BP will take charges of US$2- to $3-billion in the third quarter, the British energy company said on Friday, as it looks to reach divestments worth US$10-billion by the end of 2019, a year ahead of schedule.
In a statement, London-based BP said it expects to agree to asset sales of US$10-billion by year-end after its US$5.6-billion sale of its Alaskan operations to Hilcorp and divestments in U.S. shale gas.
The non-cash, nonoperating, after-tax charge will impact the company’s headline profit figure but not its underlying cash flow, a spokesman said. BP announced the disposal program following its US$10.25-billion acquisition of BHP’s shale business last year, its largest purchase in three decades.
The planned third-quarter impairment charges are expected to increase BP’s gearing – the ratio between debt and market capitalization – to the top end of the 20-per-cent to 30-per-cent target, BP said.
Debt levels and gearing are expected to move to the middle of the range through 2020.
BP’s third-quarter oil and gas production will be impacted by maintenance in some high-margin regions, BP said.
Output in the U.S. Gulf of Mexico was “significantly disrupted” by Hurricane Barry, with facilities shut down for about 14 days.
BP is scheduled to report its results on October 29.