BP Raised Shareholder Distribution after second quarter profit rose beyond analysts’ expectations

Oil and gas giant BP beat second-quarter earnings expectations on Tuesday, while expanding its dividend and share buyback program.

The U.K.-based energy major said it will buy back $1.4 billion of its own shares in the third quarter on the back of a $2.4 billion cash surplus accrued in the first half of the year. It also increased its dividend by 4% to 5.46 cents per share, having halved it to 5.25 cents per share in the second quarter of 2020.

Analysts polled by Refinitiv had expected second-quarter net profit of $2.06 billion.

CEO Bernard Looney told CNBC on Tuesday that a combination of strong underlying performance, an improving balance sheet and higher commodity prices had enabled the company to up its returns to shareholders.

“We have raised our own plan from $50 to $60 (average oil prices) for the next several years — that is on the back of strong demand. GDP is back to pre-pandemic levels and the vaccines are clearly working, OPEC+ is holding discipline and supply is tightening, particularly in U.S. shale,” he said.

Shares of BP started Tuesday’s session up almost 15% year-to-date, having collapsed roughly 47% in 2020. The company’s stock added a further 2.3% in early trade on Tuesday.

Operating cash flow sat at $5.4 billion at the end of the second quarter, which includes the annual payment of around $1.2 billion the company makes for the Gulf of Mexico oil spill in 2010.

Meanwhile net debt fell to $32.7 billion from $33.3 billion in the first quarter, marking the fifth consecutive quarter of decreased debt from the $51 billion seen in the first quarter of 2020.

BP Raised Shareholder Distribution after second quarter profit

BP’s financial results come after a period of stronger commodity prices. International benchmark Brent crude futures rose to an average of $69 a barrel in the second quarter, up from an average of $61 in the first three months of the year. Brent futures were trading at around $72.74 per barrel on Tuesday morning.

Oil prices have rebounded to reach multi-year highs in recent months and all three of the world’s main forecasting agencies — OPEC, the International Energy Agency and the U.S. Energy Information Administration — now expect a demand-led recovery to pick up speed in the second half of the year.

Also Read: Valvoline to sell their entire lubricant business to Saudi Aramco for a whopping $2.65 billion

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