BP shareholders in line for windfall as oil giant is set to restart share buybacks after making headway with debt pile

• BP expects to hit $35bn debt target in first quarter - earlier than planned
• It raised $4.7billion from a series of disposals in the first quarter 
• It has also been boosted by a rebound in oil prices, which are now above $60BP has pledged it will restart share buybacks soon after paying down its debt mountain earlier than expected.

  The oil giant expects its debts to have shrunk by almost $4billion (£2.8billion) in the first quarter after a 'very strong' performance thanks to rising oil prices. BP also received billions in proceeds from business disposals earlier than expected.  

  As it now expects to hit its net debt target of $35billion (£25billion) in the first quarter, BP said it was committed to returning at least 60 per cent of surplus cash flow to shareholders through share buybacks.

  

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  Shrinking debts:  BP said its debt pile to have shrunk from $39bn at the end of 2020 to $35bn in the first quarter

  The announcement marks a big turnaround for the group, which just two months ago expected net debt, which was around $39billion at the end of 2020, to actually increase in the first half of this year. The positive news sent shares in the FTSE 100 listed oil giant rising by around 3 per cent to 298.39p in mid-morning trade.Chief executive Bernard Looney said: 'We are pleased to announce that we now expect to have reached our $35billion net debt target during the first quarter 2021. 

  'This is a result of earlier than anticipated delivery of disposal proceeds combined with very strong business performance during the first quarter. 

  'We look forward to updating the market at our first quarter results, including further information on share buybacks.'

  BP has been selling off parts of the group in a bid to raise cash after being hit by a slump in oil prices caused by the pandemic. 

  It said it raised $4.7billion from a series of disposals in the first quarter, including the sale of a stake in an Omani oilfield and of its petrochemicals business to Ineos.  

  The company also made more than $1billion from selling some US assets, as well as an interest in software company Palantir.

  The flowing in of cash from such disposals, and a bounce back in oil prices, means it now expects to hit its debt targets in the first quarter instead of at the end of the year or first quarter of 2022 as it first thought. 

  

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  Chief executive Bernard Looney will give more details on the share buybacks at BP's first quarter results on 27 April

  Oil prices, which tanked to 18-year lows of under $21 a barrel in March last year in the wake of the coronavirus pandemic, have rebounded in recent months.

  Brent crude has gone from around $50 a barrel at the end of 2020 to above $60 a barrel this month.  

  This has benefited BP, which said 'very strong business performance' in the first quarter 2021 was driven by 'trading, the price environment and resilient operations'. 

  The company has been facing severance payments as well as an approximately $1.2billion payment over the Deepwater Horizon oil spill. 

  It will update shareholders with details on the share buybacks and debt reduction at its first quarter results on 27 April.

  Mark Nelson, an analyst at Killik & Co, said: 'This is a positive announcement from BP signalling strong performance in the first quarter of the year, the earlier-than-expected start of cash returns to shareholders, while at the same time providing evidence that it can deliver on its various strategic initiatives.'