BP Adds Big Oil Cash Gusher With Dividend Increase And Buybacks

(Bloomberg) – BP Plc increased its dividend and expanded share buybacks after posting record profits of $27.65 billion for 2022.

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The cash-gusher is delivering significant returns to investors — a 10% increase in dividends and an additional $2.75 billion in buybacks — while highlighting a contradiction at the heart of Europe’s oil industry. As major producers increasingly speak of the need to cut emissions and switch to cleaner energy, their polluting fossil fuel business has become increasingly lucrative as a result of the Russian invasion of Ukraine.

BP promised to accelerate investments in both low-carbon energy and fossil fuels. However, the company has slowed its plan to phase out oil and gas and will be less aggressive in curbing its carbon emissions.

By 2030, fossil fuel production will be about 25% lower than in 2019, excluding the contribution of Russia’s Rosneft PJSC. That’s a major overhaul of its 2020 goal of cutting production by 40% by the end of the decade.

Shares of the company were up 3.2% to 493.5 pence as of 8:01 am in London.

“We are increasing our investment in our transition while also increasing our investment in today’s energy system,” Chief Executive Officer Bernard Looney said in a statement Tuesday. “That’s what governments and customers demand of companies like us.”

BP said it will split additional investment evenly between low-carbon energy and oil and gas, spending up to $8 billion more on each through 2030. Annual capital expenditures may be slightly higher than previously projected, at between $14 billion and $18 billion annually for the remainder of the decade.

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The Company will target petroleum resources that can be developed quickly, offer a quick payback and better overall returns. Last month, BP’s Energy Outlook report predicted that Russia’s invasion of Ukraine would accelerate the world’s transition away from fossil fuels as countries seek to increase energy security by generating more renewable energy at home.

BP committed to driving higher returns from both clean energy and fossil fuels. By increasing capex and raising oil and gas price assumptions, the company said it will grow earnings per share before interest, taxes, depreciation and amortization by 12% a year through 2025.

BP’s adjusted net income was $4.81 billion in the fourth quarter, down from records set earlier in the year and missing the median analyst estimate of $5.11 billion.

The earnings boom has been healthy for BP’s balance sheet, something that worried investors in the years following the Deepwater Horizon oil spill of 2010. Net debt declined for the 11th straight quarter, down $9.2 billion from 2022.

–Assisted by Will Kennedy.

(Updates with stock price in fifth paragraph.)

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