BP Plc pegs restructuring charges at $1 bn

BP Plc has projected around $1 billion of restructuring charges through next year as it overhauls operations in the backdrop of crashing oil prices, Bloomberg reported.

''The simplification work we have already done is serving us well as we face the tougher external environment,'' chief executive officer Bob Dudley said in a statement before briefing analysts on exploration and production plans. ''We continue to seek opportunities to eliminate duplication and stop unnecessary activity that is not fully aligned with the group's strategy.''

According to Robert Wine, a BP spokesperson, who spoke over  phone,  the non-operating charges were mainly on account of redundancy payments and building costs in departments such as human resources and information technology.

They would be incurred over five quarters including the current one, with further details given during each of the quarterly results, according to a statement by the company.

BP, Europe's third-biggest oil company by market value, is not alone in taking cost reduction measures. Royal Dutch Shell Plc and Total SA had cut budgets and offloaded operations with margins under squeeze from the 40 per cent drop in prices since June.

In October, the company said, about $1 billion to $2 billion may be cut from the $24 billion to $26 billion of planned capital expenditure in 2015.

According to the UK company, as part of its upstream and downstream activities simplification programme, it expected to incur the charges over the next five quarters, including the current quarter, Reuters reported.

BP added, considering the current outlook for oil prices, it would also review its capital expenditure plans for 2015.

According to the group's statement, it had a strong balance sheet, with historically low gearing of 15 per cent at the end of the third quarter of 2014, which provided time and flexibility to adjust to changes in the environment, including the oil price.