Apr 6, 2021

BP: focus energy on debt reduction, not buybacks

Rapid receipt of cash from asset sales and a strong oil price mean that debt reduction is ahead of schedule. Chief executive Bernard Loony unveiled his strategy for BP last August, which included reducing fossil fuel production by 40 per cent over the decade. Future additional payouts will be made through buybacks once debt reduction targets are reached. Funds from operations close to 40 per cent of debt are required to maintain the rating. BP could theoretically spend $5bn on buybacks, or 6 per cent of its current market value, if it decided to allocate 60 per cent of expected free cash flows this year.

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