New major capital projects that will add 800,000 barrels of oil equivalent per day to BP plc’s output are “progressing,” according to Jefferies, which hosted an investor meeting with BP management, including CEO Bob Dudley.
“The meetings reinforced our view of BP as a company with increasing confidence in its strategy and direction,” Jefferies said in a statement sent to Rigzone.
In addition to the progression of the new production projects, which are expected to provide 500,000 boepd by the end of next year, existing facilities are running at “very high rates,” said Jefferies, and cost reduction efforts are driving the corporate cash cycle towards balance in 2017. The company expects to maintain a scrip dividend as “a component of cash flow neutrality” next year but expects to pay the dividend fully in cash longer term.
“We expect that the longer term dividend will be further secured by the high-margin projects that start up by the end of 2017, and BP expects to be free cash flow generative at $45 oil by 2020,” said Jefferies.
“The priority uses of free cash are likely to be some debt reduction and share repurchases to offset the dilutive effects of the scrip dividend,” Jefferies added.
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