- Net income ahead of analyst expectations
- Trading operations perform strongly
BP’s (BP.) profits extravaganza has continued in the first quarter, with lower energy prices balanced by higher refining margins and oil and gas trading profits. Net income came almost $600mn (£482mn) ahead of analyst expectations at $5bn. The energy giant has reduced its share buybacks for the quarter, however, to $1.75bn compared with a $2.5bn forecast. The shares dropped 5 per cent on the update.
Oil prices climbed at the start of this current quarter after Opec announced a further production cut, but traded strongly for much of the period, sitting at over $80 a barrel. Gas prices were low compared with last year, however, trading as low as $2 per million British thermal units – a price not seen since 2020.
BP’s trading divisions made up for this, however. The company’s preferred profit measure, underlying replacement cost (RC) profit before interest and tax, was level with the final quarter of 2022 at $9.2bn. Its reported profit was $8.2bn, down 24 per cent quarter-on-quarter even with a lower tax charge. The company said it incurred $650mn in taxes on its North Sea operations.
Refining margins have come down in the current quarter, although BP flagged “higher marketing margins and seasonally higher volumes compared with the first quarter”.
RBC Capital Markets analyst Biraj Borkhataria said free cash flow momentum would be “weaker from here”, pointing to a Macondo/Deepwater Horizon payment due this quarter and higher maintenance levels. “This could improve later in the year,” he added.
The Q1 results came after an annual general meeting dominated by investors’ climate concerns. Activists claimed a win for a climate resolution that called for BP to set new goals that would match with the Paris goals, which garnered 17 per cent support. Another group pushed for chair Helge Lund to be voted off the board, but he received 90 per cent support from shareholders.
