Major Oil reports decline in first-quarter earnings

Oil giant BP on Tuesday reported stronger-than-expected first-quarter earnings, up from the previous three months but down from the exceptional levels it hit during 2022 when fossil fuel prices soared in the wake of Russia’s all-out invasion of Ukraine.

The British energy giant reported an underlying replacement cost profit, used as a proxy for net profit, of $4.96 billion for the first quarter.

That compares to profits of $4.8 billion in the fourth quarter and $6.2 billion in the first quarter of 2022. Analysts had expected BP to report first-quarter profit of $4.3 billion, according to Refinitiv.

BP said its first-quarter earnings reflect strong oil and gas trading. And it announced another $1.75 billion in share buybacks, which it expects to complete before announcing second-quarter 2023 results in early August. The group said it completed its previously announced $2.75 billion share buyback on April 28.

“This was 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.

“Most importantly, we continue to help our shareholders through disciplined investing, reducing net debt and increasing dividends,” he added.

BP said it expects to be able to buy back shares of about $4 billion a year — the lower end of the $14 billion to $18 billion capex range — and has the ability to increase its annual dividend per common share of nearly 4 percent. %.

BP’s dividend was unchanged from the previous quarter at 6.61 cents per common 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 from the same period a year earlier.

London-listed shares are up 12.5% ​​since the start of the year.

The first-quarter results come after a year of huge profits for major oil companies. Major energy companies broke previous annual records in 2022 during a period of volatile oil and gas prices.

For its part, BP recorded annual profits of $27.7 billion last year – more than double the profits recorded in 2021. The oil major’s previous annual profit record was $26.3 billion in 2008.

Since then, Big Oil executives have sought to defend their bumper dividend amid a barrage of criticism, typically highlighting the importance of energy security in the transition away from fossil fuels and suggesting higher taxes that could discourage investment.

BP, which was one of the first energy giants to announce an ambition to reach net zero emissions “by 2050 or earlier,” He said On the heels of its record annual earnings, it now plans to scale back its emissions-cutting targets.

The move set the stage for a contentious annual shareholder meeting last week, where analysts commented that there was “very deep frustration” among some of the UK’s largest pension funds.

In fact, a group of shareholders voted 17% — up from 15% last year, but down from 21% in 2021 — in favor of a resolution introduced by Dutch group Follow This. The decision called on the company to align its 2030 emissions reduction targets with the landmark Paris agreement.

The burning of fossil fuels such as coal, oil and gas is the main driver of the climate emergency.

Last week, French oil major TotalEnergies kicked off Big Oil’s earnings season with first-quarter results in line with analyst expectations. The company reported a 27% drop in net income to $6.5 billion during the first three months of 2023, due in part to lower fossil fuel prices.

Britain’s Shell and Norway’s Equinor are set to report their quarterly earnings on Thursday.