Oil giant BP hiked its dividend and accelerated share buy-backs to the fastest pace yet after profits surged.
The oil and gas industry is boosting returns to shareholders as the cash rolls in, even while the energy crisis triggered by Russia’s invasion of Ukraine threatens the global economy. BP said it expected prices to remain high and highlighted its investments in additional supplies.
The oil and gas industry is boosting returns to shareholders as the cash rolls in, even while the energy crisis triggered by Russia’s invasion of Ukraine threatens the global economy. BP said it expected prices to remain high and highlighted its investments in additional supplies.
“Today’s results show that BP continues to perform while transforming,” chief executive Bernard Looney said in a statement on Tuesday. The company is “providing the oil and gas the world needs today — while at the same time investing to accelerate the energy transition”.
Mr Looney said it would be hard to cut fuel prices for UK motorists any faster after the UK government’s windfall tax. Prices at BP’s UK forecourts have fallen by as much as 6p a litre from a peak earlier this year as crude oil has dipped. But Mr Looney said that it would be difficult to follow France’s TotalEnergies, which has pledged to intervene with a series of price cuts for French motorists from September.
“Different countries are choosing different approaches to how to handle the cost-of-living crisis,” Mr Looney told the Financial Times, noting that France, unlike the UK, had not increased taxes on energy companies since the start of the crisis.
“Our tax bill will be significantly higher here in Britain than what it would otherwise have been and it is clearly now for the government to decide how to allocate the revenues from that additional tax to help support those best in need.”
BP’s second-quarter adjusted net income was $8.45 billion, the highest since 2008 and comfortably beating even the highest analyst estimate. This wasn’t just driven by high crude and natural gas prices — the company’s refineries earned strong margins and its oil traders delivered an “exceptional performance”.
The dividend was increased to 6 cents a share, an improvement from a previous commitment to raise the payout by about 4 per cent annually through to 2025. Net debt fell to $22.82 billion (€22.3 billion) at the end of the period, down from $32.7 billion a year ago.
The oil sector’s sky-high profits come at a politically tricky time for an industry accused of profiteering from the fallout from Russian president Vladimir Putin’s aggression, while also failing to invest enough in new drilling. Alongside its earnings statement, BP published an extensive list of investments it is making in the UK, where the rising cost of energy has become a hot political issue and the North Sea oil and gas industry has already been hit by a windfall tax.
With recession fears gathering pace, there has been speculation that the second quarter could end up marking the high point for big oil this year. BP said it expected oil and natural gas prices, and refining margins, to stay high in the third quarter because of disruptions in Russian supply, relatively low inventories and reduced spare capacity. — Bloomberg, the Financial Times
