(Alliance News) - Oil major BP PLC on Friday cautioned third quarter production has been hampered by shut-downs due to Hurricane Barry.
Alongside turnarounds in some highest-margin regions, the knock to Gulf of Mexico production caused by the hurricane will lower BP's third quarter production by around 100,000 barrels of oil equivalent per day.
Hurricane Barry made landfall in Louisiana in July, causing significant damage.
In the second quarter of 2019, total production was 3.8 million barrels of oil per day, 4% higher year-on-year.
BP, which announced the departure of Chief Executive Bob Dudley last week, said the overall production mix, due to the disruption, had a greater proportion of production from regions with higher tax rates. As a result, the third quarter underlying tax rate for BP is set to be around 50%, far higher than the second quarter, but overall 2019 tax rate guidance is kept at 40%.
Elsewhere, BP expects to reach its USD10 billion divestment target by the end of 2019, having previously aimed at completing it by the end of 2020.
The sale programme was kicked off after the USD10.3 billion acquisition of BHP Group PLC's US onshore assets in 2018.
Recent sales include the August divestment of Alaskan operations for USD5.6 billion to Hilcorp Energy Co and the sale of Gulf of Suez assets for an undisclosed sum in June.
Because of these divestments, BP will book a non-cash, non-operating, post-tax charge of USD2 billion to USD3 billion in the third quarter.
"These impairment charges are expected to increase gearing in the short term, as a result of the impact on equity, with gearing remaining above the top end of the 20% to 30% range through year end," said the FTSE 100 giant.
"However, in line with the expected growth in free cash flow and the receipt of divestment proceeds, BP continues to expect net debt levels to reduce and gearing to move towards the middle of its target range of 20% to 30% through 2020."
BP shares were 1.2% lower on Friday morning at 495.95 pence each. The company will be reporting third-quarter 2019 financials on October 29.
By George Collard; georgecollard@alliancenews.com
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