BP has announced it will lay off around 4,700 employees, which is more than 5% of its workforce, as Chief Executive Murray Auchincloss looks to cut costs and improve the company’s underperforming stock price. The oil giant is also reducing its reliance on contractors by cutting 3,000 positions this year, with many already let go, according to a memo sent to staff on Thursday.
In his memo, Auchincloss highlighted that BP is making “strong progress” in transforming into a “simpler, more focused, higher-value company.” Taking on the role of permanent CEO just a year ago, Auchincloss has been under pressure from investors following several disappointing quarters.
He initially stepped in as acting CEO in September 2023 after the departure of Bernard Looney. Last year, he laid out a two-year plan aimed at saving $2 billion in costs, with BP facing cash costs of $42 billion in 2023.
Auchincloss mentioned that BP has “stopped or paused 30 projects since June” to better concentrate on its core activities and is looking to expand in lower-cost regions, particularly in India. The company recently opened a new technical center in Pune, which employs 400 people and focuses on engineering and data services.
“We have a unique opportunity to grow value during the energy transition, but we must continuously improve our competitiveness and stay in tune with our customers and society,” Auchincloss stated.
On Thursday, BP shares saw a 1.4% increase, though they have dropped 5% since Auchincloss took on the CEO role permanently. Comparatively, BP’s stock performance has lagged behind that of competitors like Shell, ExxonMobil, and Chevron.
The company’s workforce now totals about 90,000 employees, with around 20,000 recruited following the acquisition of nearly 300 TravelCenters of America filling stations last year. Additionally, BP has expanded its operations by fully acquiring its joint ventures in the solar and biofuels sectors.
In recent years, former CEO Looney initiated a plan to significantly reduce BP’s oil and gas output by 2030 and pivot towards renewable energy ventures. Despite facing challenges in the renewables market, Auchincloss has thus far adhered to this strategy but is under pressure to clarify BP’s future direction regarding its fossil fuel and renewable energy split.
This week, BP postponed an investor event planned for February, allowing Auchincloss time to recover from a scheduled medical procedure. The company is set to release its fourth-quarter earnings on February 11, although analysts have recently downgraded their profit expectations for that period, citing weaker-than-anticipated trading conditions.