BP has been trying to transition into renewable and more sustainable energy for some time but has suffered a series of setbacks.
ADVERTISEMENTBritish Petroleum (BP) released its Q4 2023 results on Tuesday. The company announced a $13.8 billion (€12.85 billion) underlying replacement cost profit, also considered a proxy for net profit, for the full year 2023.
This figure was supported by industry refining margins being considerably lower, as well as gas trading picking up steam.
Although 2023's full-year profit was about half that of 2022's $27.7 billion (€25.8 billion), when energy prices spiked due to the Russia-Ukraine war, it was still the second highest number in about a decade. However, it also missed analyst expectations of $13.9 billion (€12.9 billion).
For Q4 2023, profits clocked in at about $2.9 billion (€2.7 billion), above analyst estimates of $2.6 billion (€2.4 billion).
Following the earnings release, BP shares jumped about 5%, trading at about $34.34 (€32) on Tuesday afternoon.
The company’s net debt fell to about $20.9 billion (€19.4 billion) in 2023, with operating cash flow coming in at $32.0 billion (€29.8 billion).
According to the Chief Executive Officer Murray Auchincloss, in the Q4 earnings release, "Looking back, 2023 was a year of strong operational performance with real momentum in delivery right across the business.
"And as we look ahead, our destination remains unchanged - from an international oil company (IOC) to an integrated energy company (IEC) - focused on growing the value of BP. We are confident in our strategy, on delivering as a simpler, more focused and higher-value company, and committed to growing long-term value for our shareholders."
More share buybacks and higher dividends
BP announced that it would be accelerating the pace of its share buybacks, planning a $3.5 billion (€3.2 billion) buyback for the first half of 2024, as well as a $1.75 billion (€1.63 billion) buyback before releasing the first quarter results this year.
It also revealed a dividend per ordinary share increase for Q4 2023, bringing the current payout to 7.27 cents per share. This was a 10% rise year-on-year.
BP attempts to transition into an integrated energy company
BP has been trying to transition into renewable and more sustainable energy for some time but has been having setbacks. These included cutting back plans to reduce emissions by 35% to 40% by the end of this decade and instead moving the goalposts to 20% to 30% lower than present.
The company justified its decision with the company's then CEO Bernard Looney reaffirming that investment in fossil fuels was still needed to meet demand and that energy transition plans needed to be undertaken in an orderly manner.
According to Richard Hunter, Head of Markets at Interactive Investor: "The more immediate outlook over the next quarter and indeed for the year as a whole guides that upstream production looks likely to improve, but lower industry refining margins could persist, albeit at a lower rate.
"The group is keeping its foot to the floor on capital expenditure to fund its transition with spending of $16 billion (€14.8 billion) per year to continue at the very least in the years 2024 and 2025.
"In the meantime, the industry as a whole is under increasing pressure to move away from traditional fossil fuels to cleaner replacement energies, and this has tended to weigh on the sector, not least of which in historical valuations. With the move to renewables yet to prove consistently profitable or practical across many technologies, there are many challenges to be overcome."
