By
Bhushan Akolkar
August 1st, 2023
BP reported a headline loss of $20.4 billion for the Q1 2022 resulting from its exit from Russia.
On Tuesday, May 3, one of the world’s largest oil-and-gas giants, BP (NYSE: BP), reported bumper profits for Q1 2022. The company registered a net profit of $6.2 billion, its highest in more than a decade.
The net profit in Q1 2022 was 2.5x higher than the $2.6 billion profit reported in Q1 2021. Furthermore, it was also way more than analysts’ expectations at $4.5 billion. As a result, British Petroleum has decided to boost its share buybacks. The company announced an additional $2.5 billion in share buybacks.
BP CEO Bernard Looney told CNBC that the company’s net debt has dropped to $27.5 billion. This was the company’s eighth consecutive quarter of debt reduction. “All in all, in an underlying sense, a good quarter for the company,” he added.
Soon after BP announced its results, its stock surged 2%. The stock price of the company is already up 18% since the beginning of 2022.
Russia Exit Hurts BP
Soon after Russia invaded Ukraine in February 2022, British Petroleum announced its decision to offload its 20% stake in Russian-controlled oil company Rosneft. As a result, the company reported a headline loss of $20.4 billion for the first quarter.
This includes the non-cash pre-tax charges of $24 billion. It also includes $1.5 billion in charges concerning the exit of its Rosfnet stake. Speaking of their Russia exit, the BP CEO said:
“We took the decision to exit Russia within 96 hours of the invasion happening and today you’re seeing the financial implications of that decision. We have been very, very clear. We are announcing our intention to leave the country. We made that decision as I said very, very quickly and like any commercial process that’s ongoing, we wouldn’t comment and I’d rather not comment on that this morning.”
The European Union is now preparing for its sixth round of economic sanctions against Russia. The bloc is also enthusiastically working on winding down its dependence on energy supply from Russia.
On the other hand, the oil and gas companies in the UK are facing the chance of a windfall tax. The government will reportedly use these funds to build a national package of support and help households for their spiraling energy bills.
Rishi Sunak, the Finance Minister of UK has openly spoken about the possibility of such a tax. He has also rejected concerns that such a move could discourage private investments.
Following the pandemic, the global oil demand has been back. This year, the oil prices have shot up to more than $100 per barrel.