BP Shares Rise After Payments Increase, Boosting Transition
- BP’s second quarter profits beat expectations at $ 2.8 billion
- Company Increases Dividend 4%, Announces $ 1.4 Billion Share Buyback
- GRAPHIC: BP dividend https://tmsnrt.rs/3CaSWI1
LONDON, Aug. 3 (Reuters) – BP (BP.L) increased its dividends and share buybacks on Tuesday, pushing its shares up more than 5%, after beating expectations with a profit of 2.8 billion dollars in the second quarter fueled by rising oil prices and recovering demand.
The good results, supported by increased sales at gasoline stations, helped allay investor concerns about BP’s plan to shift from oil and gas to renewable and low-carbon energy to combat climate change.
The 4% dividend increase coupled with a $ 1.4 billion share buyback over the next three months pushed BP shares up 5.6% at 11:30 GMT, topping its peers Royal Dutch Shell (RDSa.L) and TotalEnergies (TTEF.PA), which were up more than 2%.
Tuesday’s announcement brings BP’s total shareholder payments in 2021 to around 4.4 billion pounds ($ 6.13 billion), which is more than 7% of its market capitalization, Russ Mold said, director of investments at AJ Bell.
BP, which plans to cut oil production by 40% or 1 million barrels per day by 2030, generated a cash surplus of $ 2.4 billion in the first half.
“Investors now need to assess whether this return offers more than compensation for the risks associated with owning BP stock, as the company tries to maximize the value of its existing hydrocarbon assets … while investing in energies. renewable, ”Mold said.
Competitors including Shell, TotalEnergies and Chevron (CVX.N) also increased returns to shareholders last week, reflecting a recovery from the impact of the pandemic on energy demand. Read more
BP increased its dividend to 5.46 cents after being halved to 5.25 cents in July 2020 for the first time in a decade.
The company is repurchasing shares after announcing in April a repurchase plan of 500 million dollars to compensate for the dilution of a program of distribution of shares to the employees. Read more
Managing Director Bernard Looney said stronger performance and prospects for improvement would allow the company to move forward with a transition to cleaner energy.
“The strengthening of the balance sheet and the excess cash flow allow us to continue our agenda around the energy transition,” Looney told Reuters.
BP expects global oil demand to return to pre-pandemic levels in the second half of 2022.
Its underlying replacement cost profit, the company’s definition of net profit, reached $ 2.8 billion in the second quarter, exceeding the $ 2.15 billion expected by analysts.
This was up from $ 2.63 billion in the first quarter and marked a rebound from a loss of $ 6.68 billion a year earlier.
The results were also supported by higher demand for fuel, including aviation fuel, and higher profit margins at convenience stores at BP’s gas stations, he said.
BP’s net debt fell to $ 32.7 billion from $ 40.1 billion.
BP said it has increased its price forecast for benchmark Brent crude oil through 2030 to reflect expected supply constraints, while lowering its longer-term price forecast as it expects the market to accelerate. transition to renewable energies.
As a result, the company increased the pre-tax value of its assets by $ 3 billion, after write-downs of more than $ 17 billion last year.
The company said that at an oil price of $ 60 a barrel, it expects to be able to buy $ 1 billion in shares and increase its dividend by 4% per year through 2025.
Brent oil prices rose in the second quarter to average $ 69 per barrel, down from $ 61 in the previous quarter and $ 29.56 a year earlier.
($ 1 = 0.7177 pounds)
Reporting by Ron Bousso, editing by Anil D’Silva, Jason Neely and Barbara Lewis
Our Standards: Thomson Reuters Trust Principles.