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THE NEW YORK TIMES: BP Misses Estimates and Plans More Job Cuts

By JULIA WERDIGIER
Published: February 6, 2008

LONDON — BP, the British oil giant, announced on Tuesday that it would cut an additional 5,000 jobs by the middle of next year, part of a plan by the chief executive, Anthony B. Hayward, to slim management and make the company more efficient.

The company also announced a fourth-quarter profit that missed analyst estimates, but said it would raise its dividend 31 percent, citing an “increasingly robust” outlook.

Profit in the last three months of 2007 rose 53 percent, to $4.4 billion, from $2.88 billion, in the period a year earlier. Excluding gains or losses from holding inventories or one-time items, profit was $4 billion, which was about 10 percent less than analysts expected.

Still, BP said overall oil and gas production was expected to grow this year, justifying the increase in the dividend, to 13.5 cents a share. “The rise reflected the company’s increasingly robust view of the future and greater confidence in its ability to deliver sustained dividend income to shareholders,” Mr. Hayward said.

Mr. Hayward, who took over from John Browne last year, is trying to improve performance and efficiency by streamlining operations, removing management layers and cutting jobs. Some investors hope Mr. Hayward can help BP leave behind its recent past, which is marred by a fatal explosion at a Texas refinery in 2005 and leaks of crude oil from pipelines in Alaska.

Part of that history lingered in BP’s fourth-quarter results, which were hurt as its refining and marketing business suffered from poor reliability in some American refineries.

BP said most of the additional job cuts would be at major corporate offices, like the London headquarters. The cuts will come on top of 9,500 jobs that are moving off BP’s payroll as part of a plan announced in November to sell gasoline stations in the United States. Combined, the job cuts represent about 15 percent of BP’s work force.

BP’s shares edged higher in London, but fell in New York to $63.48, down 1.4 percent.

The company said that its refinery in Texas City, Tex., would increase production to almost full capacity by the middle of the year.

BP is still waiting for a final ruling on an agreed $50 million settlement deal for the 2005 plant explosion, which killed 15 and injured more than 170. A federal judge on Monday gave the victims and their lawyers two weeks to file briefs arguing why the settlement was too low.

Like other oil companies, BP profited from the rise of oil prices, but needed to spend more to find oil. Like BP, Royal Dutch Shell’s fourth-quarter profit missed analyst estimates as lower production and declining refining margins — the money made from turning crude oil into gasoline or other fuels — hurt earnings.

But Mr. Hayward said the company made progress in bringing new oil and gas fields online. BP, which sees oil at $60 to $90 a barrel over the coming years, said it expected extraction to increase to more than 4 million barrels of oil equivalent a day in 2009 and to about 4.3 million barrels a day in 2012.

BP plans to increase spending by as much as $3 billion, to $22 billion this year, to find more oil and said that access to new sources of oil and gas in Oman, Libya and Canada was expected to improve its business.

In a deal in December that was a turnaround from BP’s previous strategy, Mr. Hayward agreed to form a joint venture with Husky Energy to link a BP refinery in Ohio with Husky’s Sunrise oil sands project in Alberta.

Under Mr. Browne, who considered oil sands as too costly and environmentally challenging, BP was the only major oil company without holdings in oil sands, the second-largest conventional oil reserves after Saudi Arabia.

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