BP Amoco Cutting 3,000 More Jobs
BP Amoco added another 3,000 to the heap of 7,000 job cuts
already announced in the wake of the merger of British Petroleum
and Amoco and in the midst of depressed oil and gas prices. The
newest job cuts will be worldwide, and it is not yet known how many
will be in the United States. Last week the company also announced
replacement cost operating profit for 1998 of $6,437 million, off
39% from $10,583 in 1997.
BP's $48 billion stock purchase of Amoco was completed at the
end of last year. The latest results reflect a $351 million charge
for merger-related integration costs. For the year, profit after
exceptional items was $4.65 billion, down from $6.97 billion a year
Realized U.S. gas prices for 1998 were $1.80/Mcf, off 18% from
$2.20 in 1997. U.S. gas production also declined to 2,401 MMcf/d
from 2,513 MMcf/d, a decrease of about 4.5%.
CEO Sir John Browne said the company now aims to achieve pre-tax
savings running at an annual rate of $2 billion within the next 12
months - nearly a year ahead of the original target date of
Browne said that, despite a $6 drop in the crude oil price and
the effects of global recession on demand for oil and chemical
products, the company had delivered a post-tax improvement of $500
million in self-help in 1998 and aimed to achieve a further $400
million post-tax this year.
"Taking this self-help, together with the benefits of
accelerated integration, BP Amoco is looking, in around a year from
now, to an improvement in underlying performance of over $2.5
billion pre-tax. Even more important, this is something we aim to
deliver even if prices remain at their current levels through
Speaking at a press conference summary of a company presentation
to financial analysts in London, Browne said the BP-Amoco merger
"takes us a long way to fulfilling many of our strategic ambitions
and provides us with the most powerful platform for growth, even in
a hostile environment. The merger gives us a better hydrocarbon
base, with higher-margin gas. It radically improves our
petrochemicals portfolio and dramatically strengthens our marketing
and refining in the US."
Browne said the company would set out a detailed three-year plan
with new financial targets later in the year, but in the meantime
BP Amoco has embarked on a program to secure the short term and
keep the company on a trajectory of growth.
Joe Fisher, Houston
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