BP sees ‘new era’ of growth, new production from Egypt, Oman
BP is ready to enter a new era of growth after resolving most of the 2010 Gulf of Mexico spill costs even as it adapts to a long period of low oil prices, CEO Bob Dudley said Tuesday.
“I am optimistic for the first time in five years that we have a machine that can run with a long-term view,” Dudley told Reuters in a telephone interview after the British oil and gas company reported stronger than expected third-quarter earnings and further cost-cutting measures.
Dudley said BP can now focus on growing production which is expected to increase by 800,000 barrels of oil equivalent per day (bpd) by 2020 from projects in Azerbaijan, Egypt, Oman, the North Sea and the U.S. Gulf of Mexico.
“We are ready now to enter a new era,” Dudley said.
The 59-year-old American national who was appointed to head BP in the wake of the 2010 spill said the company is even ready to invest in small-scale acquisitions.
BP agreed this month to pay more than $20 billion in fines to resolve nearly all claims from its deadly Gulf of Mexico oil spill, bringing its total bill to nearly $55 billion. Dudley said BP could incur further costs.
“Of course, with the new oil price, the number one priority is to retool the company and rebase the cost structure for the industry and BP,” he said.
Oil prices have more than halved since June 2014 to around $50 a barrel and oil companies have slashed spending as they brace for an extended period of depressed oil prices.
Dudley said that following nearly $55 billion of asset sales in the five years following the deadly Gulf of Mexico spill, BP can grow the company, grow dividend and progressively increase cash flow.
And while BP might invest in new assets to expand existing production, Dudley ruled out big acquisitions.
“I think our shareholders would not respond positively if we said we are on a hunt for big M&A… I don’t think the world thinks big is beautiful.”
On Tuesday, BP announced a third cut this year to its 2015 spending budget to $19 billion as well as further asset sales and restructuring costs.
The company said it aimed to balance its organic cashflow with spending and dividend payouts by 2017 based on an oil price of $60 a barrel.
“We looked at the strip pricing and said we’ll make sure this works. If prices are lower, at $50, at $40, I have no doubt the cost structures in the industry will continue to respond,” he said.
Dudley said he hoped several companies, including the national oil firms of China and Brazil, would join the Oil and Gas Climate Initiative — an association of 10 major companies focusing on the sector’s response to global warming.
He said that companies will aim to lay out individually “precise plans” to tackle climate change.
