BP is sticking with plans to hand over nearly $3billion (£2.4billion) to shareholders in dividends and share buybacks despite its first quarter net profits crashing 71.4 percent to £1.9billion.
The oil major said that despite a strong performance from its oil trading arm, as well as better refining margins and higher production volumes, a combination of weaker oil and gas prices and the outage of its Whiting refinery in Indiana in February had hit its profits.
Aside from lower net profits, for the three months to the end of March BP saw its revenues drop 12.3 percent to £39.9billion. Its net debt also crept up 13.1 percent to £19.2billion.
Despite the fall in its revenues and its profits and the increase in its debt, BP chief executive Murray Auchincloss said that the oil major had delivered ”another resilient quarter financially”.
As a result, it has held its first quarter dividend at 7.3 US cents (5.8p) per share, a payout worth £973.3million to shareholders. It will also buy back approximately £1.4billion of its shares, as part of the £2.8billion first half shareholder bonanza it announced at its annual results in February.
BP’s results were Auchincloss’ first since he was confirmed as its permanent chief executive in January. Although they missed City forecasts, analysts and investors were encouraged by the fact that he stuck with its dividend and share buyback plans.
AJ Bell investment director Russ Mould said that while the results represent a ”relatively” inauspicious start” for Auchincloss, they were the equivalent of a ”caretaker boss at a football club getting the job full time and then losing one-nil in a closely fought game than anything more disastrous than that”.
Jamie Maddock, energy analyst at Quilter Cheviot, noted that aside from BP being confident enough in its prospects to keep its payout plans unchanged, it is also looking to make at least £1.6billion in cost savings by the end of 2026.
He added: “BP is facing pressures on a few fronts, so unspectacular results will be welcomed until it is clear the business is in better shape.”
