3rd May 2022 08:57
(Alliance News) - BP PLC on Tuesday said it swung to a first-quarter loss due to its decision to exit from its shareholding in Rosneft in response to Moscow's invasion of Ukraine; however on an underlying basis, the oil major reported a big jump in profit.
For the three months that ended March 31, BP swung to an attributable loss of USD20.38 billion from a USD4.67 billion profit in the first quarter last year. BP said the reported result included pretax adjusted items of USD30.8 billion.
By its preferred metric, BP swung to a replacement cost loss of USD23.04 billion from a replacement cost profit of USD3.33 billion the year before.
The London-based firm attributed the loss to its decision to exit its 19.75% shareholding in state-owned Russian oil firm Rosneft. BP said that, in the first quarter, the total post-tax charge for this was USD25.5 billion.
However, on an underlying replacement cost basis, BP reported a profit of USD6.25 billion, up 54% from USD4.07 billion in the fourth quarter of last year and more than doubled from USD2.63 billion a year ago.
Turning to shareholder returns, BP raised its first-quarter dividend by 4.0% to 5.46 cents from 5.25 cents the year before. It also announced a further share buyback. BP said it plans to execute a USD2.5 billion share buyback before announcing its second-quarter results.
Supporting the buyback, BP generated USD4.1 billion in surplus cash flow in the first quarter, it said. The company said it remains committed to using 60% of surplus cash flow for buybacks and the remaining 40% to pay down debt. Net debt was reduced to USD27.46 billion from USD30.61 billion at the end of 2021 and USD33.31 billion a year ago.
Looking ahead, BP said it expects the short-term outlook for gas prices to remain heavily dependent on Russian pipeline flows to Europe.
BP expects second-quarter underlying upstream production to be lower than in the first quarter. Further, second-quarter production will reflect an additional hit from the absence of production from "Russia incorporated joint ventures", it said.
"In a quarter dominated by the tragic events in Ukraine and volatility in energy markets, BP's focus has been on supplying the reliable energy our customers need. Our decision in February to exit our shareholding in Rosneft resulted in the material non-cash charges and headline loss we reported today. But it has not changed our strategy, our financial frame, or our expectations for shareholder distributions." said Chief Executive Officer Bernard Looney.
"Importantly BP continues to perform and step-by-step we are making progress executing our IEC strategy - producing resilient hydrocarbons to provide energy security while investing with discipline in the energy transition," Looney added.
BP shares were up 2.3% at 400.75 pence early Tuesday in London.
By Tom Waite; [email protected]
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