Oil giant BP said yesterday it may offload offshore assets in line with divestment plans if it was felt they “would be better in the hands of others”.
Chief financial officer Brian Gilvary did not name any assets which may fall into this category, however, as he outlined a return to BP’s historic average for global asset sales.
A BP spokesman said later a £2billion-£3.5billion sell-off in 2016 and further divestments worth up to £2billion annually in future years was targeted across downstream, midstream and upstream activities globally.
The spokesman was speaking after BP posted pre-tax losses of £593.2million for the first quarter of 2016, against profits of around £1.6billion a year ago.
The company highlighted underlying replacement cost profits – a measure of gains based on how much it would cost to replace the reserves it sells – of £365million for the latest period, down from around £1.8billion previously but better than analysts were expecting.
First quarter 2016 sales and other operating revenue totalled £26.4billion, down from £38billion a year ago.
Investors were cheered by the results, sending BP’s shares up more than 4% as they also took in news of an unchanged dividend for the quarter of nearly 7p per ordinary share, expected to be paid in June.
BP warned it could cut capital spending further next year, after reducing it to around £11.6billion in 2016, in the event of continued low oil prices.
But chief executive Bob Dudley, who suffered an embarrassing shareholder revolt earlier this month when investors rejected his $20 million remuneration package, said he expected crude prices to recover towards the end of this year.
“Market fundamentals continue to suggest that the combination of robust demand and weak supply growth will move global oil markets closer into balance,” he added.
Last year, amid the worst downturn in the oil sector in at least three decades, BP reduced its capital spending three times to £13billion and axed nearly 10% of its workforce in attempt to save cash.
The company is confident it can balance its books by next year, with Mr Gilvary saying yesterday this could be achieved at oil prices in the range $50-$55 a barrel.
He added: “Should prices remain low, we have the flexibility to adjust further within the financial framework.”
BP’s spokesman said there was no change to BP’s plans for the UK North Sea, where its Quad204 and Clair Ridge projects west of Shetland are moving swiftly forward.
Quad204 is targeting an estimated 450million barrels of oil from the Schiehallion and Loyal fields.
Glen Lyon, the new floating production, storage and offloading vessel for the project, is now in dock in Norway for final fitting out. It is expected to arrive on location this summer, with start-up forecast for around the end of the year.
Giant topsides modules for the Clair Ridge platforms are currently making their way from South Korea and due to arrive west of Shetland later this quarter.
Clair Ridge, targeting an estimated 640million barrels of oil, is expected to keep the UK producing oil for 40 years after start-up in 2017.