BP looks to reach divestments worth $10bn by year-end
British energy major BP said on Friday that it expected to deliver divestment proceeds of $10-billion by the end of this year, with significant contributions from the agreed sale of its Alaska assets and US shale divestments.
The $5.6-billion sale of BP's Alaskan business to Hilcorp, announced in August and subject to regulatory approval, is the biggest single agreed transaction and is expected to complete in 2020.
BP has also agreed the sale of four packages of legacy gas assets from its non-BHP US Lower 48 business.
As a result of the agreed divestments, BP expects to take a noncash, nonoperating, aftertax charge of $2-billion to $3-billion in its third quarter 2019 results.
BP will also continue to review asset valuations as divestments in the US Lower 48 progress over the fourth quarter 2019.
Meanwhile, BP reported that it continued to make strong progress with the delivery of its programme of major projects. It said that 23 of the 35 projects expected on line by the end of 2021 were in production, with output ramping up from the four projects that had started up so far in 2019.
In the near term, BP's third quarter 2019 production was impacted by turnarounds in some of the highest-margin regions, and output in the US Gulf of Mexico was significantly disrupted by Hurricane Barry, with facilities shut down for about 14 days. Taken together, these factors impacted BP's third quarter production by about 100 000 bbl/d of oil equivalent, with the overall production mix in the third quarter having a higher proportion of barrels produced from higher tax regions.
As a result, BP's underlying effective tax rate is expected to be about 50% in the third quarter 2019, significantly higher than in the second quarter. The full year 2019 tax guidance of 40% remained unchanged.
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