BP increases its dividend after its profit hits its highest level in 14 years

LONDON, Aug 2 (Reuters) – BP’s (BP.L) second-quarter revenue rose to $8.45 billion, its highest degree in 14 years, as sturdy refining and buying and selling margins prompted it to extend its dividend and spending on new oil and fuel manufacturing.

The sturdy efficiency caps an explosive quarter for main Western oil and fuel corporations as hovering vitality costs have elevated strain on governments to impose new taxes on the sector to assist shoppers .

“The corporate is performing properly and continues to strengthen. Now we have actual strategic momentum,” CEO Bernard Looney informed Reuters.

BP shares had been up 4.3% at 13:15 GMT, hitting their highest ranges since June and strongly outperforming the European vitality index (.SXEP) which rose 0.7%. BP shares have gained 23% this 12 months, however are nonetheless 10% under pre-pandemic ranges.

Looney, who took workplace in 2020 with vows to shortly shift BP from fossil fuels to renewables, mentioned the corporate would enhance spending on new oil and fuel by $500 million in response to the coronavirus disaster. world provide. Learn extra

“We are going to direct extra funding into hydrocarbons to assist with near-term vitality safety,” Looney mentioned. “We are going to in all probability spend about half a billion {dollars} on hydrocarbons.”

BP expects to maintain general capital spending this 12 months within the $14 billion to $15 billion vary.

BP raised its dividend by 10% to six.006 cents per share, greater than its earlier forecast of a 4% annual enhance. It halved its dividend to five.25 cents in July 2020 for the primary time in a decade following the pandemic.

The corporate additionally elevated its share buyback plan for the present quarter to $3.5 billion after shopping for $4.1 billion within the first half of the 12 months.

“The truth that it produced its highest quarterly revenue in 14 years, although oil costs had been greater throughout that interval than they’re now, means that BP is a extra environment friendly machine than it’s. it was once,” AJ Bell chief funding officer Russ Mould mentioned.

The corporate mentioned it expects crude oil and fuel costs in addition to refining margins to stay “excessive” within the third quarter and mentioned it could keep on with its goal of utilizing 60% of its extra money for share buybacks.

Rising income additionally allowed BP to chop its debt sharply to $22.8 billion from $27.5 billion on the finish of March.

BIG BONANZA OF OIL

BP lifts the second-quarter revenue whole of main Western oil and fuel corporations to $59 billion after rivals like Exxon Mobil (XOM.N) and Shell (SHEL.L) reported file income final week. Learn extra

Its underlying substitute value revenue, its definition of internet revenue, reached $8.45 billion within the second quarter, the best since 2008 and much exceeding analysts’ expectations of $6.8 billion.

That was up from $6.25 billion within the first quarter and $2.8 billion a 12 months earlier.

The sturdy efficiency was pushed by sturdy refining margins, “excellent” oil buying and selling efficiency in addition to greater gasoline costs, though fuel buying and selling was weaker, BP mentioned.

An outage at a serious liquefied pure fuel (LNG) plant on the US Gulf Coast additionally weighed on earnings.

The Freeport LNG plant provides BP with 4 million tonnes of LNG per 12 months, out of a complete portfolio of 18 million tonnes.

BP is in search of methods to provide clients regardless of the lack of provide, however it should come at a excessive value, chief monetary officer Murray Auchinclos informed Reuters.

The corporate has allotted funds to cowl further LNG provide prices following the Freeport outage, he mentioned.

Jefferies analysts estimated these further prices this quarter would whole between $700 million and $900 million.

Reporting by Ron Bousso and Shadia Nasralla; edited by Jason Neely

Our requirements: The Thomson Reuters Belief Rules.