BP to cut 10,000 jobs due to weak oil prices, outlook
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Oil prices may be recovering but the price crash in March and ongoing demand slump continues to impact the sector, with behemoth BP moving to cut about 15 per cent of its workforce.
The move comes at the end of its three-month freeze on redundancies.
“We will now begin a process that will see close to 10,000 people leaving BP — most by the end of this year,” chief executive officer Bernard Looney said.
“The majority of people affected will be in office-based jobs. We are protecting the frontline of the company and, as always, prioritising safe and reliable operations.”
The broader economic picture and the supermajor’s current financial position just reaffirmed BP’s need to reinvent itself as a leaner, faster-moving and lower carbon company, Looney said — a process which the company had started well before the COVID-19 pandemic.
The West Texas Intermediate (WTI) crude benchmark rose 49 per cent to $US38.51 over the last month, but Morgan Stanley warns that prices could have risen too fast too soon, and were at risk of falling due to fragile demand.
Reuters quoted the investment bank as saying that the rally in recent weeks “appears mostly supply- rather than demand-driven, and it is questionable how strong refinery runs can increase against this backdrop”.
It added that global oil consumption is unlikely to return to the levels it reached before the pandemic until late next year.
OPEC and other oil producers including Russia have agreed to extend the 9.7 million barrel per day production cut by one month through the end of July as previously forecast.
US shale oil producers have already started turning the taps back on with Rystad Energy estimating that more than 300,000 barrels per day of shut-in production has come back online.
However, Pioneer Natural Resources chief executive officer Sheffield deflected concerns that US oil production would rebound quickly, saying the sector was focusing on returning cash to shareholders rather than growth.
“I see no change at $40. We need to get up to $45 to $50 before you see people start adding rigs and add frack fleets,” he told Bloomberg.
This could also lead to a decline in overall US production due to the sharp decline in shale well production in the first years of output.
Byron Energy (ASX:BYE) has started the installation of the production platform at its SM58 G1 well offshore Louisiana.
This will be followed by the installation of oil and gas pipelines in early July and the arrival of a rig to complete the well for production.
Drilling of SM58 G1 was completed in early October 2019, intersecting 301 feet of net pay in the Upper O Sands while mud log data indicated that total hydrocarbon bearing interval of between 180 and 250 feet had been intersected in the Lower O section.
Meanwhile, Strike Energy (ASX:STX) has completed the reprocessing of historical 2D seismic data that has increased its confidence that valuable Permian-aged sequences are present in its wholly-owned permits south of EP469, which hosts its West Erregulla discovery with Warrego Energy (ASX:WGO).
The confirmation of a four-way dip closure over the greater South Erregulla structure, increased confidence in a sealing updip of the northwest arm of the structure and connectivity to West Erregulla supports the company’s confidence in finding an equivalent trap-seal combination that is likely to host a conventional hydrocarbon reservoir.
Strike has also received final 3D seismic data over the Walyering prospect that indicates the presence of a high confidence wet gas accumulation updip of the Walyering-4 well.