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BP Amoco boosts cost cuts
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July 15, 1999: 6:33 a.m. ET
Oil company's shares at record high after outlining $10B asset sales
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LONDON (CNNfn) - BP Amoco (BPA) Thursday outlined plans for $10 billion in asset sales and raised its cost-cutting targets despite the recent spike in oil prices, as supply reductions start to affect the company.
The statement caused shares in BP Amoco to climb 2 percent to 1,284 pence, the highest level since BP's merger with Amoco last year. The company also announced plans for a share split.
BP Amoco, whose planned $26 billion merger with Arco (ARC) is being investigated by competition officials in Europe and the United States, said it aims to cut $4 billion from its annual cost base by the end of 2001. It also plans to boost capital spending to $26 billion over the next three years.
The company divestment program includes its Canadian oil interests and its stake in U.S.-based Altura Energy, as well as $3 billion in its downstream business after a strategic decision to cut back refining capacity. Around $2 billion in cuts is expected to be generated this year.
John Browne, the company's chief executive, said BP Amoco would continue to plan on the basis of oil at $11 a barrel, and noted production costs have already been cut by 5 percent since 1989. The aim is to shave a further $2 a barrel from costs.
He also said new oil discoveries could see production climb by as much as 8 percent a year from 2001.
The company's shares have climbed steadily since the Arco deal was announced in April, buoyed by the near-doubling in crude oil prices from a low of just over $10 a barrel to their present level above $18. Oil analysts believe the price could head toward $20 by the end of the year. 
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BP Amoco
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