Oil giant BP reports largest annual loss for 20 years

Oil Prices Drag BP to Worst Annual Loss

BP posted its largest annual loss for at least 20 years and revealed another 3,000 job losses as it continued to count the cost of plunging oil prices.

The blue chip giant slumped into the red by 5.2 billion US dollars (£3.6 billion) in 2015, surpassing even the mammoth losses seen in the wake of the Deepwater Horizon explosion and oil spill in the Gulf of Mexico in 2010.

It said it will axe another 3,000 jobs worldwide in its downstream business - including refining, marketing and distribution - by the end of 2017, on top of the 4,000 cuts announced last year under a swingeing overhaul to slash costs.

BP's shares dived by 8%, sparking losses throughout the sector on London's FTSE 100 Index as oil prices also came under pressure once more.

Rival Royal Dutch Shell, which reportsits annual results on Thursday, fell more than 3%.

The annual loss at BP compared with profits of 8.1 billion US dollars (£5.6 billion) in 2014, and marks its worst for more than 20 years as the collapse in the cost of crude has reached levels not seen since the 1986 oil price crash.

BP posted losses of 2.2 billion US dollars (£1.5 billion) for the fourth quarter alone.

On an underlying basis, replacement cost profits more than halved - down 51% to 5.91 billion US dollars (£4.1 billion) in 2015.

In the fourth quarter, BP said underlying profits dropped to 196 million US dollars (£136 million) from 2.2 billion US dollars (£1.5 billion) a year earlier after its upstream business - covering exploration, drilling and well operations - saw losses of 728 million US dollars (£506 million).

The group added that hefty restructuring charges of 450 million US dollars (£313 million) also pushed the group into the red at the end of the year.

It also took another 12 billion US dollar (£8.3 billion) hit for the Gulf of Mexico oil spill, taking its total bill for the tragedy - which claimed 11 lives - to 55.5 billion US dollars (£38.7 billion).

But despite the losses, BP - a mainstay of UK pension funds - announced dividend payouts would remain unchanged at 10 cents a share for the fourth quarter.

Bob Dudley, BP group chief executive, said: "We are continuing to move rapidly to adapt and rebalance BP for the changing environment."

The group added that oil prices are expected to remain "challenging".

BP's additional job cuts take its total cull to 11,000 since the start of 2015, with the group having axed 4,000 last year and planning another 7,000 over the next two years.

It said the latest cuts are known internally and would impact across the board in the downstream arm.

BP has sold off 10 billion US dollars (£7 billion) of assets, slashing annual costs by 3.4 billion US dollars (£2.4 billion), last year.

It aims to see annual costs drop by close to 7 billion US dollars (£4.9 billion) by 2017, while it will offload up to another 5 billion US dollars (£3.5 billion) of assets over the year ahead.