BP hikes dividend on boost from buoyant oil prices

By Louis Goss

BP on Tuesday upped its dividend and expanded its share buyback plan after posting better-than-expected second-quarter results that were boosted by buoyant oil prices.

The British oil major beat expectations in posting a 6% increase in its underlying replacement cost (RC) profit, to $2.76 billion, compared to the $2.54 forecast by 25 analysts polled by the company itself.

The FTSE-100 index energy giant, in turn, lifted its dividend by 10%, to 8c per share, and vowed to buy back another $3.5 billion worth of its own shares from shareholders as it benefited from an 8.8% year-on-year increase in Brent crude prices to $85 a barrel.

BP (UK:BP) (BP) shares, listed on the London Stock Exchange, increased 2% on Tuesday having lost 5% of their value over the previous 12 months.

In the second quarter, BP's results were boosted by a 27% increase in underlying RC pre-tax profits from its oil production and operations segment, to $3.27 billion, driven by higher prices and an 8.2% increase in production.

The strong result from the segment that manages BP's oil and natural gas production assets offset a 37% slump in underlying RC profits from its gas and low carbon energy division, to $1.15 billion, driven by an underwhelming set of results from its gas trading business.

BP is now planning to generate earnings before interest, tax, depreciation and amortization (EBITDA) worth $46 billion to $49 billion in the full-year 2025, up from $43 billion in 2023, by boosting its oil and gas production.

This is set to see the supermajor start up five new major oil and gas projects and also boost its production of liquified natural gas in line with new CEO Murray Auchincloss' push to prioritze shareholder returns over achieving green ambitions.

Auchincloss in May signaled the company will focus on generating "returns and cash flow" over hitting the ambitious climate ambitions it set out under its previous chief executive Bernard Looney who left the oil major in September 2023.

BP on Tuesday also announced that it had made a final investment decision to develop the Kaskida project in the Gulf of Mexico by drilling an initial set of six wells which contain estimated reserves of 275 million barrels of oil.

The supermajor said it also expects to make a final investment decision its Tiber project in the Gulf of Mexico in 2025 having first discovered the reserves in 2009.

The increase in BP's share price comes after stock in the London headquartered oil major previously slumped by 2% at the start of July when it said it expected to take a $700 million hit to its second-quarter profits due to a slump in its refining margins.

-Louis Goss

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07-30-24 0613ET

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