Tony Hayward, BP’s fresh-faced CEO, is preparing staff for a far-reaching shake-up of the oil company as he delivered a blunt warning that third-quarter revenues would be “dreadful”.

Hayward told a staff meeting in Houston he would be announcing a streamlining of the company’s organisation next month. He said that BP’s financial performance was at its lowest since the crisis of 1992-93.

Mr Hayward’s prediction of a “dreadful” third quarter comes as analysts prepare for downbeat results in spite of record high oil prices. BP has been suffering from well-publicised problems including a squeeze on refining margins and falling US natural gas prices, as well as operational hold-ups such as damage to a North Sea gas pipeline.

Mr Hayward blamed BP’s under-performance partly on excessive complexity, adding that its fragmented structure must be simplified. He plans to consolidate it into larger operations.

“There is massive duplication and lack of clarity of who does what,” Mr Hayward was quoted as saying. “We will reduce the number of organisation units.” He added that BP needed to change its internal culture and become less risk-averse. “Assurance is killing us,” he said.