BP’S profits soar on the back of rising oil prices
Energy major BP swung to a £2.4 billion profit in the first three months of the year thanks to “significantly” higher oil prices as the group’s financial fortunes remain linked to black gold.
Energy major BP swung to a $3.3 billion (£2.4bn) profit in the first three months of the year thanks to “significantly” higher oil prices as the group’s financial fortunes remain intrinsically linked to black gold.
The group’s replacement cost profits haul was better than expected and marks a strong rebound from losses of $628 million a year earlier when the coronavirus crisis struck and sent the price of crude sliding.
On an underlying basis, BP’S replacement cost profits – the group’s preferred earnings measure – jumped to $2.6bn in the three months to the end of March from $791 ma year earlier and just $115 min the previous quarter.
Bp, which remains a key north Sea player but has also been flexing its muscles in green energy areas, said: “This result was driven by an exceptional gas marketing and trading performance, significantly higher oil prices and higher refining margins.”
The company will launch a $500m shares buyback in the second quarter as it confirmed that it had reached its target of reducing net debt to below $35bn earlier than expected. Its net debt stood at $33.3bn at the end of last month, helped by a programme of asset sales and firmer oil prices.
Stuart Lamont, investment manager at wealth management firm Brewin Dolphin, said: “Despite the continuing Covid-19 outbreak and worldwide impact, BP has posted strong earnings and cashflow for the first quarter of 2021.
“Oil prices are starting to reflect the sense of optimism felt as economies begin to reopen and vaccination programmes continue, however, this increased demand is expected to be a short-term boost.
“Transition remains the underpinning theme, with BP continuing to evolve and diversify into low-carbon energy such as offshore wind and the recently announced blue hydrogen facility at Tee side.
“Following early completion of its asset disposal programme and with its net debt targets achieved early, BP expects to resume share buybacks in the coming months which will be welcome news for investors.”
BP chief executive Bernard Looneysaid:“t his quarter demonstrateswhat we mean by performing while transforming.
“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.
“We are commencing share buybacks in the second quarter which, alongside our resilient dividend, support the growth in distributions to shareholders.”
BP announced a dividend of 5.25 cents a share for the first quarter, which is in line with the previous quarter’s payout, but half that seen a year earlier.
Steve Clayton, manager of the HL Select UK Income Shares fund, which has a holding in BP, added: “The market could not have asked for more from BP with these results. The company has seized the opportunity of a recovery in energy prices to pay down its debts, leaving it well set for the future when conditions might not be so favourable.
“The energy sector had a tough pandemic; oil prices crashed as travel ground to a halt around the globe. bpi snow riding the recovery and reshaping the business for a low-carbon future .”