BP Plc to Reach Net Debt Target in Q1 2021; 2 Energy Stocks in Focus

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BP Plc to Reach Net Debt Target in Q1 2021; 2 Energy Stocks in Focus

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 BP Plc to Reach Net Debt Target in Q1 2021; 2 Energy Stocks in Focus

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Summary

  • BP Plc on Tuesday said it expected to reach its net debt target of $35 bn in the Q1 of this year.
  • The company received about $4.7 billion in disposal proceeds in the first quarter.
  • BP Plc aims to sell $25 billion worth of assets by 2025 as part of plan to invest in alternative energy.

BP Plc’s (LON:BP) shares on 6 April were up 3.83 per cent at 13:06 GMT+1 after the company announced that it expects to reach its net debt target of $35 billion in the Q1 of this year. The company said it is possible due to sooner than expected delivery of disposal proceeds. Robust business performance in the first quarter also contributed to meeting its debt target.

In the first quarter, the company received about $4.7 billion in disposal proceeds. For 2021, it would be in the top end of the already announced $4‑6 billion range. This year, BP shares have gained 16 per cent, after it lost 45 per cent in 2020 as oil demand was hit due to the pandemic.

As part of its plans to move to investments in low carbon energy infrastructure, it plans to sell $25 billion worth of assets by 2025.

Last year, the company faced a loss of $5.7 billion and its debt rose to $39 billion by the end of 2020. The company expected its debt level to increase in H1 2021, as several payments were pending.

In February, the company had said that it expects to begin share buybacks after achieving its debt target. On Tuesday, the company said that it would update on its share buyback plans with its first quarter results that would be announced on 27 April.

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Let us discuss the stock performance of BP Plc along with Diversified Gas & Oil Plc, two energy stocks having highest dividend yield in the industry:

BP Plc’s (LON:BP)

The shares of the company were trading at GBX 300 at 14:05 GMT+1 and has a dividend yield of 6.69 per cent. The company reported a loss of $20,305 million in 2020 compared to a profit of $4,026 million in the previous year.

The company had said it would be on track to meet the net debt target of $35 billion and would meet it between the fourth quarter of 2021 and 2022’s first quarter.

Diversified Gas & Oil Plc (LON:DGOC)

The FTSE 250 gas and oil production company has a dividend yield of 9.77 per cent. The company’s adjusted revenue for the year ended 31 December 2020 came in at $553 million, 8 per cent higher than $512 million a year ago. Hedged adjusted EBITDA came in at $301 million, an increase of 10 per cent from $273 million in 2019.

The shares of the company were trading at GBX 114.80, up by 1.59 per cent on 6 April at 14:36 GMT+1.

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