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Following The Costly Exit Of Russia, BP Increases Buybacks In Response To Rising Oil Costs

Following The Costly Exit Of Russia, BP Increases Buybacks In Response To Rising Oil Costs
British Petroleum (BP) reported its largest quarterly loss after writing down $24 billion to exit its Russia assets, but a good operational performance fueled by rising oil and gas prices allowed the British energy company to increase share buybacks.
In early London trading, BP shares were up 3.3 per cent, exceeding the sector, as the firm posted its best operational performance since 2008.
BP's losses from abruptly relinquishing its shareholdings in Russia, particularly its 19.75 per cent interest in oil giant Rosneft, were partially offset by rising oil and gas prices in the aftermath of Russia's invasion of Ukraine on February 24.
The non-cash writedown of BP's holdings in Rosneft and two other joint ventures resulted in the company's largest-ever quarterly loss of $20.4 billion. However, the charge was less than BP's initial estimate of $25 billion.
In the first quarter, BP's underlying replacement cost profit, which is the company's definition of net profitability, hit $6.2 billion, the highest since 2008 and considerably above analysts' forecasts of $4.49 billion profit.
The profit was driven by BP's oil and gas trading division's "excellent" performance, as well as higher oil and gas prices and solid refining margins. Rosneft did not generate any revenue for the corporation throughout the period.
It compares to a profit of $4.1 billion in the fourth quarter of 2021 and $2.63 billion the previous year. The company's profit in 2021 was the biggest in eight years. find out more
The pullout from Russia, which had contributed 3% of the business's cash flow last year, would not hinder the company's aim to shift away from oil and gas and toward renewables, according to the corporation, which also discontinued trading Russian oil.
Chief Executive Bernard Looney stated that the exit "has not impacted our strategy, our financial frame, or our expectations for shareholder payouts."
As economies recovered from the COVID-19 pandemic, global refining margins climbed, and Russian oil began to disappear from Europe, which relied significantly on Russian refined products like diesel.
In the first three months, BP's refined oil products unit produced a $1.6 billion profit, compared to a loss of $26 million in the previous quarter and a loss of $2 million a year before.
After its surplus cash flow increased to more than $4 billion, BP said it will increase its quarterly share repurchases to $2.5 billion by the end of the second quarter.
BP announced in February that it would increase its quarterly share repurchases from $1.25 billion to $1.5 billion.
BP previously stated that it would repurchase $4 billion per year at $60 per barrel, significantly below the current benchmark Brent price of $107 on Tuesday.
The company's dividend remained unchanged at 5.46 cents per share.
Exxon Mobil, Chevron, and TotalEnergies, all BP competitors, witnessed a substantial increase in income in the quarter, boosted by higher oil and gas prices and excellent trading division performances.

Christopher J. Mitchell

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