BP announced on Thursday that it will reduce its global workforce by over 5% as part of CEO Murray Auchincloss’ strategy to cut costs and restore investor confidence in the energy company.
Key Highlights:
Job Cuts Overview:
Approximately 4,700 employees and 3,000 contractor positions will be eliminated this year.
The announcement was made in an internal memo reviewed by Reuters.
Stock Market Response:
Following the announcement, BP shares rose by 1% as of 1200 GMT.
Cost Reduction Goals:
Auchincloss previously stated his intention to cut costs by at least $2 billion by the end of 2026 to enhance returns and address investor concerns regarding BP’s energy transition strategy.
Background Context:
The job cuts come in the wake of the abrupt resignation of Auchincloss’ predecessor, Bernard Looney, in September 2023, due to undisclosed relationships with employees.
Division Reviews:
The cuts are a result of comprehensive reviews across all divisions of BP, which currently employs around 90,000 people.
Specifics regarding the distribution of cuts were not disclosed, but an internal memo indicated that around 1,100 roles may be eliminated in the technology division, with some work shifting from the UK and U.S. to Hungary, India, and Malaysia.
Market Performance:
BP shares have lagged behind many competitors over the past year, declining by over 5%, while rivals like Shell and Exxon Mobil have seen gains of 5.5% and 14%, respectively.
Future Strategy:
Auchincloss is expected to outline his new strategy during an investor day on February 26. This strategy appears to pivot away from the previous focus on reducing oil and gas operations.
Collaborations and Initiatives:
Recently, BP and Japanese power generator JERA agreed to collaborate on one of the world’s largest offshore wind operations, indicating a shift in focus towards renewable energy despite the workforce reductions.
Upcoming Financial Reports:
BP will release its fourth-quarter and full-year results on February 11.