BP boosted its share buyback program after net profit soared to its highest in more than a decade on strong oil and gas trading results, as the energy company took a $24 billion charge after exiting its operations in Russia. Soaring oil and gas prices in the wake of the Russian invasion of Ukraine on February 24 easily offset losses BP incurred from abruptly abandoning its shareholdings in Russia, including its 19.75% stake in oil giant Rosneft.
The non-cash write-down of its stakes in Rosneft and two other joint ventures pushed BP into a headline loss of $20.4 billion in the quarter. The charge was slightly lower than BP’s initial estimates of $25 billion. BP shares were up 1.5% after trading opened in London.
The company, which also halted trading Russian oil, said the exit from Russia, which had contributed 3% of the company’s cash flow last year, would not affect its plan to shift away from oil and gas towards renewables. The exit “has not changed our strategy, our financial frame, or our expectations for shareholder distributions,” Chief Executive Bernard Looney said.
BP’s underlying replacement cost profit, the company’s definition of net earnings, reached $6.2 billion in the first quarter, far exceeding analysts’ expectations for a $4.49 billion profit. The profit was driven by “exceptional” performance of BP’s oil and gas trading division, as well as higher oil and gas prices and strong refining margins. The company did not make any money from Rosneft in the quarter.
It compares with $4.1 billion in profit in the fourth quarter of 2021 and $2.63 billion a year earlier. Its 2021 profit was the highest in eight years. Global refining margins soared in recent months as economies recovered from the COVID-19 pandemic and Russian oil started to vanish from Europe, which heavily relies on Russian refined products like diesel.
BP’s refined oil products unit made a profit of $1.6 billion in the first three months, compared with a loss of $26 million in the previous quarter and a $2 million loss a year ago.
