BP to buy back more shares after profit doubles to $8bn

BP announced further share buybacks after underlying earnings more than doubled to $8bn in the third quarter, leaving the energy group on course for one of the most profitable years in its history.

Underlying profits for the three-month period were $8.2bn, up from $3.3bn a year earlier and far exceeding analysts’ average estimates of $6.1bn.

The group’s results cap a historic series of earnings for the world’s biggest oil and gas companies, buoyed by continued high energy prices following Russia’s invasion of Ukraine in February.

Last week ExxonMobil reported a record quarterly profit of nearly $20bn, while Shell and Chevron each posted the second-highest earnings in their histories at $9.5bn and $11.2bn respectively.

The oil and gas sector’s sustained profits since the invasion have fuelled renewed calls in several countries, including the US and UK, for more aggressive taxation of the industry.

“It’s time for these companies to stop war profiteering,” US president Joe Biden said on Monday as he threatened to impose a windfall tax on US profits unless oil and gas producers boosted production in the US to help bring down prices through an increase in supply.

In the UK, which introduced a windfall tax on oil and gas companies in May, BP said it expected to pay about $2.5bn in taxes on production from its North Sea business in 2022, including about $800mn under the government’s new energy profits levy.

The tax contribution far exceeds that of rival Shell, which last week said new investments and decommissioning costs in the North Sea meant it had paid no UK taxes this year despite global profits of more than $30bn in the first nine months of 2022.

Ben van Beurden, Shell chief executive, last week said the sector should be ready to “embrace” higher taxes. Rishi Sunak, the UK’s new prime minister, is weighing options to expand the levy.

Though slightly down from its 14-year high profit of $8.5bn in the second quarter, BP’s third-quarter earnings were once again the strongest since 2008.

The performance was helped by “exceptional” profits from its gas trading and marketing business, the company said. Underlying earnings in the gas and low-carbon energy division were $6.2bn, up from $3bn in the second quarter.

“Exceptional gas trading strikes again,” said Biraj Borkhataria, analyst at RBC Capital Markets, adding that it was “particularly impressive” given the outage earlier this year at one of BP’s main sources of liquefied natural gas in the US.

Profits from BP’s oil business, which has significant production in the US, were slightly weaker than the previous quarter because of lower refining margins and “average” oil trading results but still reached $5.2bn, the company said.

BP committed to buy back a further $2.5bn in shares in the fourth quarter, which would bring total share purchases for the year to just over $10bn. It left its dividend unchanged after raising it by 10 per cent in July.

Net debt declined for the 10th consecutive quarter to $22bn, down from $22.8bn at the end of June, after falling from $38.9bn at the end of 2020.

BP shares have risen more than 45 per cent this year.