BP posted a profit of nearly $13 billion, its highest in eight years, driven by growing demand and soaring oil and natural gas prices.
The oil group said an underlying profit of $12.8 billion last year on a replacement cost basis, a metric most closely watched by analysts. That is the highest level since 2013.
It also maintained its dividend and pledged to buy back $1.5 billion in stock in the first quarter of 2022.
Earnings for the last three months of 2021 rose to $4.1 billion from $3.3 billion in the third quarter, beating analysts’ median estimate of $3.9 billion. That compares to $100 million in the last three months of 2020.
Profit marks improved performance from 2020 as BP recorded a $5.7 billion loss – its first annual loss in a decade – after coronavirus restrictions hit oil demand and it has recorded assets worth billions of dollars.
The group’s share price fell to a 25-year low in September 2020, days after chief executive Bernard Looney presented investors with a strategy to overhaul the company by boosting investment. low-carbon investment, while cutting oil and gas production by 40% by 2030.
“Over the past two years, we have set new purpose, direction and strategy for BP, and completed the largest reorganization in our history,” he said. “With a period of radical change behind us, we are now focused solely on driving value through the safe, effective delivery of our strategy.”
Net debt fell for the seventh straight quarter to $30.6 billion, down from $32 billion three months earlier. It stands at $38.9 billion at the end of 2020.
Shares of BP are up 24% this year. The British company, like its peers, has benefited from the global energy crisis that has pushed oil prices above $90 for the first time in more than seven years and sent gas prices to record highs. .
Last week Rival Shell reported earnings of 19.3 billion dollars for 2021, driven by strong profits from its integrated gas business. US competitors ExxonMobil and Chevron are also driven by higher prices. They recorded a 2021 net profit of $23 billion and $15.6 billion, respectively, their highest levels since 2014, when crude oil last traded above $100 a barrel.
BP’s profits are supported by its oil and gas business, where high crude oil production in particular and high refining margins have supported profits, it said.
Biraj Borkhataria, an analyst at RBC Capital Markets, said it was “a consistent set of fundamental results” driven by oil production and activity. He added that more details on the expected performance of low-carbon businesses are needed.
BP is in the midst of one of the biggest corporate overhauls in the industry. It is aiming to build, buy or get approval for 25GW of renewable electricity by 2025 and 50GW by 2030.
BP says it is confident in meeting its 2025 goals, having quadrupled its renewable energy development pipeline since 2019 from 6GW to 24.5GW. Annual capital spending on low-carbon energy projects is expected to grow to $3-5 billion a year by 2025 and $4-6 billion by 2030, it said.
