BP today, 29 October 2013, announced its financial results for the third quarter of 2013. Underlying replacement cost profit1 for the period was $3.7 billion, compared to $2.7 billion for the previous quarter. Operating cash flow in the quarter was $6.3 billion.
Consistent with its commitment to maintaining a progressive and sustainable dividend policy, BP also announced that it will increase its quarterly dividend by 5.6%, to 9.5 cents per ordinary share, payable in December. Moving forward, BP’s board intends to review the level of dividend with the first and third quarter results each year.
“In 2011 we set a clear target for operating cash flow in 2014 and we are confident in its delivery. The strong operational progress we are now seeing across the group, combined with our focus on disciplined investment, also underpins our confidence in growing long-term sustainable free cash flow and being able to increase shareholder distributions. Today’s announcement is a further demonstration of this,” Bob Dudley, BP Group Chief Executive Officer.
Dudley said that “in line with continued capital discipline, we expect BP’s capital spending in 2014 to remain around the level expected for this year, in the range of $24 to $25 billion.”
He added that the company also intends to continue its programme of focusing its business portfolio worldwide around BP’s key assets and strategic strengths and as a result expects to divest a further $10 billion in assets before the end of 2015.
Proceeds from these divestments, which will follow on from the $38 billion divestment programme completed over the past three years, are expected to be used predominantly for additional distributions to shareholders, with a bias to share buy-backs. Earlier in the year, BP announced an $8 billion share buy-back programme following receipt of the net cash proceeds of around $12 billion from the divestment of its share in TNK-BP and, as of 25 October 2013, has spent $3.8 billion repurchasing shares for cancellation.
At the end of the third quarter, BP’s net debt ratio, or gearing, was 13.3%, at the low end of BP’s target range of 10-20% and reflects a strong balance sheet.