BP raises dividend after income hit 14-year excessive

  • Profit soars to $8.45 billion, far exceeds forecast
  • BP increases dividend by 10%
  • CEO says BP boosts spending on oil and gas
  • Profits driven by strong oil business, influenced by LNG

LONDON, August 2 (Reuters) – BP’s (BP.L) Second-quarter profit jumped to $8.45 billion, its highest in 14 years, as strong margins and its refining business spurred the company to increase dividends and spend on new oil and gas production.

Strong performance capped a difficult quarter for leading Western oil and gas companies as soaring energy prices increased pressure on governments to impose new taxes on the sector. this area to help consumers.

“The company is doing well and continues to be strong. We have real strategic momentum,” Chief Executive Officer Bernard Looney told Reuters.

Sign up now for FREE unlimited access to Reuters.com

BP shares were up 4.3% at 1315 GMT, hitting their highest level since June and outperforming the European energy index. (.SXEP) up 0.7%. BP shares are up 23% this year but are still 10% below their pre-pandemic levels.

Looney, who took office in 2020 on a vow to quickly move BP away from fossil fuels to renewables, said the company would increase spending on new oil and gas by $500 million in response to the crisis. global supply shortage. read more

“We will invest more in hydrocarbons to help ensure energy security going forward,” said Looney. “We’ll probably spend about half a billion dollars on hydrocarbons.”

BP plans to maintain its total capital expenditure this year between $14 billion and $15 billion.

BP raised its dividend 10% to 6,006 cents per share, more than its previous guidance of a 4% annual increase. It halved its dividend to 5.25 cents in July 2020 for the first time in a decade after the pandemic.

The company also increased its share repurchase plan for the current quarter to $3.5 billion after buying $4.1 billion in the first half of the year.

AJ Bell chief investment officer Russ Mold said: “The fact that it generated its highest quarterly profit in 14 years, even though oil prices were higher during that period than they are today, shows that BP was a machine. more efficient than before,” said AJ Bell investment director Russ Mold.

The company said it expected crude oil and gas prices as well as refining margins to continue “high” in the third quarter, and said it would stick to its target of using 60% of surplus cash. to buy back shares.

Reuters graphics

The soaring revenue also allowed BP to drastically reduce its debt from $27.5 billion to $22.8 billion at the end of March.

BIG BONANZA OIL

BP brings second-quarter profits for leading Western oil companies to $59 billion behind rivals including Exxon Mobil (XOM.N) and Shell (COVER) reported record earnings last week. read more

Its underlying replacement cost profit, the definition of net income, hit $8.45 billion in the second quarter, the highest since 2008 and well ahead of analysts’ expectations of 6.8. billion dollars.

This is up from $6.25 billion in the first quarter and $2.8 billion a year earlier.

This strong business was driven by high refining margins, “extraordinary” oil business performance as well as higher fuel prices, despite weaker gas trading, BP said.

An outage at a major U.S. Gulf Coast liquefied natural gas (LNG) plant also affected profits.

The Freeport LNG plant supplies BP 4 million tons of LNG per year, out of a total portfolio of 18 million tons.

BP CFO Murray Auchincloss told Reuters.

Reuters graphics

The company has allocated funds to cover the additional costs of delivering LNG as a result of Freeport’s shutdown, he said.

Jefferies analysts estimate those extra costs this quarter will total between $700 million and $900 million.

Sign up now for FREE unlimited access to Reuters.com

Reporting by Ron Bousso and Shadia Nasralla; Edited by Jason Neely

Our standards: Thomson Reuters Trust Principles.

Leave a Comment