BP in 2020 set out its ambition to become a net zero company “by 2050 or sooner.”
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Shares of BP rose 6% on Tuesday after the oil giant accelerated the pace of its buybacks and increased its dividend, despite a drop in annual profit.
The energy major increased the pace of its share repurchases, announcing intentions to execute a $1.75 billion share buyback prior to reporting first-quarter results. The company said it was committed to announcing a $3.5 billion share buyback for the first half of the year.
BP also announced a dividend per ordinary share of 7.27 cents for the final three months of 2023, marking a 10% increase compared to the same period in the previous year.
The oil giant posted underlying replacement cost profit, used as a proxy for net profit, of $13.8 billion for 2023, a steep fall from a record $27.7 billion in the previous year. Analysts had anticipated net profit of $13.9 billion for full-year 2023, according to an LSEG-compiled consensus.
BP declared fourth-quarter net profit of nearly $3 billion, beating analyst expectations of $2.6 billion.
As London-listed stock of the oil major soared toward the top of the pan-European Stoxx 600 index on Tuesday morning, analysts at RBC Capital Markets described BP’s commitment to share buybacks beyond the first quarter of 2024 as a “welcome positive surprise.”
They added that BP’s plan to execute share buybacks of at least $14 billion through 2025, subject to maintaining a strong investment grade rating, was likely not expected by the market.
“With BP putting out 2025 specific EBITDA targets, which are also above consensus expectations, the commitment on the payout front shows confidence in future delivery, we think,” RBC Capital Markets said in a research note. EBITDA refers to earnings before interest, taxes, depreciation and amortization.
“It seems that particularly oil investors right now are really responding to those shareholder returns,” Noah Brenner, executive…
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