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BP’s significant workforce reduction
In a bold move to streamline operations and regain investor trust, BP has announced plans to cut more than 5% of its global workforce. This decision, revealed in an internal memo, will affect approximately 4,700 employees and 3,000 contractor positions from a total workforce of around 90,000.
The cuts come as part of CEO Murray Auchincloss’ strategy to reduce costs and enhance the company’s overall performance.
Leadership challenges and company direction
BP has faced considerable upheaval following the scandalous resignation of former CEO Bernard Looney in September 2023.
Looney’s exit was prompted by revelations regarding undisclosed personal relationships with colleagues, which violated the company’s code of conduct. This incident has left a cloud of uncertainty over BP’s leadership and future direction, pushing Auchincloss to pivot the company back towards traditional oil and gas investments.
Investor pressure and market performance
As BP grapples with its internal challenges, investors are increasingly demanding decisive action. The company’s stock performance has been lackluster, with shares trading at $31.30 as of the last market close, a stark contrast to nearly $150 per share in 2008.
Over the past five years, BP’s stock has plummeted by nearly 20%, leading to a market capitalization of $84.58 billion—less than half that of its competitor Shell. In response to these pressures, Auchincloss has committed to cutting costs by at least $2 billion by the end of 2026, aiming to boost returns and address investor concerns about BP’s energy transition strategy.
Future outlook for BP
With the recent announcement of workforce cuts and a renewed focus on profitability, BP is attempting to navigate through turbulent waters. The company has paused or halted 30 projects since June, prioritizing those with the highest potential returns.
As it seeks to simplify operations and emerge as a more focused entity, the road ahead will require careful management of both internal dynamics and external market pressures. The coming months will be crucial for BP as it strives to stabilize its position in an increasingly competitive energy landscape.
