BP Shares Surge After Earnings and Buybacks

Profits
in
2022
had
been
inflated
by
the
impact
of
the
Russia-Ukraine
conflict
on
the
oil
price
and
led
to
calls
for
an
increased
windfall
tax
on
oil
companies.
Oil
prices
have
since
softened
considerably.

(The
figures
are
based
on
“replacement
cost
profit”,
a
common
measure
used
by
oil
companies;
profit
attributable
to
BP
shareholders
was
higher
at
$15
billion
for
the
full
year.)

BP
Profits
Best
Since
2012

Despite
the
fall
in
profits
over
the
year,
2023
results
were
the
strongest
since
2012.
The
fourth-quarter
dividend
was
hiked
10%
to
7.270
cents
on
the
same
period
the
year
before.

John
Moore,
senior
investment
manager
at
RBC
Brewin
Dolphin,
argues
there
are
other
positives
in
the
numbers:

“BP
is
still
in
resilient
shape
–
surplus
cashflow
remains
positive,
net
debt
has
fallen,
and
the
management
team’s
optimism
can
be
seen
in
the
10%
increase
in
dividend
distributions.”

BP’s
results
follow
those
of
larger
rival
Shell
(SHEL)
–
featured
in our
recent
stock
of
the
week
video
–
which
also
announced
a
raised
dividend
and
new
buybacks
even
as
full-year
profits
fell
sharply
on
the
prior
year.
Shell
shares
also
rose
on
the
day.
BP’s
$3.5
billion
buyback
pledge
now
matches
that
of
Shell.

Key
Morningstar
Metrics
for
BP
Stock

• Fair
Value
Estimate:
£5.60;
• Morningstar
Rating:
★★★★;
• Morningstar
Economic
Moat
Rating:
None;
• Morningstar
Uncertainty
Rating:
High.

BP
–
Personnel
Drama
over
CEO
Conduct

A
lot
has
happened
at
BP
in
the
last
financial
year.
For
one,
former
chief
executive
Bernard
Looney,
who
was
credited
with
pushing
the
company’s
net
zero
ambitions
further
than
rivals,
last
year resigned
over
misconduct
claims.

Chief
financial
officer
Murray
Auchinloss
was
first
appointed
as
interim
chief
executive
but
was
then
confirmed
in
post
recently.
Susannah
Streeter,
head
of
money
and
markets
at 
Hargreaves
Lansdown,
notes
his
arrival
has
brought
a
“back
to
basics”
approach
to
running
an
oil
company:
generate
lots
of
money
and
share
it
with
investors.

“The
priorities
of
BP’s
new
chief
executive
Murray
Auchincloss
have
been
made
clear,”
she
says.

“Although
on
appointment
he
pledged
that
BP’s
strategy
to
transition
from
an
international
oil
company
to
an
integrated
energy
company
was
unchanged,
the
big
share
buyback
announcement
shows
the
immediate
focus
is
on
boosting
the
share
price
and
returning
value
to
shareholders.”

All
Eyes
on
the
BP
AGM
–
and
Net
Zero

The
real
drama
is
yet
to
come
for
BP
in
its
annual
general
meeting
(AGM).

Last
year’s
AGM

was
disrupted
by
climate
change
protesters
–
as
was
Shell’s,
to
a
significant
extent
–
so
we
fully
expect
more
of
the
same
this
year.

Forces
have
already
started
to
gather
ahead
of
Shell’s
AGM,
and
they
include
some
significant
asset
managers
like
French
fund
house
Amundi
and
UK
pension
funds.
Every
year
the
pressure
increases
for
oil
companies
to
stretch
their
climate
transition
ambitions.

“Questions
have
been
raised
over
its
future
direction
and
BP
will
need
to
strike
a
tricky
balance
of
continuing
to
invest
in
its
core
energy
business
to
deliver
returns
in
the
short
term,
while
maintaining
its
long-term
transformation,” Moore
says. 

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