BP slumped to its biggest annual loss last year and announced thousands more job cuts on Tuesday, showing that even one of the nimblest oil producers is struggling in the worst market downturn in over a decade.
The British oil and gas company, which is still grappling with about $55 billion of costs from the oil spill in the Gulf of Mexico in 2010, said it would cut 7,000 jobs by the end of 2017, or nearly 9% of its workforce.
BP said it lost $6.5 billion in 2015 and its fourth-quarter underlying replacement cost profit, which is the company's definition of net income, came in at $196 million, well below analyst expectations of $730 million.
BP shares on Tuesday fell as much as 8.5%, the worst performer on the pan-European FTSEurofirst 300 index.
The company's 2015 loss shows that even its shrink to grow strategy adopted after the Macondo rig explosion in 2010, hailed as the best preparation for a weak oil market, was unable to buffer the impact of the lowest oil prices since 2003.
Should low oil prices prevail, they're a quarter or two away from having to cut the dividend, or divest some more assets, said Jack Allardyce, analyst at Cenkos Securities.
Dividends are considered sacrosanct among most major oil companies but BP's weak results and outlook are likely to put pressure on a company that has had to increase borrowing. BP maintained its 2015 dividend at 10 cents per share.
BP's results are the latest to show the extent large oil companies are struggling following a 70% slide in oil prices since the middle of 2014 that has forced them to cut tens of thousands of jobs and slash spending.
BP's 2015 annual loss was bigger than the overall loss of $4.9 billion it reported in 2010, even though it took a $17.2 billion hit in the second quarter of that year after the explosion in the Gulf of Mexico.
Meanwhile Chevron, the second biggest U.S. producer behind Exxon Mobil, reported its first quarterly loss last week in more than 13 years. Royal Dutch Shell is expected to report a near halving of profits.
BP's poor results came a day after credit ratings agency Standard and Poor's placed the company on the path towards a credit downgrade and lowered Shell's rating.
BP said if the current downturn persists for longer than anticipated, it would be able to reduce its costs further to allow its balance sheet to break even below $60 a barrel.
Should current conditions persist for longer than anticipated, we expect that all the actions we are taking will capture more deflation, Chief Financial Officer Brian Gilvary said in a statement.