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BP warns of third-quarter charges as it spurs $10 billion divestment target

Published 10/11/2019, 06:20 AM
© Reuters. FILE PHOTO: Logo of BP is seen at a petrol station in Kloten
BP
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By Ron Bousso

LONDON (Reuters) - BP (LON:BP) will take charges of $2 to $3 billion in the third quarter, the British energy firm said on Friday, as it looks to reach divestments worth $10 billion by the end of 2019, a year ahead of schedule.

In a statement, London-based BP said it expects to agree asset sales of $10 billion by end-year after its $5.6 billion sale of its Alaskan business to Hilcorp [HILCO.UL] and divestments in U.S. shale gas.

BP shares were down 1.1% by 0948 GMT compared with a 1.3% gain in the broader European energy index.

The non-cash, non-operating, after-tax charge will impact the company's headline profit figure but not its underlying cashflow, a spokesman said.

BP announced the disposal program following its $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% to 30% 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 around 14 days.

© Reuters. FILE PHOTO: Logo of BP is seen at a petrol station in Kloten

BP is scheduled to report its results on October 29.

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