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BP Q4 Profit Surges On Prices; Sees Flat Production In FY22; Plans Dividend, Buyback

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British energy major bp Plc on Tuesday reported higher profit in its fourth quarter with strong revenue growth driven by improved oil and gas prices. Looking forward for 2022, BP expects both reported and underlying upstream production to be flat compared with 2021.

The company expects first-quarter reported upstream production to be lower sequentially, reflecting base decline and higher maintenance. Production from both oil production & operations and gas & low carbon will be lower.

In customer businesses, product demand would remain impacted by ongoing uncertainty around COVID-19 restrictions and continued additive supply shortages in Castrol.

Further, BP announced a dividend of 5.46 cents per ordinary share for the fourth quarter, payable in March 2022. BP also said it plans to execute a $1.5 billion share buyback from 2021 surplus cash flow prior to announcing its first quarter 2022 results. The program will run for a period up to and including April 29.

For 2022, bp said it would use 60 percent of surplus cash flow for share buybacks and intends to allocate the remaining 40 percent to strengthen the balance sheet.

For the year, divestment and other proceeds are expected to be $2 billion to $3 billion. Between the second half of 2020 and 2025, bp's target is $25 billion of divestment and other proceeds.

Separately, bp provided an update on the significant progress made in executing its transformation to an integrated energy company since outlining its new strategy.

The company said its transformation to IEC is on track, and is confident in the delivery of its earnings and returns targets for 2025.

In addition, it is now aiming to continue to grow EBITDA through to 2030.

bp also expects to increase the proportion of its capital expenditure in transition growth businesses to more than 40 percent by 2025 and is aiming for around 50 percent by 2030. It aims to generate earnings of $9-10 billion from these businesses by 2030, driven by five transition growth engines.

For the fourth quarter, profit before taxation was $4.04 billion, up from $1.09 billion last year. Profit attributable to shareholders surged to $2.33 billion from $1.368 billion a year ago. Earnings per ADS were $0.70, higher than prior year's $0.40.

Replacement cost or RC profit more than doubled to $1.97 billion in the quarter from $825 million last year.

Underlying RC profit was $4.07 billion or $1.23 per ADS, compared to $115 million or $0.03 per ADS a year ago.

On average, nine analysts polled by Thomson Reuters expected earnings of $1.17 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues and other income surged to $52.24 billion from last year's $30.19 billion. Sales and other operating revenues were $50.55 billion, up from $26.41 billion a year ago.

In London, BP shares were trading at 410.60 pence, up 0.48 percent.

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