4 billion, and sell assets worth $10 billion as part of its restructuring effort.
  • The company aims to improve its return on capital by five to six percentage points to 16% by the end of 2001.
  • The group will dispose of a third of its refining capacity, some $4 billion of exploration and production assets, and $2.5 billion of its chemical operations.
  • BP Amoco will sell its 64% stake in Altura Energy, an oil and gas producer in Texas and New Mexico.
  • The company will also dispose of its Canadian oil interests and its Alliance Refinery in Louisiana.
  • Analysts expect BP Amoco to make more asset disposals and savings of another $1 billion if it succeeds in persuading regulators to allow it to buy Atlantic Richfield Corporation.
  • The company's market value is £125 billion, making it the UK's largest company.
  • The shares rose 26p to close at £12.85 yesterday.

Statistics:

  • BP Amoco's investment over the next three years: $26 billion (£16.7 billion)
  • Cost cuts: $4 billion
  • Asset sales: $10 billion
  • Return on capital target: 16% by the end of 2001
  • Refining capacity to be disposed of: one-third
  • Exploration and production assets to be disposed of: $4 billion
  • Chemical operations to be disposed of: $2.5 billion
  • Market value: £125 billion
  • Share price: £12.85

Sources:

  • Financial Times Limited, Lex, Page 20, Slick forecast, Page 24, Copyright 1999. All Rights Reserved.

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