Energy
Tuesday, May 7th, 2024 2:16 pm EDT
Key Points
- BP reported a decline in first-quarter profit, falling below analyst expectations due to weaker fuel margins and decreased gas and oil prices.
- The company’s underlying replacement cost profit was $2.7 billion, down from $3 billion the previous quarter and below the estimated $2.9 billion.
- Despite lower profits compared to the same period in 2023 and challenges in the oil and gas industry, BP remains committed to shareholder returns, evidenced by a recommitment to share buybacks totaling $3.5 billion for the first half of 2024.
In its recent financial report, BP revealed a decline in first-quarter profit, falling short of analyst predictions due to a significant decrease in fuel margins and reduced gas and oil prices. The company’s underlying replacement cost profit stood at $2.7 billion, a decrease from the previous quarter’s $3 billion and below the estimated $2.9 billion. This drop is attributed to lower realizations in oil and gas, alongside notably weaker fuel margins, as stated in BP’s official announcement. CEO Murray Auchincloss acknowledged the quarter’s resilience and reiterated the company’s commitment to streamlining operations to achieve $2 billion in cash cost savings by 2026. Auchincloss took over as permanent CEO in January following the resignation of his predecessor, Bernard Looney, who stepped down due to undisclosed personal relationships with colleagues. Compared to the same period in 2023, BP’s profits were notably lower, nearly halving from nearly $5 billion. This decline aligns with the trend in the oil and gas industry, where many companies have experienced reduced first-quarter profits due to plummeting gas market prices, attributed in part to high European gas stocks resulting from precautions against potential disruptions in Russian supplies following the Ukraine invasion. BP’s competitor, Shell, also reported a decrease in adjusted earnings for the first quarter, signaling a broader industry trend. Despite these challenges, energy firms like BP have maintained a focus on shareholder returns, as evidenced by BP’s commitment to share buybacks totaling $3.5 billion for the first half of 2024. While BP’s shares showed minimal movement following the announcement, analysts noted that the market would likely compare BP to Shell given the latter’s recent earnings beat. Nonetheless, they characterized BP’s results as “fairly uneventful,” noting the company’s confidence in its earnings trajectory, as evidenced by its sustained share buyback program, which is seen as a positive indicator amidst the volatility of commodity markets.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/07/bp-first-quarter-earnings-2024.html
