Centrica to Axe Jobs, CAPEX, Output

Centrica plc announced Thursday that it will axe 3,000 employees in 2016 as it seeks to create value in the current low oil price environment.

In addition to workforce cuts, the company’s capital expenditure has been reduced to around £500 million ($715 million) this year. Warning of further reductions, Centrica revealed that it had the flexibility to reduce capital expenditure (CAPEX) even more in the next couple of years if a low oil price remains in place.

Centrica confirmed in its latest financial report that its £750 million ($1.07 billion) cost efficiency program is on track to be completed by 2020. Around £200 million ($286 million) worth of savings is expected to be delivered in 2016 and the company is on track to deliver savings of £500 million per annum by the end of 2018.

The UK company produced 78.6 million barrels of oil equivalent in 2015, which was 1 percent less than 2014’s figure of 79.5 million. Centrica aims to reduce this output considerably in the years ahead, stating in its financial results that it will try to cut its production levels to between 40 and 50 million barrels of oil equivalent per annum.

Centrica Chief Executive Iain Conn commented in a company statement:

“Centrica has delivered a resilient financial performance, with solid 2015 adjusted earnings despite the challenge of falling wholesale oil and gas prices. Operating cash flow has been strong, and with capital discipline this has allowed the group to reduce net debt. In 2016 we expect operating cash flow also to be over £2 billion ($2.86 billion).

“We remain confident that our plans and underlying performance momentum will allow us to more than balance cash flows and deliver at least 3-5 percent per annum underlying operating cash flow growth to 2020, even in the current environment, so underpinning a progressive dividend policy.”