Lower spending on exploration could hurt growth, of course. BP says much of capex shrinkage is due to industry-wide deflation and re-phasing of projects, rather than retrenching on exploration. Since production grew 4.4 percent in the third quarter, it appears BP appreciates the difference between spending less and cutting back.
BPs net-debt-to-total-capital ratio has hit the upper limit of its 20 percent target, so it cant rely on much more debt to fund the dividend. Any shortfall in 2016 could be covered by the $3 billion to $5 billion of planned asset sales. BPs balancing exercise doesnt include ongoing liability payments for its Gulf of Mexico oil spill either, although further asset sales from 2017 might help fund those obligations.
The big risk to the BP plan is the oil price. Steps taken so far suggest BP can make ends meet at $60. It may have to go back to the drawing board if oil stays at $50, or lower, for longer.
http://blogs.reuters.com/breakingviews/2015/10/27/self-help-underpins-bps-108-billion-value/
