BP reports worst annual loss in 20 years

Oil giant BP reported its worst annual loss in 20 years and further restructuring charges as low oil prices continue to weigh on the company.

For 2015 as a whole, the company reported a loss of $6.5 billion. The stock opened down over 5 percent in London trade.

On an underlying basis, fourth quarter replacement cost profit came in at $196 million, well below expectations of $730 million in a poll of analysts provided by the company, and down from $2.2 billion a year earlier.

Replacement cost profit is a common accounting measure to report profits in the oil industry which takes into account the fluctuations in the price of oil. Oil prices are wallowing around a 12-year low of around $33 a barrel for benchmark Brent crude as demand fails to keep pace with a glut in global supply.

BP took $2.6 billion in non-operating post-tax charges in the fourth quarter, primarily related to impairments of upstream assets as well as restructuring charges for the group. Including these charges and other offsetting effects, BP reported a replacement cost loss for the fourth quarter of 2015 of $2.2 billion.

Cumulative restructuring charges from the beginning of the fourth quarter 2014 totaled $1.5 billion by the end of 2015. A further $1.0 billion of restructuring charges are expected to be incurred in 2016, the group said.

Still, it reported a quarterly dividend of 10 cents per ordinary share.

BP oil
Andrey Rudakov | Bloomberg | Getty Images

In its earnings statement, BP said that "despite strong operational performance and growing cost reductions, the lower underlying result was predominantly driven by the impact of steeply lower oil and gas prices on BP's Upstream segment, which reported a pre-tax loss for the quarter. This was partially offset by a strong set of counter-cyclical results from the Downstream segment," it said.

Times were tough for the company when oil dropped to $60 a barrel last year and have only got worse as prices have continued to drop. Like other oil producers, BP is looking to cut exploration projects and costs and in January announced that it was to cut 5 percent of its global workforce.

BP said it aimed to reduce its global oil production, or upstream, headcount by 4,000 to 20,000 as it undergoes a $3.5 billion restructuring program. Its headcount totaled around 80,000 at the end of 2015, it said.

On Tuesday, it said its focus on "cost discipline and increasing efficiency" continues.

- Reuters contributed reporting to this story.