Driven by the recovery of oil and gas demand, BP achieved its highest profit in eight years. The oil giant maintained its dividend and promised to buy back $1.5 billion of shares in the first quarter of 2022.
BP reported a basic replacement cost profit (used as a representative of net profit) of $12.8 billion in 2021. Analysts surveyed by refinitiv had previously estimated the group’s full year net profit of $12.5 billion.
By contrast, BP 2020 had a net loss of $5.7 billion – the group’s first annual loss in 10 years, due to the impact of the epidemic on oil demand and a write down of $6.5 billion in oil and gas assets.
BP also reported fourth quarter net profit rose to $4.1 billion from $3.3 billion in the previous quarter, exceeding analysts’ expectations of $3.9 billion.
“This is another good quarter for the company,” BP CEO Bernard Rooney said on CNBC on Tuesday.
By the end of 2021, BP’s net debt had fallen to US $30.6 billion for the seventh consecutive quarter, a decrease of US $8.3 billion compared with the same period in 2020.
BP’s share price has risen 24% this year. In November 2020, the group’s share price once fell to a 25 year low.
BP said it intended to buy back another $1.5 billion of shares and maintain its dividend at 5.46 cents per share.
Just a few days ago, Rooney showed investors his strategy to revolutionize the company by increasing low-carbon investment and cutting oil and gas production by 40% by 2030.
Rooney said:
“Over the past two years, we have set new goals, directions and strategies for BP and completed the largest restructuring in our history. With the full end of this transformation, we are now only focused on creating value through the safe and efficient implementation of our strategy.”
Last week, after the British oil giant shell reported huge annual profits, British legislators from all political factions again called on the government to impose a windfall profit tax on oil and gas producers in the North Sea to fund a national family support program.
At present, millions of households are facing record energy bill growth. But British finance minister Rishi sunak rejected the move, saying such a policy would eventually hinder investment.
Rooney said:
“I understand that some people are calling for a windfall profits tax now, but if we break down the problem, I think there are two solutions. One is that we need more natural gas, not less natural gas, so we need to encourage investment in the North Sea, not stop it. This is the first and the second thing is about the transition. We need to speed up the energy transition.”
Rooney said that BP intends to accelerate the UK’s energy transformation by investing a lot of money in offshore wind power projects in Scotland and the Irish sea, as well as projects such as hydrogen and zero net power generation in Teesside in northeast England.
