BP’s net profit hits highest in many years, lifting share buyback scheme

London — BP boosted its share buyback programme after net profit soared to its highest in more than a decade on strong oil and gas trading results, as the energy company took a $24bn charge after exiting its operations in Russia.

BP’s strong results show that soaring oil and gas prices in the wake of the Russian invasion of Ukraine on February 24 offset losses it incurred from abruptly abandoning stakes in Russia, including its 19.75% stake in Rosneft.

The non-cash writedown of its stakes in Rosneft and two other joint ventures pushed BP into a headline loss of $20.4bn in the quarter. The charge was slightly lower than BP’s initial estimates of $25bn.

The company, which also halted trading Russian oil, said the exit from Russia, which contributed 3% of the company's cash flow last year, would not impact its plan to shift away from oil and gas towards renewables.

The exit from Russia and resulting writedown “has not changed our strategy, our financial frame, or our expectations for shareholder distributions”, CEO Bernard Looney said.

BP’s underlying replacement cost profit, the company’s definition of net earnings, reached $6.2bn in the first quarter, far exceeding analysts' expectations for a $4.49bn profit.

The profit was driven by “exceptional” performance of BP’s oil and gas trading division as well as higher oil and gas prices and strong refining margins. The company did not make any money from Rosneft in the quarter.

It compares with $4.1bn in profit in the fourth quarter of 2021 and $2.63bn a year earlier. Its 2021 profit was the highest in eight years.

Buyback boost

BP said it would boost its quarterly share repurchases to $2.5bn before the end of the second quarter after its surplus cash flow rose to more than $4bn.

BP said in February it would accelerate its share buybacks to $1.5bn per quarter from $1.25bn.

BP previously said it would repurchase $4bn a year at oil prices of $60 per barrel, well below the current price of benchmark Brent, which was about $107 on Tuesday.

The company maintained its dividend at 5.46c per share.

BP rivals including ExxonMobil, Chevron and TotalEnergies all saw a sharp rise in revenue in the quarter, lifted by higher oil and gas prices and strong performances of their trading divisions.

Top Western energy companies have boosted dividends and share repurchases in recent quarters as revenue surged in the wake of the global recovery from the Covid-19 pandemic.

Reuters