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Business Week: BP’s True Operating Problem: Readers Report

6 August 2007

I disagree with your conclusion regarding possible job cuts in pursuit of enhancing BP’s efficiency (“Refilling BP’s Tank,” Global Business, July 23). Benchmarking BP’s stats on revenue, production, and proved reserves per person against those for its rivals (ExxonMobil (XOM ) and Shell (RDS )), I found that BP performs in line with or better than the average, surpassing Shell on every metric except for revenue per person.

During a term project at business school, I found that the primary problem was rooted in the firm’s impaired execution skills. BP’s ability to execute the projects and deliver hydrocarbons to the market still lacks perfection. Examples of failed execution include delays in starting Thunder Horse platform, and an explosion at a Houston refinery facility. This addresses BP’s lower valuation vs. ExxonMobil. With less than sure access to new reserves as well as inflated costs, it is going to be more difficult for BP to maintain margins on its upstream business.

Farid Dadashev
New York

http://www.businessweek.com/magazine/content/07_32/c4045022.htm?chan=search

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