High oil prices and the Forward Agenda of reducing complexity and efficiency improvements are paying off at oil company BP. Today’s results for the first half of 2008 showed profits in the second quarter of £4.74 billion. Chief executive Tony Hayward cited the Forward Agenda, which includes an overhaul of IT systems within BP, as being a primary reason for the profits.
In February Hayward told investors that BP had a three point plan to improve competitiveness which consisted of: restore revenues, reducing complexity and costs and acquiring new assets. The Forward Agenda is at the core of the second point of competitive improvements and Hayward was happy with its results. “As we have previously indicated, our aim is to reduce corporate overheads by between 15 and 20 per cent. The programme of simplifying our business model is well underway. I would expect to see the financial benefits of these changes begin to feed through into our results towards the end of this year and into 2009.”
A spokesperson for BP told CIO that a programme of standardisation was being carried out across many parts of the BP IT infrastructure to reduce costs, complexity and duplication. The company is also looking to adopt more off-the-shelf applications to replace legacy bespoke systems which dominate the global oil drilling and refining company.
Looking at the whole company Hayward said oil production was up by six per cent in the first half of 2008 at 3.83 million barrels a day.
Underlying profit for the company was $8.6bn, an increase of 56 per cent over the same period last year and operating cash flow was 10 per cent higher than a year ago at $6.7bn, Byron Grote, the chief financial officer of BP reported.
“The world’s economy is weakening and the global political situation is delicate. The oil price continues to be high and volatile,” Hayward said. “In summary, the first half of 2008 has seen BP make satisfactory progress.”