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BP Amoco Cutting 3,000 More Jobs

February 22, 1999
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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 earlier.

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 end-2000.

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 1999."

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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