BP
followed its oil major peers
Exxon Mobil,
Chevron,
and
Shell
in exceeding expectations for fourth-quarter profit as well as announcing a bigger share buyback program.
The stock jumped 5.1% in London trading. BP’s American depositary receipts were up 5.5% shortly after the market opened, on track for the largest percent increase in a day since Feb. 7, 2023.
London-based BP reported earnings of 18 cents a share, compared with the 16 cents expected by analysts surveyed by FactSet. Replacement cost profit, its preferred measure of underlying profitability, was $3 billion, better than the $2.8 billion expected. The company is accelerating buybacks to $1.75 billion for the first quarter, up from $1.5 billion in the last three months of 2023.
Big Oil did well last year even though crude prices fell substantially from the previous year, when Russia’s invasion of Ukraine created fears of supply shortages. BP’s new chief executive, Murray Auchincloss, is keeping the company’s strategy of committing to energy-transition goals away from fossil fuels.
BP hasn’t watered down those commitments as much as European peer Shell, but both nevertheless still suffer from lower market valuations than Exxon or Chevron, which remain focused on increasing production of oil and gas.
“Rather than following Shell’s example, BP appears to be sticking with the current strategy and focusing on pacifying shareholders with throwing extra cash their way with further buybacks,” said Michael Hewson, an analyst at CMC Markets.
BP said profits were bolstered by gas trading, but were offset by weaker refining margins and impairments from exploration.
BP was a Barron’s stock pick last month. It has committed to increasing production in the U.S. and its dividend yield is among the highest of all the oil majors.
Write to Brian Swint at [email protected]
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