BP adds to big oil cash flow with increased dividends and share repurchases

(Bloomberg) — BP Plc increased its dividend and extended share buybacks after posting a record profit of $27.65 billion for 2022, joining its fellow supermajors in reaping the benefits of skyrocketing oil and natural gas prices.

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The cash flow brings significant returns to investors – a 10 percent increase in dividends and an additional $2.75 billion in buybacks – and also highlights the contradiction at the heart of the European oil industry. As large producers increasingly talk about the need to reduce emissions and switch to cleaner energy, their polluting fossil fuel business is becoming increasingly profitable as a result of Russia’s invasion of Ukraine.

BP has committed to accelerate investment in both low-carbon energy and fossil fuels. However, the company has slowed down its plan to phase out oil and gas and will be less aggressive in cutting carbon emissions.

By 2030, fossil fuel production will be about 25% lower than in 2019, excluding the contribution of Russian PJSC Rosneft. This is a big revision of the 2020 target of a 40% reduction in production by the end of the decade.

The company’s shares rose 3.2% to 493.5 pence as of 8:01 am in London.

“We are increasing our investment in our transition and, at the same time, increasing investment in today’s energy system.” This was announced on Tuesday by CEO Bernard Looney. “This is what governments and clients are asking for from companies like us.”

BP said it would evenly spread the additional investment between low-carbon energy and oil and gas, spending up to $8 billion on each by 2030. the rest of the decade.

The company will focus on oil resources that can be developed quickly, that provide quick payback and generally higher profits. Last month, in its Energy Outlook report, BP predicted that Russia’s invasion of Ukraine would accelerate the world’s transition away from fossil fuels as countries seek to increase energy security by producing more renewable energy at home.

BP has committed to delivering higher returns on both clean energy and fossil fuels. By increasing investment and revising upward oil and gas price assumptions, the company said it would increase earnings per share before interest, taxes, depreciation and amortization by 12% per year through 2025.

BP’s fourth-quarter adjusted net income was $4.81 billion, lower than record levels hit earlier this year and below analysts’ average estimate of $5.11 billion.

The boom in profits benefited BP’s balance sheet, causing concern among investors in the years following the 2010 Deepwater Horizon oil spill. Net debt contracted for the 11th consecutive quarter and was down $9.2 billion from 2022.

–With assistance from Will Kennedy.

(Updates with share price in fifth paragraph.)

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