Oil and gas giant BP Plc (NYSE:BP) is reducing its workforce by 4,700 positions, which accounts for 5% of its employees, and eliminating more than 3,000 contractor jobs.

The oil giant aims to streamline its operations and reduce costs as part of an ongoing initiative to cut $2 billion by the end of 2026.

CEO Murray Auchincloss communicated these cuts to staff as part of the company’s ongoing cost-reduction efforts.

Since June 2024, BP suspended or paused 30 projects to concentrate on its most lucrative initiatives, according to a report from Bloomberg.

BP employs approximately 90,000 people worldwide, and while the cuts will affect several regions, specific details on country-level job losses have not been disclosed, reported BBC.

The restructuring comes under the leadership of CEO Auchincloss, who took the helm a year ago.

The CEO, in his memo to the employees, stated that the company's pivot toward more digital capabilities, including artificial intelligence in engineering and marketing, would boost its operations.

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BP's decision to scale back its oil and gas production reduction targets for 2030 has been controversial, with some of the investors supporting the decision.

In 2020, BP set a goal to reduce its oil and gas production by 40% by 2030. The goal was abandoned in October 2024.

Earlier this week, BP said production in its fiscal fourth quarter is expected to be lower than in the third quarter. 

For the fourth quarter, the company anticipates a decline in upstream production compared to the previous quarter, with reductions in both oil and gas & low-carbon energy output.

In the gas and low-carbon energy segment, realizations are expected to improve by $0.1 to $0.2 billion, driven by fluctuations in non-Henry Hub natural gas prices.

In the oil production and operations sector, BP predicts a negative impact on realizations of $0.2 billion to $0.4 billion, primarily due to price lags, especially in the Gulf of Mexico and UAE.

The company’s operating revenues for the third quarter came in at $47.254 billion, missing the consensus of $52.557 billion.

Investors can gain exposure to the stock via Texas Capital Texas Oil Index ETF (NYSE:OILT) and Amplify Natural Resources Dividend Income ETF (NYSE:NDIV).

BP Price Action: BP shares are trading higher by 1.55% at $31.79 at publication Thursday.

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