BP’s Profits Higher Than Expected

A driver fills a fuel tanker at the BP Plc fuel terminal in Hemel Hempstead, UK, on Oct. 4, 2021. Dan Kitwood/Getty Images

Energy giant BP has shared its first quarter results of the year, announcing a profit of $5 billion and citing strong performance in its oil trading business.

Although a reduction from the $6.2 billion in the same quarter last year, the figures set at least a 10-year record for the London-based company.

BP published its performance results on May 2, reporting a $5 billion underlying replacement cost profit for the first quarter of 2023, compared with $4.8 billion for the previous quarter.

The drop from 2022, attributed to BP’s lower profits from selling oil and gas, was partly offset by “an exceptional gas marketing and trading result.” The 2023 figures have also surpassed the expectations of $4.3 billion, put forward by a company-provided survey of analysts.

“This has been a quarter of strong performance and strategic delivery as we continue to focus on safe and reliable operations,” BP’s CEO Bernard Looney said in a statement.

BP also said that its shares had fallen around 4.5 percent by 7:35 a.m. GMT. The company announced a further $1.75 billion share buyback over the next three months, down from $2.75 billion in the previous three months. Its dividend remained at 6.61 cents per share, following a 10 percent increase in February.

BP continues “to deliver for shareholders, through disciplined investment, lowering net debt and growing distributions,” according to Looney, who has also confirmed the company’s commitment to an oil production project in the Gulf of Mexico, as well as hydrogen and carbon capture and storage (CCS) projects in the UK.

“Momentum continues to build across our integrated energy company strategy, with the start-up of Mad Dog Phase 2, our agreement to acquire TravelCenters of America and progress towards hydrogen and CCS projects in the UK,” Looney said.

Global Adjustment

Alongside other energy companies, BP has been navigating soaring energy prices and market volatility in the wake of Ukraine’s war and the recent decision by the OPEC+ group of leading oil producers to cut production.

In April 2023 OPEC noted a voluntarily production adjustment by a number of countries, including Saudi Arabia (500,000 barrels per day), Iraq (211,000 bpd), United Arab Emirates (144,000 bpd), Kuwait (128,000 bpd), Kazakhstan (78,000 bpd), Algeria (48,000 bpd), Oman (40,000 bpd) and Gabon (8,000 bpd).

This is in addition to Russia’s adjustment of 500,000 barrels per day, bringing the “total additional voluntary production adjustments by the above-mentioned countries to 1.66 million b/d,” according to OPEC.

The commitment to the adjustment extends to the end of 2023.

Much like BP, energy companies such as Shell and Centrica have reported record profits for 2022 of £32.2 billion and £3.3 billion respectively.

According to the new 25 percent Energy Profits Levy, introduced by the UK government in 2022, oil and gas companies that operate in the UK or on the UK Continental Shelf are subject to the windfall tax until March 2028.

BP, Shell, and Centrica have all reported paying millions under the levy since its introduction.

Meanwhile, rising energy costs have now become a prominent issue for UK families, as reported by the Office of National Statistics on April 24. Electricity prices in the UK rose by 66.7 percent and gas prices by 129.4 percent in the 12 months to March 2023.

The news of BP’s record profits may not have been welcomed by some members of the UK government, including the shadow climate and net zero secretary, Ed Miliband, who said that energy giants profit “at the expense of British families.”

However, BP maintains that it is “working hard to accelerate the energy transition and keep energy flowing where it’s needed.”