BP unveils further bumper profits as oil and gas price hikes continue to fuel energy giant’s earnings
BP’s profits have beaten industry forecasts, with the energy giant posting £3.97bn earnings during the first quarter of trading this year.
It confirmed underlying replacement cost profits – the way BP prefers to measure its earnings – were £560m higher than City predictions.
This is above last quarter’s £3.84bn profits, but below the £4.96bn earnings reported in last year’s first quarter.
It is also not the first energy giant to unveil robust quarterly earnings this year, with Stateside rivals Chevron and Exxon Mobil last week posting profits of £5.27bn and £9.17bn respectively.
BP attributed its performance to “exceptional” gas marketing and “very strong” oil trading.
It also expects European oil and gas prices to remain strong by historical standards in the current second quarter.
However, BP’s year-on-year drop reflects easing profits – which are paring back from the record peaks of 2022 across the energy sector.
This has seen the energy giant’s share price has fallen nearly five per cent on the FTSE 100 in this morning’s trading, amid growing expectations markets are gradually calming – with fossil fuels easing closer to conventional pre-crisis prices.
BP’s bumper £23bn profits last year were fuelled by soaring fossil fuel prices in the wake of Russia’s invasion of Ukraine.
Concerns of supply shortages and Russia’s throttling of gas flows saw oil prices peak at a 14-year high of $139 per barrel and gas climb to a record £8 per therm.
Oil prices are now less than $80 per barrel, while gas prices have dipped to less than 90p per therm.
BP has also slashed overall buybacks from £2.2bn to £1.4bn quarter-to-quarter – despite rewarding shareholders with a 6.6 cents per share dividend payment – up from 5.4 cents a year ago.
The figures will likely revive a debate over whether taxation on energy firms is tough enough – with BP revealing it paid £2.7bn in taxes worldwide.
This includes £520m on its North Sea business in the first quarter, including £240m which could be attributed to the windfall tax.
Shell results later this week
BP also emerged from its shareholder showdown unscathed last week, fighting off rebellious activists with overwhelming support for its watered-down climate plans.
It is planning to hike spending on drilling for oil and gas by £6.4bn – while also increasing spending on the transition to a green economy by the same amount.
The company has also eased its in oil and gas production reductions from 40 per cent to 25 per cent at the end of this decade to be an adjustment to its wider climate strategy, which was resoundingly approved by shareholders last year.
Both companies have made vast investment pledges this decade, with Shell and BP announcing plans to invest £25bn and £18bn respectively this decade in domestic waters.
In the North Sea, BP recently snapped up a 40 per cent stake in the Viking carbon capture and storage (CCS) project.
Meanwhile three BP-led hydrogen and CCS projects in the North East have been chosen by the government to progress to the next stage of development
Away from the energy giants, North Sea firms are slashing investment in new projects following the toughened windfall tax last year – with growing concerns over whether Ithaca Energy will commit to Rosebank, the biggest undeveloped oil and gas field in UK waters which it has a 20 per cent stake in.