* BP had previously expected to hit debt target in Q4 or Q1
2022
* CEO says sale proceeds, strong first quarter helped cut
debt
* BP shares rises as much as 3% in early trade
(Adds shares, detail on proceeds, background)
By Yadarisa Shabong
April 6 (Reuters) - Energy group BP said on Tuesday
it expects to have hit its $35 billion net debt target in the
first quarter of this year, sooner than expected and paving the
way for it to deliver on its promise of buying back shares.
"This is a result of earlier than anticipated delivery of
disposal proceeds combined with very strong business performance
during the first quarter," Chief Executive Bernard Looney said
in a statement.
Shares in the London-based company, which had previously
expected to reach the net debt target in around the fourth
quarter of 2021 or the first quarter of 2022, rose as much as 3%
to 299 pence in early trade on news it would reach the target
sooner.
BP shares are now up around 16% this year, after shedding
45% in 2020 as the coronavirus pandemic hit oil demand.
BP plunged to a $5.7 billion loss last year and had a debt
pile of $39 billion at the end of 2020. It had expected that
debt level to rise in the first half of 2021 due to several
payments due.
However, in the first quarter it generated around $4.7
billion from sale proceeds.
As part of Looney's plan to shift the focus of the oil major
to low carbon energy investments, BP aims to sell $25 billion of
assets by 2025.
BP said in February that it plans to start share buybacks
once it reaches its debt target. The company said on Tuesday
that it would provide an update on share buybacks during its
first-quarter results on April 27.
"We estimate that at $60/bbl oil prices, the company will be
buying back around $2 billion - $2.5 billion in shares
annually," Berenberg analyst Henry Tarr wrote in a note.
BP also said its performance in the first quarter of 2021
was driven by trading, the price environment and resilient
operations.
Brent crude rose 22.6% during the quarter on optimism about
a recovery in oil demand following the rollout of COVID-19
vaccines since the start of the year.
BP said on Tuesday it expects sale proceeds in 2021 to be at
the top end of its existing $4 billion to $6 billion range.
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Shounak
Dasgupta and Susan Fenton)