Oil and gas giant BP beat second-quarter earnings expectations on Tuesday, while expanding its dividend and share buyback program, APA reports citing CNBC.
The U.K.-based energy major said it will buy back $1.4 billion of its own shares in the third quarter on the back of a $2.4 billion cash surplus accrued in the first half of the year. It also increased its dividend by 4% to 5.46 cents per share, having halved it to 5.25 cents per share in the second quarter of 2020.
It also anticipates buybacks of around $1 billion per quarter and an annual dividend increase of 4% through 2025, based on an estimated average oil price of $60 per barrel.
The energy major posted full-year underlying replacement cost profit, used as a proxy for net profit, of $2.8 billion. That compared with a loss of $6.7 billion over the same period a year earlier and $2.6 billion net profit for the first quarter of 2021.
Analysts polled by Refinitiv had expected second-quarter net profit of $2.06 billion.
“This shows we continue to perform while transforming BP — generating value for our shareholders today while we transition the company for the future,” CEO Bernard Looney said in the earnings statement.
The results reflect a broader trend across the oil and gas industry as energy majors seek to reassure investors they have gained a more stable footing amid the ongoing coronavirus pandemic. The British-Dutch multinational Royal Dutch Shell, France’s TotalEnergies and Norway’s Equinor all announced share buyback schemes last week.
Share prices of the world’s largest oil and gas majors are not yet reflecting the improvement in earnings, however, and the industry still faces a host of uncertainties and challenges.
Shares of BP are up almost 15% year-to-date, having collapsed roughly 47% in 2020.
Operating cash flow sat at $5.4 billion at the end of the second quarter, which includes the annual payment of around $1.2 billion the company makes for the Gulf of Mexico oil spill in 2010.
Meanwhile net debt fell to $32.7 billion from $33.3 billion in the first quarter, marking the fifth consecutive quarter of decreased debt from the $51 billion seen in the first quarter of 2020.
A year out from the announcement of its strategic overhaul, announced in August 2020, the company highlighted that it had built a 21 gigawatt renewable energy pipeline and brought eight major oil and gas projects online.