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Despite falling oil and gas prices, BP on Tuesday reported $5 billion in profits for the first quarter, higher than the earnings for the fourth quarter of 2022 and above consensus estimates, thanks to what it described as “exceptional” gas trading and “a very strong oil trading result.”
Underlying replacement cost profit – BP’s metric closest to net profit – was $4.963 billion for the first quarter of 2023, up from $4.807 billion for the fourth quarter of 2022, but down from the $6.245 billion for the first quarter of 2022 when oil and natural gas prices soared after the Russian invasion of Ukraine.
The Q1 2023 profit beat the $4.27 billion consensus estimate of 25 brokers provided by BP.
“Compared to the fourth quarter 2022, the result reflects an exceptional gas marketing and trading result, a lower level of refinery turnaround activity and a very strong oil trading result, partly offset by lower liquids and gas realizations and lower refining margins,” BP said in a statement.
In the first quarter, BP generated surplus cash flow of $2.3 billion and intends to execute an additional $1.75 billion share buyback from surplus cash flow before the announcement of its second quarter 2023 results.
During the first quarter, the UK-based supermajor completed $2.2 billion of share buybacks from surplus cash flow. The $2.75 billion share buyback program announced with the fourth quarter results was completed on April 28, 2023.
BP remains committed to using 60% of its surplus cash flow for this year for share buybacks, subject to maintaining a strong investment-grade credit rating.
“This has been a quarter of strong performance and strategic delivery as we continue to focus on safe and reliable operations,” CEO Bernard Looney said.
“And importantly we continue to deliver for shareholders, through disciplined investment, lowering net debt and growing distributions.”
BP’s resilient profits despite the drop in commodity prices followed earnings beats at the two U.S. supermajors, Exxon and Chevron, at the end of last week.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.