BP reports 91 percent plunge in 4th quarter earnings

As a result, it is planning even more restructuring of the business, and said it will “reduce the number of staff and contractor roles in the upstream segment by around 4,000 during 2016 and by up to 3,000 from the downstream by the end of 2017”.

BP was the biggest top flight faller, down 7%, or 25.5p, to 241.5p.

“The short term looks hard but shareholders should be encouraged by the fact that a pick-up in prices is expected soon and that BP management are committed to continue paying out current dividend levels”.

Like many of its peers, BP has tapped the debt market in order to plug the gap in income to cover spending and dividend payouts.

Underlying operating cash flow for the year, excluding amounts related to the Gulf of Mexico oil spill, was $20.3 billion, 38 percent lower than $32.8 billion posted in 2014.

After the announcement of disappointing earnings results for the latest quarter, BP repeated a commitment it made last month to cut 4,000 jobs this year in its exploration and production unit.

But the company, a stalwart of many United Kingdom pension funds, maintained its dividend at 7p (10 cents) per share. “Downstream operations become less of a safety net for weak upstream results” for BP and its peers in early 2016, he said.

The company booked $2.6bn in impairment charges for the fourth quarter of the year, causing group underlying replacement cost profit to fall to $196m compared to $2.24bn in during the same period in 2014.

The head of equity research at Hargreaves Lansdown, Steve Clayton, said BP hadn’t blinked on its dividend but it was “playing chicken” with the oil price. Underlying replacement cost profit is analysts’ preferred measure of profitability for companies such as BP as the measure strips out one-off charges. There are few predictions that oil prices will bounce back quickly, with some analysts forecasting they will drop to near $10 a barrel.

The cost of crude slumped below $28 a barrel at one stage last month and has collapsed by more than 70 per cent since a peak of around $115 in the summer of 2014.

BP said its capital spending came to US$18.7 billion in 2015, down from a planned US$24-$26 billion, and it expected 2016 spending to be at the lower end of a US$17-19 billion range.

The surprising move, coming just five years after Dudley took the helm, sparked speculation amongst analysts and observers that the British oil major is laying the groundwork for a succession plan.

The statement added that “controllable cash costs in 2015 were $3.4 billion lower than in 2014 and are on track to be close to $7 billion lower in 2017”.

For the full year, RC loss was $5.1bn, compared with a profit of almost $81.bn a year ago.

BP is still grappling with costs relating to the 2010 Gulf of Mexico disaster.