( AP ) -- BP PLC's massive restructuring plan sent its shares to a 52-week high Friday in what appears to be investors' willingness to absorb short-term losses for long-term gains.
The oil giant's stock rose $3.47, or 4.8 percent, to $75.29 during afternoon trading in higher-than-average volume. That level tops its 52-week high of $75.25. Few other integrated oil companies made gains above 1 percent.
Chief Executive Tony Hayward outlined a plan on Thursday to simplify BP's organizational structure, boost revenue and cut its head office workforce by about 25 percent to get rid of overlaps.
BP's shares and operational performance have lagged its peers in recent years, amid a sequence of safety and operational failures that were followed by the abrupt departure last year of its long-time CEO, John Browne.
The company lost about $5 billion in revenue over the last 30 months due to shutdowns at refineries caused by a deadly explosion, fires at Alaskan wells and crude oil and natural gas production delays, according to Oppenheimer & Co. analyst Fadel Gheit. And that doesn't include the billions worth of settlements the company has paid out resulting from related injuries and deaths.
Such problems have caused BP's stock to trail its peers by wide margins over the last few years. Its shares were up about 6 percent this year, compared with 15 percent for its rivals and 10 percent for the S& P 500, as of Thursday's close.
"It's really simple: BP has lagged its peers for the last two years by about 20 percent, and that is because of fears of mishaps and misfortune that plagued the operations," Gheit said in an interview Friday. "Tony Hayward inherited a company in flux that was at the bottom of the heap and had a lot of problems on hand," he added.
But after conducting a months-long review of operations, Hayward is determined to close BP's performance gap with competitors. A culture shift is at the heart of his plan.
"Our problem is not about the strategy itself but about our execution of it," the CEO said in a statement yesterday. He added that the company has been inconsistent and its organization had grown too complex.
"At the root of all this is a need to change our behaviors," Hayward said.
Most expect disappointing results from BP in the third quarter, after Hayward warned of "dreadful" performance last month. However, analysts anticipate improvements next year as its repaired Texas City and Whiting refineries return to full capacity and production begins at new sites.
However, the day before BP outlined its plan, it reported the fifth fire in two months in the Prudhoe Bay field it operates. Though Saturday's fire was small and extinguished quickly, BP said it would likely cause a production cut of about 30,000 barrels a day.