BP joins Big Oil profit bonanza with further share buybacks

The British supermajor books major Q3 profit, the group’s second-highest to date, also announcing share buybacks worth USD 2.5bn.
Photo: Henry Nicholls/
Photo: Henry Nicholls/
By William Mathis, Bloomberg News

BP Plc posted its second-highest quarterly profit on record and announced a further USD 2.5bn of share buybacks, capping a stellar period for Big Oil after Russia’s invasion of Ukraine pushed up energy prices.

The strong earnings, which included an “exceptional” performance from gas trading, is delivering a windfall for investors, but also stoking the ire of politicians who are grappling with the economic damage from soaring inflation and rising interest rates.

BP’s home country of the UK has already imposed additional taxes on the oil industry, and companies could face more levies as US President Joe Biden and some other European governments seek to mitigate the impact of high energy prices.

BP’s adjusted net income was USD 8.15bn, just below the record set in the second quarter, but still well ahead of the average analyst estimate of USD 6.18bn, the company said in a statement on Tuesday. It’s more than double the level from a year ago.

Once again, BP’s large and opaque trading unit appeared to be key to the better-than-expected profit. The company said its gas marketing results were particularly notable in what was a very volatile quarter for prices in Europe.

Bumper profits have been used to pay down debt and reward shareholders. The company’s latest share buyback brings total repurchases announced in 2022 to USD 8.5bn. Net debt fell to USD 22bn, dropping at a slower pace than prior quarters but still down by almost USD 10bn from a year earlier.

BP is also channeling its extra cash into low-carbon energy after its pledge to achieve net-zero carbon emissions by 2050. Last month, it agreed to acquire biogas producer Archaea Energy Inc. for about USD 4.1bn including debt.

“We are providing the oil and gas the world needs today, while at the same time investing to accelerate the energy transition,” BP Chief Executive Officer Bernard Looney said in the statement.

The rising payouts are pleasing investors. BP shares are up about 45% this year to the highest level since February 2020, just before the coronavirus pandemic hammered the oil industry.

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