BP’s $3bn earnings in fourth quarter beat forecasts

London — BP posted forecast-beating earnings of $3bn in the fourth quarter on Tuesday while boosting share repurchases and vowing to make pragmatic investments, as its recently appointed CEO sought to allay investor concern over its energy transition strategy.

The company’s shares were more than 5% higher by 9.07am GMT (11.07am)  after the unexpected acceleration of the buyback programme.

The quarterly results, lifted by strong gas trading, took the energy giant’s 2023 profit to $13.8bn, though it was half that of a year earlier as oil and gas prices cooled and refining profit margins weakened.

The earnings come as a relief to CEO Murray Auchincloss after the company substantially missed forecasts in the previous two quarters.

Auchincloss became permanent CEO in January after being named interim CEO on September 12 when Bernard Looney abruptly stepped down for failing to fully disclose details of past personal relationships with colleagues.

Auchincloss said BP remains committed to reducing oil and gas output and sharply growing its renewables and low-carbon businesses by the end of the decade.

“As we drive towards 2025 we are going to focus on simplifying the business,” he said.

“We will pragmatically adapt to what’s happening with demand in society,” he said, adding that BP will go for the “highest return and highest-value projects”.

BP’s shares have underperformed rivals in recent months amid investor concerns over its strategy and the leadership upheaval.

The company said it is committed to repurchasing $3.5bn of shares in the first half of 2024 and expects to purchase $14bn in 2024-25.

“BP delivers what investors were asking for: higher distributions and more visibility,” Jefferies analyst Giacomo Romeo said in a note.

Strong trading

Rivals ExxonMobil, Chevron and Shell last week beat profit expectations on a mix of strong trading results and higher oil and gas production though refining margins weighed on the sector amid sluggish global economic activity.

BP’s fourth-quarter underlying replacement cost profit, the company’s definition of net income, reached $2.99bn, exceeding forecasts of $2.77bn in a company-provided survey of analysts.

That compared with a $3.3bn profit in the third quarter and $4.8bn a year earlier.

BP said the results reflect strong gas trading and higher oil and gas prices, which were offset by “significantly lower” refining margins, weak oil trading and exploration impairments.

It maintained its dividend at 7.27c per share and increased the rate of its share buybacks to $1.75bn over the next three months from $1.5bn in the previous three.

Capital expenditure in 2023 was unchanged from a year earlier at $16.3bn, and is expected to dip to $16bn this year and next.

BP generated more than $32bn of cash last year, compared with $41bn in 2022. It reduced net debt to $20.9bn by year-end, the lowest in a decade, from $21.4bn 12 months earlier.

Reuters