BP, one of many world’s largest oil corporations, simply beat expectations for second-quarter revenue on Tuesday as excessive costs and constrained provide drove up earnings for power corporations.
BP reported an underlying revenue of $8.5 billion, up from $6.2 billion within the earlier quarter and triple the $2.8 billion in the identical interval final 12 months. Its shares rose greater than 3 p.c in buying and selling in London, the place the corporate is predicated.
The outcomes imply that the 5 greatest Western oil corporations — BP, Chevron, Exxon Mobil, Shell and TotalEnergies — generated some $60 billion in revenue for the second quarter. The surge in earnings adopted a spike in crude oil, pure gasoline and gasoline costs this 12 months, ensuing principally from Russia’s invasion of Ukraine.
The 5 power giants additionally spent about $25 billion within the first half of the 12 months shopping for again their very own shares, which primarily rewards shareholders by elevating the worth of shares. BP stated it had spent $3.9 billion on buybacks within the first half, and deliberate $3.5 billion price of buybacks within the third quarter. The corporate stated it will commit 60 p.c of its “surplus money movement” this 12 months to share buybacks. It additionally raised its dividend 10 p.c.
“Now just isn’t the time to lose self-discipline,” Bernard Looney, BP’s chief government, stated on a name with analysts. “In order that’s the very first thing to say is that we’re anxious to not get drawn into this into believing that this new world will probably be this new world without end, and we’re cognizant of the trade’s historical past.”
BP introduced its exit from Russia in February, and within the first quarter wrote off about $25 billion within the worth of its stake in Rosneft, Russia’s state-controlled oil firm, and different ventures. Analysts thought-about {that a} paper loss with little relevance to BP’s future efficiency.
Power corporations’ windfall earnings have introduced political strain on them to do extra to extend manufacturing and decrease prices to customers. President Biden has accused oil corporations of profiteering off surging power costs, and Britain, residence of BP and Shell, has introduced a particular tax on the trade’s “extraordinary” earnings.
A local weather and power invoice agreed by Senate Democrats final week goals to scale back international warming air pollution by 50 p.c in america by 2030. The invoice additionally mandates lease gross sales for brand new oil and gasoline exploration within the Gulf of Mexico, a major base of operations for BP, and customarily “offers a nod to the significance of oil and gasoline,” Mr. Looney instructed analysts.
“I believe is making an attempt to strike a steadiness, which I believe is sort of smart and pragmatic between delivering power safety at the moment, which is a hydrocarbon-based system for america,” he stated, “and on the identical time, clearly, lots of local weather provisions.”
