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BP PLC on Tuesday said it began 2023 strongly, swinging to a profit in the first quarter as revenue ticked up and impairments were significantly reduced.
In response, the London-based oil major declared a higher dividend and announced a $1.75 billion share buyback.
Despite the positive results and shareholder returns, BP shares were down 5.1% to 507.50 pence each early Tuesday in London.
Underlying replacement cost pretax profit was $13.23 billion in the first quarter, swinging from a loss of $20.40 billion. Statutory pretax profit was $12.63 billion, swinging from $16.90 billion loss.
This was in line with total revenue and other income rising by 11% to $56.95 billion from $51.22 billion, while net impairment and losses on sale of businesses and fixed assets fell away to $88 million from $26.03 billion.
While financial performance improved from a year before, earnings dropped from the fourth quarter of 2022. Underlying RC pretax profit fell 31% from $19.15 billion, statutory pretax profit fell 29% from $17.72 billion, while revenue fell 19% from $70.36 billion.
Net impairment and losses still improved, however, dropping from $3.63 billion.
BP increased its first quarter dividend by 21% to 6.61 US cents from 5.46 US cents a year earlier.
BP announced a further share buyback of around $1.75 billion, which it intends to execute from surplus cash flow prior to announcing its second quarter results. During the first quarter, BP completed around $2.2 billion in buybacks from surplus cash flow, as part of a $2.75 billion share buyback programme announced with its fourth-quarter results.
Turning to production, BP’s first quarter operations improved from a year earlier. Total upstream production was around 2.33 billion barrels of oil equivalent per day, up 3.4% annually.
Within Gas & Low Carbon Energy, total hydrocarbons production was 969 million barrels of oil equivalent per day, firming 0.3% from 966 million a year earlier, and up 1.4% from 956 million in the fourth quarter of 2022.
Within Oil Production & Operations, total hydrocarbons production was 1.36 billion barrels of oil equivalent per day, up 5.4% from 1.29 billion a year earlier, and up 3.8% from 1.31 billion in the fourth quarter of 2022.
‘This has been a quarter of strong performance and strategic delivery as we continue to focus on safe and reliable operations. Momentum continues to build across our integrated energy company strategy, with the start-up of Mad Dog phase 2 [project in the Gulf of Mexico], our agreement to acquire TravelCenters of America and progress towards hydrogen and [carbon capture and storage] projects in the UK,’ said Chief Executive Officer Bernard Looney.
‘And importantly we continue to deliver for shareholders, through disciplined investment, lowering net debt and growing distributions.’
Chief Financial Officer Murray Auchincloss added: ‘In the first quarter, BP delivered resilient earnings and continues to execute against its unchanged financial frame. We are strengthening the balance sheet, investing with discipline to advance our strategy, and are committed to returning 60% of 2023 surplus cash flow through share buybacks with a further $1.75 billion announced for the first quarter.’
Looking ahead, BP said it expects oil prices to remain elevated in the second quarter, noting the recent Opec+ decision to restrict production, alongside strengthening Chinese demand, as tightening supply and demand balances.
In the second quarter, BP expects European gas and Asian liquefied natural gas prices to be supported by recovering Chinese gas demand, restocking of European storage capacity and coal-to-gas switching, In the US, it also expects Henry Hub gas prices to be buoyed by coal-to-gas switching across the power sector.
Across its own operations, BP expects second quarter upstream production to be lower across both Gas & Low Carbon Energy and Oil Production & Operations operations, but for 2023 upstream production to be broadly flat compared to 2022.
BP said it continues to expect 2023 capital expenditure of around $16 billion to $18 billion, keeping steady from $16.33 billion across 2022.
Cash and cash equivalents at the end of the first quarter was $30.43 billion, down 12% from $34.41 billion a year earlier.
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