BP reported a profit of $13.8bn last year – the second-highest in 10 years 

BP has announced its second-highest annual profit in a decade of $13.8 billion for the year 2023. This figure, although impressive, marks a substantial decline from the record $27.7 billion reported in 2022. 

The drop in profits is being put down to the decrease in oil prices last year, contrasting with the spike observed in the aftermath of Russia’s invasion of Ukraine. 

Despite the challenging economic landscape, BP says that it remains committed to providing value for its shareholders. The company recently announced plans to intensify its efforts to return cash to shareholders, signaling confidence in its financial stability and future prospects. 

This announcement coincides with the appointment of Murray Auchincloss as BP’s new chief executive, succeeding Bernard Looney, who resigned in September amid accusations of “serious misconduct.”

The decline in BP’s annual profits mirrors the trend seen in its competitor, Shell, which reported a drop in profits to $28.2 billion in 2023 from $39.9 billion in 2022. However, excluding the exceptional results of 2022, BP’s annual profit figure is its best performance since 2012.

In the last quarter of 2023, BP surprised investors by reporting profits of $3 billion, surpassing expectations and driving a more than 5% increase in its share price by Tuesday afternoon.

 The company also unveiled plans to enhance returns to investors through $1.75 billion in share buybacks in the first quarter of 2024, with an additional commitment of $3.5 billion for buybacks in the first half of the year.

Looking ahead, BP anticipates higher underlying production from oil operations in the coming year, while gas and low-carbon energy output is expected to decline.

This projection aligns with the company’s recent decision to scale back plans for reducing oil and gas production by 2030 – a move that drew criticism from environmental groups.

Despite such criticisms, BP faces conflicting pressures from investors, with some, like BlueBell Capital Partners, urging the company to abandon targets for lower oil and gas output altogether, labeling them as “irrational.” This shows the complex challenges BP navigates as it balances shareholder interests, environmental concerns, and its long-term strategic objectives.

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