Tony Hayward’s era at BP “is off to an encouraging start”, said Alex Brummer in the Daily Mail. Last year’s production and refining problems meant the oil giant’s profits fell 22% to $17.3bn – against $28bn for Shell and $40bn for ExxonMobil – but a 31% hike in the dividend reveals confidence in the future, while cutting 5,000 managerial jobs will save £760m in annual costs.
Most pleasing to “oil industry aficionados” is that production levels have started to recover and BP is confident that oil now coming on stream in Russia, Azerbaijan, Egypt and Angola can replace existing annual output.
Is this optimism justified?
Unlike predecessor Lord Browne, Hayward expects the price of Brent crude to stay above $60 a barrel, rather than $40, over the next five years, said Lex in the FT. It’s a figure “gaining currency across the industry”, so raising price assumptions – which justifies investment in new projects – “looks sensible”.
However, while Hayward “has been vocal about cutting fat”, he hasn’t downsized that much since taking the helm, said Cyrus Sanati on Breakingviews. He should take a leaf from Exxon and “start chopping, rather than sniping, at BP’s bloated workforce.” But it’s a “tough balancing act”, said Damian Reece in The Daily Telegraph. Too much talk of margin-improving cost cuts and regulators “will start worrying about safety being compromised”.
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