BP slumps £16bn into red after pulling out of Russia
EXITING from Russia has sent BP spiralling to a record £16billion loss in the first quarter despite soaring energy prices.
The oil giant announced it would pull out shortly after Ukraine was invaded and the move will cost it £19.5billion, more than wiping out its profits.
The year before BP made a first-quarter net profit of £3.9billion. Its revenues rose for the quarter from £29.2billion to £40.9billion.
Were it not for the invasion and BP writing off its stake in Russian oil giant Rosneft and its businesses there, it would have reported its strongest quarterly results in a decade thanks to rocketing wholesale energy prices.
BP has however raised its first-quarter dividend from
4.2p per share to 4.4p and unveiled plans to return £2billion to shareholders.
That comes on top of the £1.3billion it spent on buying back and cancelling shares to boost its stock price in the first three months of 2022.
Chief executive Bernard Looney said that despite BP’s Russian losses, the oil giant will stick to its strategy and financial plans, as the business is making progress, supported by high oil and gas price, with net debt falling 17.6 per cent to £22billion.
He said: “Our decision in February to exit our shareholding in Rosneft resulted in the material non-cash charges and headline loss we reported today. But it has not changed our strategy, our financial frame, or our expectations for shareholder distributions.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said that while BP’s Russia losses are “eyewatering”, higher oil prices will help the energy giant make them back quickly.
“With growing expectation that the European Union will slap a ban on Russian crude exports at the end of the year the [oil] price is set to stay elevated, which will help BP recoup the cost of its expensive exit,” she said.
“The further $2.5billion share buyback announced underlines the company’s confidence that the direction of travel will be accompanied by higher crude prices given more of the world is set to shun Russian oil.”