Amid lower fossil fuel costs, BP’s profits tanked in comparison to the bumper profits recorded in 2022.
On Tuesday, May 2, oil major British Petroleum (BP) reported stronger-than-expected first-quarter (Q1 2023) profits, and rising from the previous quarter i.e. Q4 2022. However, the numbers were down from the exceptional profits that the company recorded during a blockbuster 2022 when fossil fuel prices shot up significantly following Russia’s invasion of Ukraine.
BP Q1 2023 Performance
During the first quarter, the British energy giant reported an underlying replacement cost profit of $4.96 billion. This was higher than the $4.8 billion net profit in Q4 2022 but lower than the $6.2 billion profit recorded in Q1 2022. Analysts expected British Petroleum to report $4.3 billion in profit during the first quarter this year.
The first quarter results from British Petroleum reflect robust oil and gas trading. Speaking on the development, BP CEO Bernard Looney said:
“This has been a quarter of strong performance and strategic delivery as we continue to focus on safe and reliable operations. And importantly we continue to deliver for shareholders, through disciplined investment, lowering net debt and growing distributions.”
BP Stock Price and Share BuyBack
During the earning morning trade on the London stock exchange, shares of BP tanked by more than 5% while slipping to the bottom of the pan-European Stoxx 600 index. The energy giant said that it expects to deliver a share buyback of $4 billion a year. This is still at the lower end of the company’s $14 billion to $18 billion capital expenditure range.
For the year 2022, BP reported annual profits of $27.7 billion, more than double recorded in the previous year. The last time, the oil major recorded this massive profit was in 2008. Despite a barrage of criticism, big oil giants have sought to defend their profits highlighting the importance of energy security as the world transitions away from fossil fuel. BP is among the first energy giants to announce reaching an ambition of net-zero emissions by 2050.
However, shareholders have shared disappointment with some of the UK’s biggest pension funds expressing deep frustration. Some 17% of the shareholders have voted in favor of a resolution put forward by Dutch Group Follow This. This resolution calls for BP to align its 2030 emission reduction targets with the landmark Paris Agreement.
In addition to BP, French oil major TotalEnergies also kicked off its earnings season for the first quarter in line with analyst expectations. Amid lower fossil fuel prices, the company reported a 27% drop in net income to $6.5 billion.