BP results Q4 and financial year 2022

On Tuesday, oil giant BP reported record annual profits, doubling last year’s total as fossil fuel prices soared following Russia’s full-scale invasion of Ukraine.

The British energy giant posted an underlying replacement cost profit, used as a proxy for net profit, of $27.7 billion for 2022. That’s up from $12.8 billion the year former.

Analysts polled by Refinitiv had expected net profit of $27.6 billion for the full year 2022. BP said its previous all-time profit record was $26.3 billion in 2008.

For the fourth quarter, BP posted net profit of $4.8 billion, narrowly beating analysts’ expectations of $4.7 billion.

BP has announced a further $2.75 billion share buyback, which it expects to complete before announcing its first quarter 2023 results in early May. It also increased its dividend by 10% to 6.61 cents per common share.

BP CEO Bernard Looney described the earnings as “a good set of results”.

“First of all, I hope you can see a business that is running well, performing well while transforming. We had our highest operational reliability in our history, we had the lowest cost of production in 16 years , so the business itself is doing very well.” Looney told CNBC’s “Squawk Box Europe” on Tuesday.

“Second, we reflect on our strategy today. We are announcing up to $8 billion in additional investments in the energy transition this decade and up to $8 billion more in oil and gas to support energy security and energy affordability this decade.” he added. “And third, it’s about making sure we get back to our shareholders.”

BP said fourth quarter net debt was reduced to $21.4 billion from $30.6 billion from the same period a year earlier.

BP shares rose more than 4% in early morning trading in London.

The results see BP joining Big Oil’s profit bonanza.

British rival Shell posted its highest annual profit of nearly $40 billion on Thursday. Prior to that, US oil giant Exxon Mobil announced a profit of $56 billion for 2022, marking an all-time high for the Western oil industry. Chevron’s profits in 2022 hit a record $36.5 billion.

According to data from Refinitiv, the largest Western fossil fuel companies are expected to have raked in combined profits of nearly $200 billion for the year. The French TotalEnergies should publish its annual results on Wednesday.

The extraordinary scale of profits has renewed criticism of the oil and gas industry and sparked calls for higher taxes.

“People across the country need look no further than their own front door – one of Britain’s own oil companies – which has made record profits when so many Britons face hardship without let it be their fault,” campaign manager Jonathan Noronha-Gant said. to the advocacy group Global Witness.

“Introducing a windfall tax to help those in financial difficulty, coupled with a significant increase in renewable energy and home insulation, could be the beginning of the end of the era of fossil fuels, both for people and for the planet. BP is richer because you’re poorer,” Noronha-Gant said.

John Moore, chief investment officer at RBC Brewin Dolphin, said BP’s record results supported the dividend increase and additional share buybacks.

“It is fair to say that after the period covered by these results, the price of oil has weakened, while BP is also emphasizing its investments in renewable energy and its commitment to changing the way company,” Moore said.

“But, even taking these factors into account, there will inevitably be a backlash against today’s results in the current climate. They will only add to the calls for political intervention at some point in the near future. .”

In recent quarters, Big Oil executives have sought to defend their growing profits and said the significant disruption to global energy markets from the war in Ukraine has reaffirmed the importance of solving “the energy trilemma.” .

According to a statement to investors from BP’s Looney late last year, it refers to “secure, affordable and low-carbon energy”.

BP, which announced in 2020 its ambition to become a net zero company “by 2050 or earlier”, recently predicted that oil and gas would become a considerably smaller part of the global energy mix by mid-century. .

In its latest annual energy outlook, released on January 30, the company said it sees the share of fossil fuels as a primary energy source falling from 80% in 2019 to between 55% and 20% by 2050. share of renewables in primary energy, meanwhile, is expected to rise from 10% to 35% to 65% over the same period.

The wide range of results reflects several possible pathways for the energy transition. But in each of BP’s three scenarios, the rate at which renewables are entering the global energy system is “faster than any other fuel in history,” the report says.

— CNBC’s Catherine Clifford contributed to this report.