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BP buys back shares as oil price recovery boosts profits

Oil giant

BP

BP 1.63%

PLC said rising oil prices and strong trading performance will boost shareholder returns after boosting earnings in the first quarter. This is the strongest sign of a recovery in one of the industries most affected by the pandemic.

Oil companies endured one of the worst years of record in 2020 as the blockade of Covid-19 curbed demand and hit prices. As the economy recovers and demand begins to recover, prices will recover, helping major oil companies face more and more, if any. Uncertainty about the outlook For their business as the world moves to low carbon energy.

BP on Tuesday saw a $ 3.32 billion replacement cost profit (similar to the net profit figures reported by US oil companies) over the three months ending March 31 from a loss of $ 628 million in the year-ago quarter. Indicator) was reported.

According to the company, strong revenues and revenues from asset sales reduced net liabilities from $ 39 billion in the previous quarter to approximately $ 33 billion. Encouraged by that progress, BP said it would buy back $ 500 million in shares in the second quarter.

Bernard Looney, BP’s Chief Executive Officer, said: “of course [the oil] In terms of prices, it’s easy to imagine a world where distribution to shareholders will be above pre-pandemic levels next year. “

According to the company, the increase in profits was the result of gas marketing and trading, and Rooney said the company was in a good position against the cold in the United States and Asia, pushing up natural gas prices. He said he had benefited.

BP shares rose after rising more than 2% in their early transactions in London.

Oil prices averaged $ 61 a barrel for the three months to March 31, up more than $ 10 a barrel from the year-ago quarter. Demand continued to recover Especially after the blockade hit transport fuel last year.

BP said it expects oil demand to continue to recover this year due to strong growth in the United States and China, global vaccine deployments, and less stringent blockade restrictions. However, oil demand, like refining margins, remained below pre-pandemic levels in 2021. Gas demand will exceed 2019 levels.

Analysts say oil companies will benefit as oil prices recover after many industries cut costs, reduce labor, and in some cases cut dividends, including BP, during a pandemic. States in good condition.

when Dividend halved in August, BP has promised to repay at least 60% of its surplus cash as a repurchase after reducing its debt to $ 35 billion. It was expected to reach that goal by the fourth quarter of this year at the earliest.

Partly due to the sale of assets, we achieved our goal earlier than planned. BP plans to sell $ 25 billion in assets between the second half of 2020 and 2025, and the $ 14.7 billion sale is more than half the way to reach its goal.

Other major oil companies will also report improved Q1 results in the coming days.

Royal Dutch shell

The PLC will report on Thursday, suggesting that its oil production unit will return to profitability for the first time before the pandemic.

American companion

Exxon mobile Co., Ltd.

And

Chevron Co., Ltd.

I will report on Friday. Exxon warned of a $ 800 million hit related to Texas, where unseasonable cold caused widespread power outages earlier this year, but showed that rising oil and gas prices would boost earnings.

BP’s strong gas marketing and trading performance “is likely caused by the effects of the Texas storm,” said Billage Volcataria, an analyst at RBC Capital Markets. “They were clearly beneficiaries.”

Since steering in February last year, Rooney has begun the process of moving BP away from oil dependence. The company aims to reduce oil and gas production by 40% by 2030 and is investing in new areas such as offshore wind.

However, Investors are cautious About changes that some consider risky.

Rooney admitted that the company’s ability to provide cash returns while moving to low-carbon energy was questioned, but said the move to buy back shares was a sign that it was possible. ..

Write to Sarah McFarlane sarah.mcfarlane@wsj.com

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BP buys back shares as oil price recovery boosts profits

Source link BP buys back shares as oil price recovery boosts profits

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