BP Amoco Streamlines Amidst Crude Oil Price Crisis

Strategic Insights -

BP Amoco, the merged giant created just 32 working days prior, is undergoing rapid streamlining amidst plummeting crude oil prices. Chief executive Sir John Browne has announced plans to axe 3,000 jobs by year's end, in addition to the 7,000 already cut, promising £1.55bn in savings. Despite this, the company's shares have fallen 16 1/2p to 840p.

Key Takeaways:

  • BP Amoco is cutting 3,000 jobs by year's end, in addition to the 7,000 already cut, with £1.55bn in savings expected.
  • The company's shares have fallen 16 1/2p to 840p despite the job cuts and savings plan.
  • Chief executive Sir John Browne has cut the budgeted oil price from $16 per barrel to $14 long-term and $10 for the coming year.
  • North Sea crude prices have dropped to $9.80, with OPEC countries increasing production instead of cutting back.
  • Replacement cost profits before exceptionals for 1998 fell 34% to $4.5bn (£2.75bn).
  • BP Amoco is writing off £122m from troubled Russian investment Sidanco.
  • The company will sell offices, slash capital spending by 30%, and prioritize large new field development.
  • Growth will continue in the long-term, according to Sir John Browne, despite the current challenges.

Statistics:

  • £1.55bn: savings expected from cutting 10,000 jobs.
  • 16 1/2p: share price fall.
  • 840p: current share price.
  • $16: original budgeted oil price per barrel.
  • $14: new long-term budgeted oil price per barrel.
  • $10: budgeted oil price per barrel for the coming year.
  • $9.80: North Sea crude price.
  • 34%: fall in replacement cost profits before exceptionals for 1998.
  • £2.75bn: replacement cost profits before exceptionals for 1998.
  • £122m: write-off from troubled Russian investment Sidanco.
  • 30%: cut in capital spending.

Sources:

  • "BP Amoco Streamlines Amidst Crude Oil Price Crisis" - The Times, [ exact source date not provided ].
  • Report cited in The Times article, [ exact source not provided ].