BP hits $ 35 billion net debt target well ahead of schedule

BP signage can be seen at a petrol station near Brighton, UK on January 30, 2021. REUTERS / Toby Melville / File Photo

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  • BP previously planned to meet its debt target in Q4 or Q1 2022
  • CEO Says Proceeds of Sale, Strong First Quarter Help Reduce Debt
  • BP share increases up to 3% in early trades

April 6 (Reuters) – Energy group BP (BP.L) said on Tuesday that it plans to meet its net debt target of $ 35 billion in the first quarter of this year, ahead of schedule and open the way to keep his promise to buy back shares.

“This is the result of an earlier than expected delivery of the proceeds of the divestiture combined with very good commercial performance during the first quarter,” said Managing Director Bernard Looney in a statement.

Shares of the London-based company, which previously expected to hit the net debt target around the fourth quarter of 2021 or the first quarter of 2022, rose 3% to 299 pence in early trades on the announces that she would hit the target sooner.

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BP shares are now up about 16% this year, having lost 45% in 2020 as the coronavirus pandemic hit demand for oil.

BP plunged into a $ 5.7 billion in losses last year and had $ 39 billion in debt at the end of 2020. He expected the debt level to increase in the first half of 2021 due to multiple payments due.

However, in the first quarter, it generated around $ 4.7 billion from the sale proceeds.

As part of Looney’s plan to refocus the oil major on low-carbon energy investments, BP aims to sell $ 25 billion in assets by 2025.

BP said in February that it plans to initiate share buybacks once it hits its debt target. The company said on Tuesday it would provide an update on share buybacks in its first quarter results on April 27.

“We estimate that at an oil price of $ 60 a barrel, the company will buy back about $ 2 billion to $ 2.5 billion of shares per year,” Berenberg analyst Henry Tarr wrote in a note.

BP also said its performance in the first quarter of 2021 was driven by trade, the pricing environment and resilient operations.

Brent crude rose 22.6% in the quarter on optimism about a recovery in demand for oil following the rollout of COVID-19 vaccines since the start of the year.

BP said on Tuesday that it expects the proceeds from the sale in 2021 to be at the top of its current range of $ 4 billion to $ 6 billion.

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Report by Yadarisa Shabong in Bangalore; Editing by Shounak Dasgupta

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Ann J. Cox