BP expects to hit $35bn net debt target for Q1

BP believes it reached its $35bn net debt target for the first quarter of this year, having brought it down from $38.9bn at the end of last year, the UK major reported on April 6.

BP is due to publish its results for the three-month period on April 27. CEO Bernard Looney, who set debt reduction as a cornerstone of the company's strategy last year, said he expected the target to be reached thanks to disposal proceeds and "strong" trading performance.

The oil and gas producer has received $4.7bn in disposal proceeds over the past three months, including $2.4bn from the sale of a 20% interest in Oman's Block 61 to Thailand's PTTEP and a $1bn final payment from the divestment of its petrochemicals business to the UK's Ineos.

Having delivered on its net debt goal, the UK major's plan is to return at least 60% of surplus cash flow to shareholders through share buybacks. It will provide an update on its buyback scheme when it publishes its first-quarter results.

BP now expects to rake in close to $6bn in disposal proceeds in 2021. The company has agreed or completed deals worth $14.7bn for divestments between the second half of 2020 and 2025, of which $10bn has been received. Its target is to raise $25bn over the period.

BP swung to a net loss of $5.7bn on weaker oil and gas prices in 2020, after earning $10bn in profits in the previous year. In a sign of the times, Looney received only £1.74mn ($2.4mn) in remuneration in the year, and bonuses for executive directors were considered "unaffordable" given the difficult market conditions in the wake of the pandemic.