BP reaches US$35 billion net debt target
Published by Nicholas Woodroof,
"We are pleased to announce that we now expect to have reached our US$35 billion net debt target during the first quarter 2021. This is a result of earlier than anticipated delivery of disposal proceeds combined with very strong business performance during the first quarter. We look forward to updating the market at our first quarter results, including further information on share buybacks," said Bernard Looney, CEO.
During the first quarter BP has received around US$4.7 billion of disposal proceeds. This includes approximately:
- US$2.4 billion from the completion of the sale of a 20% interest in Oman’s Block 61;
- US$1 billion as the final payment from the sale of BP’s global petrochemicals business to INEOS;
- US$0.7 billion from the sale of a 49% interest in a controlled affiliate holding certain refined product and crude logistics assets onshore US; and
- US$0.4 billion from the sale of an interest in Palantir.
BP now expects disposal proceeds in 2021 to be at the top end of the previously announced US$4-6 billion range.
BP’s target of US$25 billion of disposal proceeds between 2H20 and 2025 is now underpinned by agreed or completed transactions of around US$14.7 billion with approximately US$10 billion of proceeds received.
BP’s net debt at the end 4Q20 was US$38.9 billion.
As disclosed at the time of the company's 4Q20 results, net debt was expected to increase in 1H21, driven by: severance payments spread across both quarters; the payment to Equinor following completion of the US offshore wind joint venture which occurred during the first quarter; and the ~US$1.2 billion pre-tax annual Gulf of Mexico oil spill payment scheduled for the second quarter.
Reflecting the delivery of disposal proceeds and the very strong business performance in 1Q21, driven by trading, the price environment and resilient operations, BP now expects to have reached its net debt target of US$35 billion during 1Q21.
On reaching this net debt target, BP is committed to returning at least 60% of surplus cash flow to shareholders by way of share buybacks, subject to maintaining a strong investment grade credit rating.
Further information, including in relation to share buybacks, will be provided with BP’s 1Q21 results, expected to be reported on 27 April.
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