Adjustments ahead for oil companies and contractors as oil price gloom persists

The severe beating taken by oil companies in the face of the decline in the price of oil has left oilfield service companies nervous about the impact. Andrew McBarnet reviews oil company policies in this crisis environment and reports on the anticipated impact on upstream operations and in particular the seismic industry. That chilling maxim that things have to get worse before they can get better proved numbingly true last month when BP Amoco announced their fourth quarter and annual results. Most analysts agreed that the BP Amoco results in themselves were better than their peer companies, which have invariably been reporting major plunges in earnings and in some cases losses. The bald figures, the first for the merged company, showed fourth quarter revenues down to US$19.6 billion compared with $26.8 billion in 1997, full year revenues were down to $83.7 billion from $108.5 billion with profit 34% down on the previous year at $4.65 billion (after exceptional items). The kicker was in the remarks from Sir John Browne, chief executive of BP Amoco, describing the companyís strategy for 1999. He said the company expected to take a restructuring charge of some $1.5 billion mainly to cover the severance and associated costs of the 7000 job losses already announced and the further 3000 likely over the remainder of the year. In other words, the cutbacks announced at the time of the BP Amoco merger last August were not the full story.