BP follows peers in resuming buybacks

BP announced on August 3 it would buy back $1.4bn of its own shares in the third quarter, after generating $2.4bn in surplus cash flow in the first half of the year. The UK major also said it would increase its dividend for the second quarter by 4% to $5.46/share.

Chevron, Shell and TotalEnergies similarly revived their buyback programmes and raised dividends when announcing their second-quarter results, signalling growing confidence in the market outlook. The oil and gas majors enjoyed a surge in earnings in the three months ending June 30 on the back of higher oil and gas prices and increased fuel demand.

BP reported an underlying replacement cost (RC) profit before interest and tax of $2.8bn in Q2, up from $2.6bn in the previous three months and a loss of $6.7bn in the corresponding period of 2020. Income from BP's oil production division came to $2.24bn, in a reversal from a $7.7bn loss a year earlier, while its gas and low-carbon energy business earned $1.24bn, compared with an $814mn loss.

The UK major generated $827mn of underlying RC profit from its customers and products segment and $689mn from its stake in the Russian oil company Rosneft, versus an income of $1.41bn and a loss of $61mn respectively a year before. 

BP managed to reduce its net debt to $32.7bn by the end of June, from $33.3bn three months earlier. The company announced last year it would seek to divest $25bn of assets by 2025, and it has already agreed or completed transactions worth $14.9bn, with more than $10bn of proceeds received. It forecasts capital expenditure to come to $13bn this year.

At $60/barrel oil, BP expects to buy back $1bn in shares each quarter and increase dividends by 4% annually through to 2025, the company said.

"This shows we continue to perform while transforming BP – generating value for our shareholders today while we transition the company for the future," CEO Bernard Looney commented.