BP sets 2017 capital spending at $16-17 billion

BP PLC reported plans in 2017 to spend $16-17 billion, which is equal if not slightly more than the $16 billion the firm spent in 2016.

BP PLC reported plans in 2017 to spend $16-17 billion, which is equal if not slightly more than the $16 billion the firm spent in 2016.

BP says it now anticipates breaking even by yearend at Brent crude oil prices of around $60/bbl given the mostly second-half startups of its new upstream projects. At the end of third-quarter 2016, the firm said it remained “on track to rebalance organic cash flows next year” at $50-55/bbl.

The British firm reported a fourth-quarter 2016 underlying replacement cost profit of $400 million compared with $196 million for the same period in 2015 and $933 million for third-quarter 2016.

Compared with a year earlier, the quarter’s result benefited from higher oil prices and much lower costs, offset by weaker refining margins and higher turnarounds in the firm’s downstream segment.

The headline reported result for the full year was a profit of $115 million compared with a loss of $6.5 billion for 2015.

The 2016 headline result included a total of $4 billion nonoperating charges taken through the year associated with resolution of the remaining legacy of the 2010 Deepwater Horizon oil well blowout and spill. The headline profit excluding these legacy charges was $4.1 billion for 2016 compared with $2 billion for 2015.

BP made $7.1 billion in pretax payments related to the Macondo spill through 2016, as processing of outstanding claims accelerated. Total divestment revenues were $3.2 billion in the year.

Cash payments related to the spill in 2017 are expected at $4.5-5.5 billion, before falling to around $2 billion in 2018 and to a little more than $1 billion/year from 2019.

The firm reported a reserves replacement ratio of 109% for 2016.

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