Tuesday 6 April 2021 10:39 am

BP to hit $35bn net debt target a year early after flurry of disposals

BP expects to reach its $35bn net debt target in the first quarter of 2021, the oil major said this morning.

The forecast follows earlier-than-expected proceeds from disposals and a “very strong quarter”.

The company, which had a debt pile of $39bn at the end of 2020, had previously expected to reduce its debt to $35bn by as late as 2022.

BP plans to start share buybacks once it reaches its debt target, for which it will provide an update during its first quarter results on 27 April.

The London-based firm said it expects sale proceeds in 2021 to be at the top of its current $4bn to $6bn range.

It has already raised $4.7bn from disposals so far this year, including $2.4bn from the sale of a 20 per cent stake in a gas block in Oman.

Mark Nelson, analyst at Killik & Co, said: “This is a positive announcement from BP signalling strong performance in the first quarter of the year, the earlier-than-expected start of cash returns to shareholders, while at the same time providing evidence that it can deliver on its various strategic initiatives.”

Shares in the firm rose 3.1 per cent this morning. 

The debt reduction plan is part of the FTSE blue chip’s attempts to stabilise its finances after the drama of the coronavirus pandemic.

The oil major plunged to a $5.7bn loss last year, its first in a decade, as the pandemic took a heavy toll on oil demand.