After TotalEnergies, another oil giant announces rising quarterly earnings
The group thus has a consolidated profit share of 9.26 billion dollars (9.03 billion euros) in the second quarter. It took the opportunity to increase the dividend paid to its shareholders by 10% for the period and launch a new share buyback program.
For the first six months of the year, BP posted a net loss of $11.13 billion after spending $24.4 billion after taxes in the first quarter following its exit from Russia’s Rosneft, as in the wake of the Russian invasion of the US Ukraine.
Hydrocarbon prices have been rising for months and gas prices, which fell from peaks reached in March just after the conflict erupted, are rebounding after Russian supplies fell.
Excluding special items, BP posted a profit of $8.45 billion in the second quarter, compared to $14.7 billion in the first half (ie especially excluding the impact of the exit from Russia).
These quarterly results “highest in 14 years” are “well above analysts’ forecasts” and show that “BP is a much more efficient machine than in the past”notes Russ Mold, an analyst at AJ Bell.
Enough to pass some of the gains on to its shareholders: After a $2.5 billion share buyback program completed on July 22, BP announced another 3.5 billion buybacks on Tuesday.
Those announcements also supported the action, which rose 3.44% to 405.85 pence around 11:30 GMT on Tuesday on the London Stock Exchange.
BP is the latest oil major to post a pharaonic profit. Combined earnings from the industry’s largest companies (TotalEnergies, Shell, Exxon, Chevron and BP) were about $62.5 billion in the second quarter.
These results are startling in the UK amid a severe cost-of-living crisis, and London had announced in May a temporary 25% tax on energy sector profits to partially fund state aid to the poorest households.
Not enough, criticized the NGO Greenpeace in a press release on Tuesday and called on the government to tax more “those monstrous wins” and to “Stop giving companies massive tax breaks for destructive new investments” in hydrocarbons.
Investments in the UK
“We must remember that two years ago we had to make the difficult decision to cut the dividend by 50%.”in a market thrown into crisis by the pandemic, chief executive Bernard Looney argued during an investor conference.
The UK tax will not stop the oil giant from investing £18bn in the UK over the decade as it plans to, Mr Looney also assured “The majority in the energy transition”but also in hydrocarbons, especially in the North Sea, he explained.
BP also announced in June that it would take a 40.5% stake in Australia’s project billed as the world’s largest renewable energy facility, which will generate solar, wind or green hydrogen power: the Asian Renewable Energy Hub (AREH) valued at $36 billion.
But since the beginning of the year “BP spent a total of $361 million on low-carbon energy”much less than in hydrocarbons, the “continues to show how little renewable energy is used compared to oil and gas”according to CMC Markets analyst Michael Hewson.
BP expects oil prices to remain high in the third quarter “due to continued disruption in Russian supplies”but also inventories “well below the five-year average”.