BP Swings to 4Q Profit But Misses Consensus Estimates -- Update
--BP achieved a profit in the fourth quarter, helped by the
disposal of its petrochemicals business
--Net debt was reduced to $39 billion
--The oil major continues to expect to reach its $35 billion
debt target in late 2021 or early 2022
By Jaime Llinares Taboada
BP PLC said Tuesday that it swung to a profit in the fourth
quarter of 2020 and forecast that it will reach its deleveraging
target in the fourth quarter of 2021 or the first quarter of
The British oil major made a net profit of $1.36 billion in the
three months to Dec. 31, compared with a net loss of $450 million
in the third quarter. The company's financial performance benefited
from the $2.3 billion sale of its petrochemicals business.
Its underlying replacement cost profit increased to $115 million
from $86 million quarter-on-quarter, but was below the
company-compiled market consensus of $370 million, based on 26
brokers' estimates. The metric is similar to the net profit figure
that U.S. oil companies use but strips out one-off items.
The full-year result was a loss of $5.7 billion compared with a
$10 billion profit in 2019, driven by lower oil and gas prices,
significant exploration write-offs and refining margins and
BP said operating cash flow for the quarter, excluding Gulf of
Mexico oil spill payments of $0.1 billion, was $2.4 billion.
Compared with the third quarter, this reflected the significant
impact of lower marketing volumes in downstream and a significantly
weaker contribution from gas marketing and trading.
At year end net debt was $39 billion, down $1.4 billion over the
quarter and $6.5 billion over the full year. Net debt is expected
to increase in the first half of 2021, driven by severance
payments, the annual Gulf of Mexico oil spill payment and payment
following completion of the offshore wind joint venture with
Equinor. It is expected to then fall in the second half with
growing operating cash flow and the receipt of divestment
BP said it continues to expect to reach its $35 billion net debt
target around fourth quarter 2021 and first quarter 2022. This
assumes oil prices in the range of $45-$50 a barrel and BP planning
assumptions for refining marker margin and gas prices. The company
said this summer it will return cash to shareholders through share
buybacks once net debt is reduced to $35 billion.
BP declared a quarterly dividend of 5.25 cents a share, bringing
the full-year payment to 31.50 cents, down from 41.00 cents in
The company said that oil prices have risen since the end of
October and demand is expected to recover in 2021. Moreover, BP
forecast U.S. gas prices will benefit from lower production and a
recovery in international liquefied natural gas demand driven by
However, the group also projected that its Downstream division
will be hurt by the pandemic in the first quarter of 2021, as
restrictions weigh on product demand.
Write to Jaime Llinares Taboada at email@example.com;
(END) Dow Jones Newswires
February 02, 2021 03:19 ET (08:19 GMT)
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