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BP Beats Earnings Forecast, Boosts Dividend Despite Weak Prices

UK supermajor BP (NYSE: BP) snapped on Tuesday a streak of gloomy earnings for Big Oil, reporting profit-beating expectations, raising its dividend, and more than doubling its U.S. shale production after buying BHP assets in America.

BP’s underlying replacement cost profit—the group’s proxy for net profit—in the fourth quarter fell to $2.6 billion from $3.5 billion, mostly reflecting lower oil prices in the period, which also dragged down the earnings of the other supermajors that reported Q4 and 2019 financials last week.

BP’s full-year profit fell to $10.0 billion from $12.7 billion, “largely reflecting the impact of the weaker environment,”, but the 2019 profit beat the analyst forecast of $9.7 billion, as per Refinitiv.

BP also completed its share buyback program in January, 2020, and said today it is raising fourth-quarter dividend by 2.4 percent year on year to 10.5 cents per share.

Full-year results mainly reflected lower liquids and gas realizations due to lower prices and higher depreciation, partly offset by strong gas marketing and trading results and higher production, BP said in a statement.

Thanks to the $10-billion acquisition of U.S. shale assets from BHP, BP’s business in the Lower 48 states, BPX Energy, reported liquids production more than doubled to 124,000 barrels per day (bpd) in 2019, up from 55,000 bpd in 2018. Capital expenditure jumped to $1.939 billion from $1.146 billion, while the average number of BPX-operated rigs was 13 rigs last year, up from 9 rigs in 2018.

Retiring Group chief executive Bob Dudley, who leaves the post to Bernard Looney and who saved BP from the brink after the Deepwater Horizon disaster, said: “After almost ten years, this is now my last quarter as CEO. In that time, we have achieved a huge amount together and I am proud to be handing over a safer and stronger BP to Bernard and his team.”

“BP is navigating a difficult course with some aplomb,” Richard Hunter from Interactive Investor commented on the 2019 results.

Despite the 9-percent slump in BP’s shares in the past three months alone, and “despite the difficulties, among the oil majors BP’s performance was arguably the pick of the bunch,” Hunter noted.

Following the results release and dividend increase, BP’s shares rallied more than 3 percent in London at noon local time, and were up more than 4 percent in pre-market in New York at 07:30 a.m. on Tuesday.

By Tsvetana Paraskova for Oilprice.com

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