BP to use £2.4bn to promise ‘major payout’

BP will use a mammoth $3.3 billion (£2.4bn) profit to help win favour from investors, promising a major payout thanks to “significantly” higher oil prices.

It will buy back shares from investors for around $500 million (£360m) in the second quarter after managing to pay down net debt to below $35bn (£25bn) nearly a year earlier than expected.

Net debt stood at $33.3bn (£24bn) at the end of March, helped by a programme of asset sales and firmer oil prices.

The oil giant’s $3.3bn (£2.4bn) replacement cost profits haul for the first three months of 2021 was better than expected and marks a bounce-back from losses of $628m (£452m) a year earlier when the coronavirus crisis sent the price of crude plummeting.

On an underlying basis, BP’S replacement cost profits – the group’s preferred measure – surged to $2.6bn (£1.9bn) in the three months to March 31 from $791m (£569m) a year earlier and just $115m (£83m) in the previous quarter.

Most analysts had been expecting firstquarter underlying replacement cost profits to reach $1.64bn (£1.18bn).

BP said: “This result was driven by an exceptional gas marketing and trading performance, significantly higher oil prices and higher refining margins.”

Chief executive Bernard Looney said: “With the acceleration of divestment proceeds, together with strong business performance and the recovery in the price environment, we generated strong cash flow and delivered on our net debt target around a year early.”

BP announced a dividend of 5.25 cents (3.82p) a share for the first quarter.