Just weeks after it published its third quarter results, BP told investors they can expect more than 50 per cent growth in operating cash flow by 2014 at 100 dollars per barrel.
In an investor presentation held on Monday, the group unveiled details of expected production and capital expenditure planned for the coming years.
The increase in operating cash was expected to be driven by a number of factors, including growth coming from new upstream projects, the Whiting refinery upgrade coming on stream and completion of contributions to the US Trust fund.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Brian Gilvary, Chief Financial Officer at BP, told investors: "Taking all of this into account, we expect to see operating cash flow of $30-$31bn in 2014. On a like-for-like basis, this represents more than 50% growth in operating cash flow versus 2011 and is consistent with the guidance we gave in the third quarter update for the US criminal settlement."
"We are increasingly confident in the drivers that underpin this growth. The growth in group cash flows creates the platform to increase both reinvestment and distributions by 2014 and beyond."
He added that upstream capital expenditures - so-called capex - was expected to rise by 40% to 50% between 2011 and 2014 and would be funded in part by higher free cash flow from other activities and by divestments of $2-to-$3bn per annum.
"With our current portfolio we expect to manage gross organic capital expenditure for the group to between $24-to-$25bn to 2014 and on average to between 24 and 27bn dollars through to the end of the decade," he went on to say.
He went on to conclude by saying that: "In broad terms, the proportion of group capex invested into the upstream is expected to increase from around 70% to around 80%."
Some analysts negative on company's presentationStuart Joyner, an analyst at Investec, commented on the capex details saying: "BP signalled it will attempt to spend its way out of its shrink to grow reaction to Macondo. It is a familiar strategy - Shell did the same after its own crisis in the last decade."
"The new $24-$27bn capex range is in line with our own thinking, but the duration is longer and is well above consensus. BP's opportunity set is decent post a quiet reboot. That said, we see a natural disconnect for the shares between the pain of extra spending in the near term against eventual, but unspecified, growth at some point in the future."
At 15:49 shares of BP are down by 1.48% to 423.8p.
MF
-
Ofgem proposes new energy tariffs with low or no standing changesStanding charges have invited public backlash as households battle high energy bills
-
Google shares bounce on Gemini 2.0 launchGoogle has launched the latest version of its Gemini AI platform, and markets have responded positively. Is it time to buy Google shares?
