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BP Boosts Share Buybacks as Earnings Exceed Estimates

BP (NYSE: BP) is accelerating share buybacks as it looks to return more cash to shareholders after posting Q4 and full-year 2023 earnings above expectations.  

BP reported on Tuesday an underlying replacement cost profit – the closest metric to net profit –of $3.0 billion for the fourth quarter, compared with $3.3 billion for the previous quarter. The earnings beat analyst estimates of $2.76 billion.

Full-year earnings of $13.83 billion were half the record-high level of $27.65 billion earnings for 2022, when Big Oil raked in huge profits amid soaring oil and gas prices and volatility in oil and gas trading.

Nevertheless, the full-year 2023 earnings also beat analyst expectations.

Related to the fourth quarter results, BP plans a $1.75-billion share buyback prior to reporting first-quarter results this spring. The company is also committed to announcing $3.5 billion buybacks for the first half of 2024.

“At current market conditions and subject to maintaining a strong investment grade credit rating, bp plans share buybacks of at least $14 billion through 2025 as part of our commitment, on a point forward basis, to returning at least 80% of surplus cash flow to shareholders,” the UK supermajor said. 

“As we look ahead, our destination remains unchanged – from IOC to IEC – focused on growing the value of bp,” said CEO Murray Auchincloss, who was recently elected permanent chief executive succeeding Bernard Looney, who resigned in the autumn over failing to disclose relationships with colleagues.

“We are confident in our strategy, on delivering as a simpler, more focused and higher-value company, and committed to growing long-term value for our shareholders,” Auchincloss added.

BP’s shares surged by 5.8% on Tuesday morning in London trade after the results were released, with the stock hitting a two-month high. In pre-market trade in New York, BP was also up by more than 5%.   

The share repurchase boost could help BP and its new permanent CEO Murray Auchincloss to win shareholders as BP’s stock has been underperforming its peers, including Shell, over the past year.

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With the Q4 results today, BP joins the other supermajors ExxonChevron, and Shell in reporting better-than-expected earnings despite the decline in oil and gas prices.   

By Tsvetana Paraskova for Oilprice.com

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