BP expects to reduce net debt to £25.26 billion sooner than expected

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Apr 6, 2021
  • BP expects to reduce net debt to £25.26 billion sooner than expected.
  • The oil and gas firm valued disposals proceeds at £3.39 billion in Q1.
  • BP shares opened just under 2% up in the stock market on Tuesday.

British Petroleum plc (LON: BP) said on Tuesday that it is likely to hit the milestone of £25.26 billion in net debt well ahead of schedule in Q1 of the ongoing year, attributed to robust financial performance in recent months and disposal proceeds that it received sooner than expected.

British Petroleum shares opened just under 2% up on Tuesday and gained another 2% in the next hour. Including the price action, the stock is now exchanging hands at £3.0 per share. In comparison, it had started the year at £2.54 per share after recovering from a low of £1.96 per share in late October 2020 due to the COVID-19 related disruptions.

BP valued disposals proceeds at £3.39 billion in Q1

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British Petroleum valued proceeds from disposals at £3.39 billion in the first quarter. Once the net debt is reduced to £25.26 billion, the oil major will commit to returning surplus cash (at least 60%) to stockholders via share buybacks – a promise that it made earlier.

Analyst Henry Tarr of Berenberg commented on the news on Tuesday and said:

“We estimate that at $60/bbl oil prices, the company will be buying back around $2 billion – $2.5 billion in shares annually.”

The FTSE 100 listed company had concluded 2020 with £28.07 billion of net debt, which was initially expected to jump further in the first quarter. In separate news from the United Kingdom, Channel 4 said on Monday that the British health regulator might restrict AstraZeneca’s COVID-19 vaccine for younger people.

BP forecasts £4.33 billion of disposals proceeds in 2021

British Petroleum now forecasts disposals proceeds worth close to £4.33 billion in 2021. Chief Executive Bernard Looney is currently committed to shifting the company’s focus to low-carbon energy investment. To that end, the London-based firm targets offloading assets worth £18.04 billion by 2025.

Last year, BP swung to a loss of £4.11 billion as the Coronavirus pandemic wreaked havoc on the global oil industry. The COVID-19 crisis has so far infected more than 4.3 million people in the United Kingdom and caused over 126 thousand deaths. The oil and gas firm, however, swung to profit in the fourth quarter.

British Petroleum performed largely downbeat in the stock market last year with an annual decline of a little under 50%. At the time of writing, the British multinational oil and gas company has a market cap of £80.49 billion.

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