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BP (NYSE: BP) on Tuesday increased its quarterly dividend by 10% and extended share buybacks after high oil and gas prices in the second quarter resulted in the supermajor's highest quarterly earnings in 14 years, which easily beat analyst expectations.
BP reported today an underlying replacement cost profit—its preferred metric for net profit—of $8.45 billion for the second quarter, up from $6.2 billion for the previous quarter and well above analyst estimates of $6.8 billion.
The jump in Q2 earnings—the highest quarterly profit since 2008—was "driven by strong realized refining margins, continuing exceptional oil trading performance and higher liquids realizations," BP said.
Gas marketing and trading was down from "the exceptional result in the first quarter," which partly offset the exceptional oil trading performance in Q2. The ongoing outage at Freeport LNG impacted LNG trading and led to "a significant reduction in the number of cargoes expected to be received," BP said.
BP's net debt fell for the ninth successive quarter to reach $22.8 billion at the end of Q2, down by $4.6 billion from the end of the first quarter.
In light of the solid results, BP announced a 10% increase in its quarterly dividend to 6.006 cents per ordinary share to reflect "the underlying performance and cash generation of the business, which has enabled strong progress in delivering share buybacks and net debt reduction," the supermajor said.
"Looking ahead, on average, based on bp's current forecasts, bp continues to expect to have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025 at around $60 per barrel Brent and subject to the board's discretion each quarter," the company said.
BP also announced a further $3.5 billion share buyback, on top of the $2.5-billion share repurchase program announced with the first-quarter 2022 results and completed last month.
BP wraps up a strong earnings season for European and U.S. supermajors, all of which reported solid—and in several cases, record—quarterly profits amid rallying oil and gas prices and surging refining margins.
Last week, Shell reported a record quarterly profit for a second consecutive quarter, while TotalEnergies more than doubled its Q2 net income due to rallying oil and gas prices, record-high refining margins, and soaring LNG demand in Europe. U.S. supermajors ExxonMobil and Chevron both reported their highest-ever quarterly profits on Friday as oil and gas prices rallied and refining margins jumped to multi-year highs in the second quarter.
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.