By Oliver Griffin 
 

Integrated oil-and-gas giant BP PLC (BP.LN) expects to have finalized its planned two-year divestment program by the end of this year, ahead of schedule, although its third-quarter results will take a hit from related charges.

The company said Friday that it expects to deliver proceeds and announced transactions worth a total of $10 billion as part of the divestment program it announced in the wake of its 2018 all-cash purchase of onshore U.S. assets previously owned by miner BHP Group PLC (BHP.LN) by the end of the year.

It said strong progress in delivering the program was driven by the sale of its Alaska assets to Hilcorp Energy Co. for $5.6 billion. The transaction, the largest in the divestment program, is expected to be completed in 2020. The company has also agreed the sale of four packages of gas assets from its business in the lower 48 U.S. states.

BP said that agreed divestments are expected to result in a non-cash post-tax charge in the region of $2 billion to $3 billion for its third-quarter results.

These charges are expected to increase the company's closely watched gearing levels in the near term. BP said its gearing will remain above the targeted 20% to 30% range through to the end of the year, though net debt will fall through 2020, bringing gearing in line with targets.

BP said production in the third-quarter was hit by turnarounds in some of its highest-margin regions, while Hurricane Barry "significantly disrupted" output in the U.S. Gulf of Mexico. As a result, the company said these factors reduced output by around 100,000 barrels of oil equivalent a day.

The overall production mix in the quarter saw more barrels of oil produced from higher tax regions and that, subsequently, its effective tax rate in the third quarter is 50%. It said this was significantly higher than in the second quarter but backed its full-year guided tax rate of 40%.

 

Write to Oliver Griffin at oliver.griffin@dowjones.com; @OliGGriffin

 

(END) Dow Jones Newswires

October 11, 2019 05:55 ET (09:55 GMT)

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