- The British energy giant posted underlying replacement cost profit, used as a proxy for net profit, of $4.96 billion for the first quarter as lower oil and gas prices took a toll.
- That compared with a profit of $4.8 billion in the fourth quarter and $6.2 billion for the first quarter of 2022.
- The results for the first quarter come after a year of huge profits for Big Oil. Major energy companies previously broke annual records in 2022 during a period of volatile oil and gas prices.
BP, which in 2020 set its ambition to become a net zero company “by 2050 or sooner”, has come under sharp criticism for scaling back its emissions reduction targets in the wake of record profits.
Matt Cardy | Getty Images News | Getty Images
LONDON – Oil major BP reported stronger-than-expected first-quarter profits on Tuesday, which rose from the previous three months but down from the exceptional levels it recorded through a blockbuster 2022 as fossil fuel prices rose following Russia’s full-scale invasion of Ukraine.
The British energy giant posted underlying replacement cost earnings, used as a proxy for net income, of $4.96 billion for the first quarter.
That compared with a profit of $4.8 billion in the fourth quarter and $6.2 billion for the first quarter of 2022. Analysts had expected BP to report a profit of $4.3 billion in the first quarter, according to Refinitiv.
BP said its first-quarter earnings reflected robust oil and gas trading. It announced a further share buyback of $1.75 billion, which it expects to complete before releasing its second-quarter 2023 results in early August. The group said it completed its previously announced $2.75 billion share buyback on April 28.
“This has been a quarter of strong performance and strategic delivery as we continue to focus on safe and reliable operations,” BP CEO Bernard Looney said in a statement.
“And importantly, we continue to deliver for shareholders, through disciplined investments, lowering net debt and increasing distributions,” he added.
BP said it expects to deliver share buybacks of around $4 billion per year – which is at the lower end of its investment range of $14 billion to $18 billion – and has the capacity for an annual increase in dividends per ordinary share of about 4% .
BP’s dividend was unchanged from the previous quarter at 6.61 cents per ordinary share, after a 10% increase in February.
The company reported net debt in the first quarter of $21.2 billion, down from $27.5 billion compared to the same period a year earlier.
Shares in the London-listed stock are up 12.5% so far this year.
The results for the first quarter come after a year of huge profits for Big Oil. Major energy companies previously broke annual records in 2022 during a period of volatile oil and gas prices.
BP, for its part, posted an annual profit of $27.7 billion last year – more than doubling the profit recorded in 2021. The oil major’s previous annual profit record was $26.3 billion in 2008.
Big Oil executives have since tried to defend their profits amid a barrage of criticism, typically emphasizing the importance of energy security in the transition away from fossil fuels and suggesting that higher taxes could deter investment.
BP, which was one of the first energy giants to announce an ambition to reach net-zero emissions “by 2050 or sooner,” said in the wake of its record annual profit that it now plans to scale back its emissions reduction targets.
The move set the stage for a contentious annual shareholder meeting last week, with analysts commenting that there was “clearly very deep frustration” among some of Britain’s biggest pension funds.
In fact, a 17% shareholder group – up from 15% last year, but down from as high as 21% in 2021 – voted in favor of a resolution put forward by the Dutch group Follow This. The resolution asked the company to align its emissions reduction targets for 2030 with the landmark Paris Agreement.
Combustion of fossil fuels such as coal, oil and gas is the main driver of the climate crisis.
Last week, French oil major TotalEnergies kicked off Big Oil’s earnings season with first-quarter results in line with analysts’ expectations. The company reported a 27% drop in net income to $6.5 billion through the first three months of 2023, due in part to lower fossil fuel prices.
British Shell and Norwegian Equinor will both report their quarterly results on Thursday.