Amid falling fossil fuel costs, BP’s profits have mellowed compared to the bumper profits recorded in 2022.
On Tuesday, May 2, British oil giant BP reported a stronger-than-expected first quarter (First quarter 2023) earnings, and an increase from the previous quarter, i.e. the fourth quarter of 2022. However, the numbers are down from the exceptional profits the company recorded during 2022 when fossil fuel prices skyrocketed in the wake of the Russian invasion of Ukraine.
BP Q1 2023 performance
During the first quarter, the British energy giant reported an underlying profit in replacement cost of $4.96 billion. This was higher than the net profit of $4.8 billion in the fourth quarter of 2022 but lower than the profit of $6.2 billion recorded in the first quarter of 2022. Analysts had expected BP to post a profit of $4.3 billion during the first quarter of this year. .
BP’s first-quarter results reflect strong oil and gas trading. Speaking about the development, BP CEO Bernard Looney He said:
This was a quarter of strong performance and strategic delivery as we continue to focus on safe and reliable operations. Most importantly, we continue to provide assistance to shareholders, through disciplined investing, reducing net debt and increasing dividends.”
BP share price and BuyBack shares
During profitable morning trading on the London Stock Exchange, BP shares fell more than 5% while falling to the bottom of the pan-European Stoxx 600 index. The energy giant said it expects to buy back $4 billion worth of shares annually. That’s still at the lower end of the company’s $14 billion to $18 billion capital spending range.
For 2022, BP reported annual profits of $27.7 billion, more than double the previous year. The last time the oil major posted such a huge profit was in 2008. Despite a barrage of criticism, the oil giants have sought to defend their profits highlighting the importance of energy security as the world shifts away from fossil fuels. BP is among the first energy giants to announce its ambition to reach net-zero emissions by 2050.
However, the disappointment has been shared by shareholders with some of the UK’s largest pension funds, expressing deep frustration. About 17% of shareholders voted in favor of a resolution introduced by Dutch group Follow This. The decision calls for BP to align its 2030 emissions reduction targets with the landmark Paris Agreement.
In addition to BP, French oil major TotalEnergies also kicked off its first-quarter earnings season in line with analyst expectations. Amid falling fossil fuel prices, the company reported a 27% drop in net income, to $6.5 billion.
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Bhushan is a financial technology enthusiast with a good knack for understanding financial markets. His interest in economics and finance has turned his attention towards the new emerging Blockchain technology and Cryptocurrency markets. He is persistent in the learning process and keeps himself motivated by sharing the knowledge gained. In his spare time he reads fantasy and thriller novels and occasionally explores his culinary skills.
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