BP earnings exceed forecasts on ‘exceptional’ oil and gas trading performance

BP’s first-quarter earnings beat market expectations but eased off the record levels set in 2022 following Russia’s invasion of Ukraine.

The underlying profits of $5bn, which exceeded average analyst forecasts of $4.3bn, were driven by “exceptional” and “very strong” performances from its gas and oil trading teams, BP said on Tuesday.

“This has been a quarter of strong performance and strategic delivery,” chief executive Bernard Looney said.

The quarterly figure was less than the $6.2bn recorded in the first three months of last year after war in Ukraine sent oil and gas prices soaring but was almost double the $2.6bn reported in the same period in 2021.

BP left its quarterly dividend unchanged after raising it by 10 per cent in February but pared back plans for share repurchases, announcing $1.75bn in buybacks to be completed in the next three months, down from the $2.75bn of buybacks it announced in the first quarter.

BP’s shares have rallied 36 per cent in the past 12 months, but the UK energy major continues to view its stock as undervalued, particularly compared with US rivals, which are trading at much higher multiples of their cash flow.

In response, it has continued to use billions of dollars of profits for share buybacks, repurchasing $11.25bn of its own shares last year.

The company said it would continue to use 60 per cent of surplus cash flow for share repurchases in 2023.

Looking ahead, BP said it expected oil prices to “remain elevated”, driven by strengthening Chinese demands and the April decision by the Opec cartel and its allies to restrict production.

Recovering Chinese gas demand, restocking of European gas storage and coal-to-gas switching for power generation would also keep European gas prices higher than historical averages, it said.