'We get it': BP's boss expresses sympathy for customers as firm posts near record profits
THAT AND A BUCK WILL GET YOU A COFFEE
Tuesday 2 August 2022
Joel Hills
Business and Economics Editor
ITV News Business and Economics Editor Joel Hills reports on how bumper profits from energy firms have prompted growing calls for minister to tax companies further to help households with rising bills
It’s raining oil and gas money at BP and the deluge is forecast to continue for the foreseeable.BP’s business breaks even when Brent oil hits $40 a barrel. Between April and June a barrel of Brent averaged $114.This morning, BP reported a profit for the period of $8.5 billion (£6.9 billion) - a near record high.
BP chief executive officer Bernard Looney.
Credit: AP
“We’re capturing the upside from higher market prices,” explained BP’s boss, Bernard Looney, this morning.That’s one way of putting it. Others are less generous.“A slap in the face to struggling families,” is the Lib Dem’s take. “Fossil fuel companies are laughing all the way to the bank,” exclaims Greenpeace, urging the government to “bring in a proper windfall tax on these monster profits”.In the space of just two years BP has swung from a record loss (£4.7 bn in 2020) to eye-popping profitability without really having done anything differently.
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The whole of the industry cut investment in the first year of the pandemic, inadvertently creating the perfect conditions for oil and gas prices to head into the stratosphere as pandemic restrictions lifted before shooting into outer space when Russian tanks rolled into Ukraine.Oil majors everywhere suddenly finds themselves awash with cash at a time when motorists are paying record prices at the pump and households and businesses face crippling energy bills.
“We understand, we get it,” insisted Looney this morning. He explained that BP was “helping” to numb the pain that many of its customers feel by investing in its UK business and creating jobs.
BP triples profits to £6.9bn as energy prices soar amid cost of living squeeze
BP also expects to pay bumper taxes on its bumper profits - the North Sea alone will generate £1 billion in revenues for the Treasury this year. The government’s new Energy Profits Levy will raise even more money, although Mr Looney declined to offer guidance on how much more.The contrast in fortunes between energy companies and their customers is stark and is set to get starker.BP predicts oil and gas prices will “remain elevated”. The longer these exceptional profits persist the higher the risk that BP’s policy of “maximising returns” for shareholders will enrage its customers, the greater the likelihood of further political intervention.
For now though, the business continues to throw-off “surplus cash” at an astonishing rate - $6.5 billion (£5.3 billion) between April and June alone.
BP is using much of this money ($3.5 billion) to buy back shares and reduce net debt.Fair enough, shareholders are entitled to a share of the spoils and resizing the balance sheet seems perfectly sensible.But it is both striking and perhaps odd that BP is choosing not to use any of the windfall that has fallen into its lap to ramp-up its investment in renewable energy.The company plans to hit net zero emissions by 2050.
“We’re capturing the upside from higher market prices,” explained BP’s boss, Bernard Looney, this morning.That’s one way of putting it. Others are less generous.“A slap in the face to struggling families,” is the Lib Dem’s take. “Fossil fuel companies are laughing all the way to the bank,” exclaims Greenpeace, urging the government to “bring in a proper windfall tax on these monster profits”.In the space of just two years BP has swung from a record loss (£4.7 bn in 2020) to eye-popping profitability without really having done anything differently.
Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know
The whole of the industry cut investment in the first year of the pandemic, inadvertently creating the perfect conditions for oil and gas prices to head into the stratosphere as pandemic restrictions lifted before shooting into outer space when Russian tanks rolled into Ukraine.Oil majors everywhere suddenly finds themselves awash with cash at a time when motorists are paying record prices at the pump and households and businesses face crippling energy bills.
“We understand, we get it,” insisted Looney this morning. He explained that BP was “helping” to numb the pain that many of its customers feel by investing in its UK business and creating jobs.
BP triples profits to £6.9bn as energy prices soar amid cost of living squeeze
BP also expects to pay bumper taxes on its bumper profits - the North Sea alone will generate £1 billion in revenues for the Treasury this year. The government’s new Energy Profits Levy will raise even more money, although Mr Looney declined to offer guidance on how much more.The contrast in fortunes between energy companies and their customers is stark and is set to get starker.BP predicts oil and gas prices will “remain elevated”. The longer these exceptional profits persist the higher the risk that BP’s policy of “maximising returns” for shareholders will enrage its customers, the greater the likelihood of further political intervention.
For now though, the business continues to throw-off “surplus cash” at an astonishing rate - $6.5 billion (£5.3 billion) between April and June alone.
BP is using much of this money ($3.5 billion) to buy back shares and reduce net debt.Fair enough, shareholders are entitled to a share of the spoils and resizing the balance sheet seems perfectly sensible.But it is both striking and perhaps odd that BP is choosing not to use any of the windfall that has fallen into its lap to ramp-up its investment in renewable energy.The company plans to hit net zero emissions by 2050.
BP sees earnings hit 14-year high amid anger over energy firm profits
Holly Williams, PA Business Editor
Tue, August 2, 2022 a
BP has revealed second-quarter profits more than trebled to a 14-year high as it joined rival Shell in reaping the benefits of soaring oil and gas prices.
The oil giant reported underlying replacement cost profits – its preferred measure – jumping to a far better-than-expected 8.5 billion US dollars (£6.9 billion) for the three months to June 30, up from 2.8 billion US dollars (£2.3 billion) a year ago.
BP delivered cheer to investors, with a 10% rise in the dividend shareholder payout and by ramping up its share buyback plan with another 3.5 billion US dollars (£2.9 billion) due before the end of September.
Yet the result comes as households are struggling to meet rocketing bills and anger is mounting anger over massive profits from oil and energy firms following bumper results from Shell and British Gas owner Centrica last week.
BP also warned that there is not expected to be any let up with energy prices over the summer, forecasting that crude oil and gas prices will remain high over the third quarter due to supply disruption from Russia.
Households across Britain have been warned they could face an annual energy bill of £3,615 this winter in the latest grim analysis by energy consultant Cornwall Insight.
Joshua Warner, market analyst at City Index, said it was a “recipe that should continue to deliver bumper earnings for BP and other oil and gas giants”.
The Government is introducing a windfall tax on the profits of energy companies, but it has faced criticism for giving strong incentives to allow companies to invest in oil and gas, while there are no tax incentives in the policy for green investment.
But BP’s reported half-year figures were impacted by a massive 24.4 billion US dollar (£19.9 billion) hit from the firm’s move to ditch its near-20% stake in Russian oil producer Rosneft in response to the Ukraine war.
This left it with statutory replacement cost losses of 15.4 billion US dollars (£13 billion), against profits of 5.7 billion US dollars (£4.7 billion) a year earlier.
BP chief executive Bernard Looney insisted the group was continuing to “perform while transforming”.
He said: “Our people have continued to work hard throughout the quarter helping to solve the energy trilemma – secure, affordable and lower carbon energy.
“We do this by providing the oil and gas the world needs today – while at the same time, investing to accelerate the energy transition.”
Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting.
BP earnings soar as energy firm profits from rising prices
DANICA KIRKA
Tue, August 2, 2022
LONDON (AP) — BP said its earnings from April to June almost tripled from a year earlier, increasing pressure on governments to intervene as energy companies profit from high oil and natural gas prices that are fueling inflation and squeezing consumers.
Net income jumped to $9.26 billion in the second quarter from $3.12 billion in the same period a year ago, London-based BP said Tuesday. It said it expects oil and gas prices to remain high due to disruptions in supply caused by Russia’s invasion of Ukraine.
BP’s earnings come as energy companies worldwide scoop up record profits. British rival Shell last week posted an unprecedented $18 billion quarterly profit. Irving, Texas-based Exxon Mobil reported net income of $17.85 billion, and San Ramon, California-based Chevron earned $11.62 billion.
Nick Butler, a visiting professor at Kings College London and a former BP vice president, said the figures are likely to make BP and other oil companies uncomfortable given the pain high energy prices are causing for consumers.
“I think BP’s very sensitive to the reputational problems of making money at this level,” Butler told the BBC. “I think there’s a real case here, which I think people in the companies would be very open to, for the government calling together the industry to find a plan to get us through the winter without putting these very high prices onto ordinary consumers.”
British regulators have increased the annual energy price cap for household gas and electricity bills by 73%, to 1,971 pounds ($2,408), since Oct. 1. Cornwall Insights, an energy and utility consultant, on Tuesday estimated that the cap would jump a further 70%, to 3,359 pounds, this fall as regulators try to keep pace with wholesale gas prices.
In the United Kingdom, where inflation reached a 40-year high of 9.4% in June, the government has announced a 25% windfall profits tax on the earnings of oil and gas companies that come from British operations.
BP said Tuesday that the windfall profits tax would increase the headline tax rate on its North Sea operations to 65% from 40%. The company said it plans to set aside $800 million to cover the bump.
The opposition Labour Party said the government should do more to help consumers.
“People are worried sick about energy prices rising again in the autumn, but yet again we see eye-watering profits for oil and gas producers,” Rachel Reeves, the party’s spokeswoman on treasury issues, said in a statement. “Labour argued for months for a windfall tax on these companies to help bring bills down, but when the Tories finally U-turned they decided to hand billions of pounds back to producers in tax breaks.”
Brent crude, a benchmark for international oil prices, averaged $113.83 a barrel in the second quarter, up 65% from a year earlier, according to BP. Natural gas prices more than doubled over the same period, rising as Russia's war in Ukraine worsened an energy crunch and as Moscow has reduced or cut off natural gas supplies to a dozen European Union countries.
The high prices pushed BP's underlying replacement cost earnings, an industry standard profit measure that excludes one-time items and the value of inventories, to $8.45 billion in the second quarter from $2.80 billion in the same period last year.
The soaring earnings allowed BP to return billions of dollars to shareholders, with the company boosting its dividend by 10% and announcing plans to buy back $3.5 billion in shares. BP said it expects to increase dividends by about 4% annually through 2025.
BP shares rose 4.3%, to 409.8 pence, in afternoon trading on the London Stock Exchange, outpacing the 0.2% gain in the benchmark FTSE 100 Index.
The company also said it was investing in plans to increase the production of renewable energy and reduce reliance on fossil fuels as the company seeks to cut net carbon emissions to zero by 2050. The company said it increased its pipeline of renewable energy projects by 10% in the first half of the year, primarily through an option to develop offshore wind farms off the east coast of Scotland and a global solar energy initiative.
“Our people have continued to work hard throughout the quarter helping to solve the energy trilemma — secure, affordable and lower carbon energy,” Chief Executive Bernard Looney said. “We do this by providing the oil and gas the world needs today — while at the same time investing to accelerate the energy transition.”
Environmental groups criticized the company for moving too slowly.
“While households are being plunged into poverty with knock-on impacts for the whole economy, fossil fuel companies are laughing all the way to the bank," said Doug Parr, chief scientist for Greenpeace UK. “The government is failing the U.K. and the climate in its hour of need."
Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting.
BP Boosts Returns as Oil Refining and Trading Drive Profit Beat
Laura Hurst
Tue, August 2, 2022 a
(Bloomberg) -- BP Plc hiked its dividend and accelerated share buybacks to the fastest pace yet after an “exceptional” result in oil refining and trading lifted profits above even the highest expectations.
The oil and gas industry is boosting returns to shareholders as the cash rolls in, even while the energy crisis triggered by Russia’s invasion of Ukraine threatens the global economy. BP said it expects prices to remain high and highlighted its investments in additional supplies.
“Today’s results show that BP continues to perform while transforming,” Chief Executive Officer Bernard Looney said in a statement on Tuesday. The company is “providing the oil and gas the world needs today -- while at the same time investing to accelerate the energy transition.”
Following in the footsteps of most of its peers, the London-based company said it will repurchase $3.5 billion of shares over the next three months, adding to the $3.8 billion it already bought back in the first half. It also increased its dividend by 10%.
Shares of the company rose 4.5% to 409.8 pence as of 9:30 a.m. in London.
The dividend was increased to 6 cents a share, an improvement from a previous commitment to raise the payout by around 4% annually through to 2025. Net debt fell to $22.82 billion at the end of the period, down from $32.7 billion a year ago.
The results showed BP is “delivering across all three key areas: earnings/cash, capital discipline and shareholder distributions,” Redburn analysts wrote in a research note.
BP’s second-quarter adjusted net income was $8.45 billion, the highest since 2008 and comfortably beating even the highest analyst estimate. This wasn’t just driven by high crude and natural gas prices -- the company’s refineries earned strong margins and its oil traders delivered an “exceptional” performance.
The company never discloses how much profit its oil traders generate, but did say that adjusted earnings before interest, taxation, depreciation and amortization for its refining and trading unit was $3.73 billion, compared with just $301 million a year ago.
Gas trading fared worse, delivering an “average” result for the quarter, the company said. That in part was a result of a halt to operations at the Freeport liquefied natural gas facility in the US, which will lead to significant reduction in the number of cargoes it expects to receive.
Political Pressure
The oil sector’s sky-high profits come at a politically tricky time for an industry accused of profiteering from the fallout from Russian President Vladimir Putin’s aggression, while also failing to invest enough in new drilling. Alongside its earnings statement, BP published an extensive list of investments it is making in the UK, where the rising cost of energy has become a hot political issue and the North Sea oil and gas industry has already been hit by a windfall tax.
That hasn’t stopped calls for further taxation. Friends of the Earth campaigner Sana Yusuf said that a much tougher windfall tax on oil and gas profits is needed. “It beggars belief that these companies are raking in such huge sums in the midst of a cost-of-living crisis,” she said in a statement.
Collectively, the world’s five major international oil companies made more money in the second quarter than ever before, raking in more than $60 billion.
With recession fears gathering pace, there has been speculation that the second quarter could end up marking the high point for Big Oil this year. BP said it expects oil and natural gas prices, and refining margins, to stay high in the third quarter because of disruptions in Russian supply, relatively low inventories and reduced spare capacity.
©2022 Bloomberg L.P.
Holly Williams, PA Business Editor
Tue, August 2, 2022 a
BP has revealed second-quarter profits more than trebled to a 14-year high as it joined rival Shell in reaping the benefits of soaring oil and gas prices.
The oil giant reported underlying replacement cost profits – its preferred measure – jumping to a far better-than-expected 8.5 billion US dollars (£6.9 billion) for the three months to June 30, up from 2.8 billion US dollars (£2.3 billion) a year ago.
BP delivered cheer to investors, with a 10% rise in the dividend shareholder payout and by ramping up its share buyback plan with another 3.5 billion US dollars (£2.9 billion) due before the end of September.
Yet the result comes as households are struggling to meet rocketing bills and anger is mounting anger over massive profits from oil and energy firms following bumper results from Shell and British Gas owner Centrica last week.
BP also warned that there is not expected to be any let up with energy prices over the summer, forecasting that crude oil and gas prices will remain high over the third quarter due to supply disruption from Russia.
Households across Britain have been warned they could face an annual energy bill of £3,615 this winter in the latest grim analysis by energy consultant Cornwall Insight.
Joshua Warner, market analyst at City Index, said it was a “recipe that should continue to deliver bumper earnings for BP and other oil and gas giants”.
The Government is introducing a windfall tax on the profits of energy companies, but it has faced criticism for giving strong incentives to allow companies to invest in oil and gas, while there are no tax incentives in the policy for green investment.
But BP’s reported half-year figures were impacted by a massive 24.4 billion US dollar (£19.9 billion) hit from the firm’s move to ditch its near-20% stake in Russian oil producer Rosneft in response to the Ukraine war.
This left it with statutory replacement cost losses of 15.4 billion US dollars (£13 billion), against profits of 5.7 billion US dollars (£4.7 billion) a year earlier.
BP chief executive Bernard Looney insisted the group was continuing to “perform while transforming”.
He said: “Our people have continued to work hard throughout the quarter helping to solve the energy trilemma – secure, affordable and lower carbon energy.
“We do this by providing the oil and gas the world needs today – while at the same time, investing to accelerate the energy transition.”
Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting.
BP earnings soar as energy firm profits from rising prices
DANICA KIRKA
Tue, August 2, 2022
LONDON (AP) — BP said its earnings from April to June almost tripled from a year earlier, increasing pressure on governments to intervene as energy companies profit from high oil and natural gas prices that are fueling inflation and squeezing consumers.
Net income jumped to $9.26 billion in the second quarter from $3.12 billion in the same period a year ago, London-based BP said Tuesday. It said it expects oil and gas prices to remain high due to disruptions in supply caused by Russia’s invasion of Ukraine.
BP’s earnings come as energy companies worldwide scoop up record profits. British rival Shell last week posted an unprecedented $18 billion quarterly profit. Irving, Texas-based Exxon Mobil reported net income of $17.85 billion, and San Ramon, California-based Chevron earned $11.62 billion.
Nick Butler, a visiting professor at Kings College London and a former BP vice president, said the figures are likely to make BP and other oil companies uncomfortable given the pain high energy prices are causing for consumers.
“I think BP’s very sensitive to the reputational problems of making money at this level,” Butler told the BBC. “I think there’s a real case here, which I think people in the companies would be very open to, for the government calling together the industry to find a plan to get us through the winter without putting these very high prices onto ordinary consumers.”
British regulators have increased the annual energy price cap for household gas and electricity bills by 73%, to 1,971 pounds ($2,408), since Oct. 1. Cornwall Insights, an energy and utility consultant, on Tuesday estimated that the cap would jump a further 70%, to 3,359 pounds, this fall as regulators try to keep pace with wholesale gas prices.
In the United Kingdom, where inflation reached a 40-year high of 9.4% in June, the government has announced a 25% windfall profits tax on the earnings of oil and gas companies that come from British operations.
BP said Tuesday that the windfall profits tax would increase the headline tax rate on its North Sea operations to 65% from 40%. The company said it plans to set aside $800 million to cover the bump.
The opposition Labour Party said the government should do more to help consumers.
“People are worried sick about energy prices rising again in the autumn, but yet again we see eye-watering profits for oil and gas producers,” Rachel Reeves, the party’s spokeswoman on treasury issues, said in a statement. “Labour argued for months for a windfall tax on these companies to help bring bills down, but when the Tories finally U-turned they decided to hand billions of pounds back to producers in tax breaks.”
Brent crude, a benchmark for international oil prices, averaged $113.83 a barrel in the second quarter, up 65% from a year earlier, according to BP. Natural gas prices more than doubled over the same period, rising as Russia's war in Ukraine worsened an energy crunch and as Moscow has reduced or cut off natural gas supplies to a dozen European Union countries.
The high prices pushed BP's underlying replacement cost earnings, an industry standard profit measure that excludes one-time items and the value of inventories, to $8.45 billion in the second quarter from $2.80 billion in the same period last year.
The soaring earnings allowed BP to return billions of dollars to shareholders, with the company boosting its dividend by 10% and announcing plans to buy back $3.5 billion in shares. BP said it expects to increase dividends by about 4% annually through 2025.
BP shares rose 4.3%, to 409.8 pence, in afternoon trading on the London Stock Exchange, outpacing the 0.2% gain in the benchmark FTSE 100 Index.
The company also said it was investing in plans to increase the production of renewable energy and reduce reliance on fossil fuels as the company seeks to cut net carbon emissions to zero by 2050. The company said it increased its pipeline of renewable energy projects by 10% in the first half of the year, primarily through an option to develop offshore wind farms off the east coast of Scotland and a global solar energy initiative.
“Our people have continued to work hard throughout the quarter helping to solve the energy trilemma — secure, affordable and lower carbon energy,” Chief Executive Bernard Looney said. “We do this by providing the oil and gas the world needs today — while at the same time investing to accelerate the energy transition.”
Environmental groups criticized the company for moving too slowly.
“While households are being plunged into poverty with knock-on impacts for the whole economy, fossil fuel companies are laughing all the way to the bank," said Doug Parr, chief scientist for Greenpeace UK. “The government is failing the U.K. and the climate in its hour of need."
Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting.
BP Boosts Returns as Oil Refining and Trading Drive Profit Beat
Laura Hurst
Tue, August 2, 2022 a
(Bloomberg) -- BP Plc hiked its dividend and accelerated share buybacks to the fastest pace yet after an “exceptional” result in oil refining and trading lifted profits above even the highest expectations.
The oil and gas industry is boosting returns to shareholders as the cash rolls in, even while the energy crisis triggered by Russia’s invasion of Ukraine threatens the global economy. BP said it expects prices to remain high and highlighted its investments in additional supplies.
“Today’s results show that BP continues to perform while transforming,” Chief Executive Officer Bernard Looney said in a statement on Tuesday. The company is “providing the oil and gas the world needs today -- while at the same time investing to accelerate the energy transition.”
Following in the footsteps of most of its peers, the London-based company said it will repurchase $3.5 billion of shares over the next three months, adding to the $3.8 billion it already bought back in the first half. It also increased its dividend by 10%.
Shares of the company rose 4.5% to 409.8 pence as of 9:30 a.m. in London.
The dividend was increased to 6 cents a share, an improvement from a previous commitment to raise the payout by around 4% annually through to 2025. Net debt fell to $22.82 billion at the end of the period, down from $32.7 billion a year ago.
The results showed BP is “delivering across all three key areas: earnings/cash, capital discipline and shareholder distributions,” Redburn analysts wrote in a research note.
BP’s second-quarter adjusted net income was $8.45 billion, the highest since 2008 and comfortably beating even the highest analyst estimate. This wasn’t just driven by high crude and natural gas prices -- the company’s refineries earned strong margins and its oil traders delivered an “exceptional” performance.
The company never discloses how much profit its oil traders generate, but did say that adjusted earnings before interest, taxation, depreciation and amortization for its refining and trading unit was $3.73 billion, compared with just $301 million a year ago.
Gas trading fared worse, delivering an “average” result for the quarter, the company said. That in part was a result of a halt to operations at the Freeport liquefied natural gas facility in the US, which will lead to significant reduction in the number of cargoes it expects to receive.
Political Pressure
The oil sector’s sky-high profits come at a politically tricky time for an industry accused of profiteering from the fallout from Russian President Vladimir Putin’s aggression, while also failing to invest enough in new drilling. Alongside its earnings statement, BP published an extensive list of investments it is making in the UK, where the rising cost of energy has become a hot political issue and the North Sea oil and gas industry has already been hit by a windfall tax.
That hasn’t stopped calls for further taxation. Friends of the Earth campaigner Sana Yusuf said that a much tougher windfall tax on oil and gas profits is needed. “It beggars belief that these companies are raking in such huge sums in the midst of a cost-of-living crisis,” she said in a statement.
Collectively, the world’s five major international oil companies made more money in the second quarter than ever before, raking in more than $60 billion.
With recession fears gathering pace, there has been speculation that the second quarter could end up marking the high point for Big Oil this year. BP said it expects oil and natural gas prices, and refining margins, to stay high in the third quarter because of disruptions in Russian supply, relatively low inventories and reduced spare capacity.
©2022 Bloomberg L.P.
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