Energy group BP said that it has set itself up for delivering on its promise of buying back shares as the company said that in the first quarter of the current year, it had likely brought down its net debt and had already hit its target of $35 billion that it had set for the current year.
“This is a result of earlier than anticipated delivery of disposal proceeds combined with very strong business performance during the first quarter,” company’s Chief Executive Bernard Looney said in a statement.
According to the previously announced plans of the company that is listed at the London Stock Exchange, it had set a target of achieving that target of net debt by about the fourth quarter of the current year or by the first quarter of next year. This announcement pushed up the shares of the company at London by as much as 3 per cent.
After dropping by as much as 45 per cent last year because of the pandemic induced slump in oil demand, the shares of the company are currently up by about 16 per cent so far this year.
BP reported a huge loss of $5.7 billion last year while piling up a similarly huge debt of $39 billion by the close of last year.
The company had expected that there would be an increase in the bet debt by the first half of the current year because of the company needing to make several pay outs that are due by then.
But the company managed to generate about $4.7 billion from sale proceeds during the first quarter of the current year itself.
The company aims to sell $25 billion of assets by 2025 under the plan of Looney to shift the focus of the company from being an oil major to making more inroads into the low carbon energy sector.
In February, the company had announced its plans of share buybacks as soon as it reaches its net debt target. In its latest statement, the company has said that an update on its share buyback plans would be provided during the announcement of its first quarter results later this month.
“We estimate that at $60/bbl oil prices, the company will be buying back around $2 billion – $2.5 billion in shares annually,” Berenberg analyst Henry Tarr wrote in a note.
More trading, the price environment and resilient operations had driven the good performance of the company in the first quarter of 2021, BP also said. The global price of Brent crude increased by as much as 22.6 per cent during the first quarter because of increased optimism about the revival of demand for oil, following the global roll out of Covid-19 vaccine since the beginning of the year.
BP said in the statement that it expects its sale proceeds to be at the top end of its existing $4 billion to $6 billion range for the entire year of 2021.
(Adapted from TheChronicleHerald.com)