BP boosts buybacks on soaring energy prices after costly Russia exit

  • Firm quarterly internet revenue reaches $6.25 bln
  • BP boosts quarterly share buybacks to $2.5 bln
  • BP shares up 7% since Russia invasion on Feb. 24

LONDON, Could 3 (Reuters) – BP (BP.L) reported its strongest operational efficiency in additional than a decade on Tuesday on the again of rocketing oil costs that helped it step up share buybacks, at the same time as a $24 billion writedown from exiting Russia led to a file quarterly loss.

Shares within the vitality agency climbed 2.8% by 1311 GMT in London buying and selling after BP reported its highest operational revenue since 2008, encouraging extra requires a windfall tax to assist British households and different shoppers address spiralling gas payments.

Hovering oil and fuel costs within the wake of the Russian invasion of Ukraine on Feb. 24 helped offset losses BP incurred from abruptly abandoning its shareholdings in Russia, together with its 19.75% stake in oil big Rosneft (ROSN.MM). learn extra

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The non-cash writedown of its stakes in Rosneft and two different joint ventures pushed BP right into a headline lack of $20.4 billion within the quarter, its greatest recorded. However the cost was barely decrease than BP’s preliminary estimates of $25 billion.

BP’s underlying alternative value revenue, the corporate’s definition of internet earnings, reached $6.2 billion within the first quarter, the strongest since 2008 and much exceeding analysts’ expectations for a $4.49 billion revenue. learn extra

The 2022 first quarter efficiency was pushed by what BP stated was an “distinctive” efficiency in its oil and fuel buying and selling division. Chief Monetary Officer Murray Auchincloss stated volatility in oil and fuel costs was probably the most BP had seen.

After calls from Britain’s opposition for a windfall tax on vitality companies, BP stated it will pay as much as 1 billion kilos ($1.25 billion) in UK tax in 2022 – way more than the $283 million reported in 2020. It didn’t give 2021 figures. The federal government stated a brand new tax wouldn’t assist the vitality transition. learn extra

BP, whose shares are up 7% since February, didn’t generate profits within the quarter from Rosneft, which beforehand paid out its dividend within the second and third quarters of the 12 months. BP didn’t embrace future dividend funds in its plans, it stated.

The corporate, which additionally halted buying and selling Russian oil, stated the exit from Russia, which had contributed 3% of the corporate’s money move final 12 months, wouldn’t have an effect on its plan to shift away from oil and fuel in the direction of renewables.

The exit “has not modified our technique, our monetary body, or our expectations for shareholder distributions,” Chief Government Bernard Looney stated.

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Signage is seen for BP (British Petroleum) at a service station close to Brighton, Britain, January 30, 2021. REUTERS/Toby Melville


The cost doesn’t have an effect on BP’s cashflow. Some $14.5 billion of the writedown pertains to stakes in Rosneft and two joint ventures, which have now been lower to zero. One other $11.1 billion pertains to adjustments in international change worth.

Though pricey, sources informed Reuters in March that Looney had lengthy had reservations about how the stake in Rosneft would match into BP’s plans to shift to renewables. learn extra

In the meantime, refining margins have soared as economies have recovered from the COVID-19 pandemic and as Russian refined merchandise began disappearing from Europe.

BP’s refined oil merchandise unit made a revenue of $1.6 billion within the first three months, in contrast with a lack of $26 million within the earlier quarter and a $2 million loss a 12 months in the past.

BP stated it will enhance its quarterly share repurchases to $2.5 billion earlier than the top of the second quarter after its surplus money move rose to greater than $4 billion. BP had stated in February it will speed up quarterly buybacks to $1.5 billion.

BP beforehand stated it will repurchase $4 billion a 12 months at oil costs of $60 per barrel, nicely under the present value of benchmark Brent , which was about $107 on Tuesday.

The corporate maintained its dividend at 5.46 cents per share.

BP’s internet debt declined sharply to $27.5 billion from $30.6 billion on the finish of 2021.

BP rivals together with Exxon Mobil, Chevron and TotalEnergies all noticed a pointy rise in income within the quarter, additionally lifted by robust performances of their buying and selling divisions, permitting them to spice up shareholder returns. learn extra

($1 = 0.7970 kilos)

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Reporting by Ron Bousso and Shadia Nasralla; Enhancing by Louise Heavens and Edmund Blair

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