BP posts almost $5 billion in first-quarter profit but slows share buyback

Results beat analyst expectations on the back of stronger oil and gas trading

BP will reward investors by repurchasing a $1.75 billion in shares over the next three months. Reuters

BP posted a profit of about $5 billion in the first quarter of this year after stronger oil and gas trading, significantly beating analyst expectations.

The oil and gas company said it made an underlying profit of $4.96 billion (£4 billion) in the first three months of 2023.

That was up from the $4.8 billion it made in the fourth quarter of last year but down from the $6.25 billion it made in the same period last year.

However, profits remain strong by historical standards and follow last week's similar results from rivals such as Exxon Mobil and Chevron as the oil companies continue to benefit from energy prices that are still robust despite some softening since the start of the year.

BP is generating extra cash as a result, allowing it to reward investors by repurchasing a further $1.75 billion in shares over the next three months, after buying $2.75 billion in the previous three months.

BP's dividend remained unchanged at 6.61 cents per share after a 10 per cent increase in February.

“We continue to deliver for shareholders, through disciplined investment, lowering net debt and growing distributions,” chief executive Bernard Looney said on Tuesday.

Nick Butler, a former BP executive and current visiting professor at King's College London, said the results came from “a good internal business performance but also from high prices around the world”.

“The challenge of BP is how to use the money that they're getting in and, from what I've read … they're putting a lot back into both conventional energy oil and gas, and into low-carbon activity.”

However, Mr Butler warned profits could fall in the coming months, reflecting a reduction in the oil price.

“Just looking at oil and gas prices [we know they are] below where they were a year ago," he said.

“That's why the profits are lower than the comparable quarter last year ... I think they will come down quite a lot this year."

Mr Butler said this would "have an impact" on BP's revenue.

He added that the firm has stability "and a balance between what they're doing with the money, and a good lot of projects which are going ahead in the UK and around the world, both oil and gas, and low carbon", activities he said could form "a very interesting part of the future”.

New schemes include a joint non-binding offer with Adnoc to acquire 50 per cent of Israel's NewMed Energy and take the company private.

BP said it expected oil and European gas prices to remain strong in the second quarter, even as refining profit margins are forecast to weaken due to lower diesel prices.

BP shares have outperformed in the sector so far this year, up 10 per cent compared to a 6 per cent rise for Exxon and a 3 per cent for Shell.

Benchmark Brent crude oil prices averaged $81 per barrel in the first three months of the year, down 16 per cent from a year earlier and 7 per cent from the fourth quarter.

BP's profit hit a record $28 billion last year due to soaring energy prices and market volatility, which boosted its large trading business.