CEO of oil and gas giant BP, Bob Dudley, said the сompany has been fundamentally reshaped in the past 6 years due to financial discipline and a sharper focus, adding that it is getting back to growth.
Bob Dudley and his management team are now setting out plans to 2021, demonstrating how BP plans to deliver growth throughout its businesses over the next 5 years.
He said: «We can see growth ahead right across the Group. While always maintaining our discipline on costs and capital, BP is now getting back to growth - today, over the medium term and over the very long term.»
Production ramping up from new Upstream projects is expected to deliver a material improvement in BP's operating cash flow through the 2nd half of 2017.
BP said it intends to maintain its existing financial frame throughout the 5 years to 2021, with organic capital expenditure kept within a range of $15-17 billion a year and the target band for gearing remaining at 20-30%.
Brian Gilvary, BP chief financial officer, said: «Last year we delivered our targeted $7 billion reduction in cash costs a year early, and capital spending was $8.6 billion lower than its peak in 2013 - without damaging our growth pipeline. We will continue that tight focus on costs and capital discipline and seek further improvements throughout the Group. We expect this combination of continued cost discipline with the growing cash flow from our core businesses - and the recent portfolio additions - will steadily drive down the cash balance point of the business. Over the next 5 years we expect this to fall to around $35-40 a barrel for the Group overall.»
Volume and margin growth throughout BP's businesses are expected to increase returns over the next 5 years.
Assuming a stable price environment and portfolio, BP now expects return on average capital employed (ROACE) for the Group to recover steadily over the next few years and to be over 10% by 2021.
BP now estimates that this growth will enable the Upstream segment to generate $13-14 billion of pre-tax free cash flow by 2021, at oil prices around $55 a barrel.
BP is now confident that Upstream production will grow from 2016 by an average of 5% a year out to 2021.
BP Group production, including BP's share of production from Rosneft, is expected to be around 4 million boe/d by 2021.
BP believes the growth will enable the Downstream to deliver $9-10 billion of pre-tax free cash flow by 2021, with returns of around 20% in 2021.