BP shares gain as higher oil prices lift profit

BP shares rose on Tuesday after the oil and gas major announced a significant increase in profits driven by higher oil and energy prices.

Underlying RC profit for the 2021 year was $12.8bn compared to a $5.7bn loss in 2020.

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BP shares rose 1.3% to 414p on news the sharp increase in profit is being returned to to shareholders in the form of dividends and sharebuybacks.

BP’s ordinary dividend for the fourth quarter will increase to 5.46 cent per share, up from 5.25 cents in the same period last year.

“2021 shows bp doing what we said we would – performing while transforming. We’ve strengthened the balance sheet and grown returns. We’re delivering distributions to shareholders with $4.15 billion of buybacks announced and the dividend increased,” said Bernard Looney, Chief executive officer.

BP benefited from higher energy prices and recorded average oil prices of $63.60 in 2021, rising from $36.63 in 2020.

“A week after Shell reported surging profits driven by their gas portfolio, BP has announced earnings that have also been bloated by the high oil and gas price environment. The company announced RC profit for the quarter of $4.1 billion beating consensus expectations of $3.9 billion, and a full year result of $12.8 billion. BP will look to increase its dividend, buy back shares, and continue investing in their energy transition strategy,” said Allegra Dawes, senior analyst at Third Bridge.

BP also took the opportunity to update the market on their clean energy activities that include offshore wind in New York and the establishment of a network of EV charging points.

“While oil majors have maintained that their traditional hydrocarbon businesses are essential for funding and enabling the energy transition, they are coming under increased pressure to decarbonize and invest in green energies,” said Dawes.

“BP has embarked on an aggressive strategy, with oil and gas production expected to be reduced by one million barrels of oil equivalent a day by 2030. They are also planning to develop a portfolio of 50GW by 2030 in renewable energy while becoming a leader in solar over the same period.”

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