LONDON, UK – British oil company BP disclosed its plans to increase returns for its shareholders despite a significant drop in profits, in line with the decrease in oil prices. The company reported a $13.8 billion profit for 2023, a steep decline from the previous year’s record $27.7 billion.
The share repurchases accelerated, with BP announcing a $1.75 billion buyback before reporting first-quarter results and committing to a $3.5 billion share repurchase for the first half of the year. Additionally, the company declared a dividend of 7.27 cents per ordinary share for the final three months of 2023, a 10% increase from the same period in the previous year.
BP’s fourth-quarter net profit nearly reached $3 billion, outperforming analyst expectations of $2.6 billion. BP CEO Murray Auchincloss expressed confidence in the company’s strategy of delivering as a simpler, more focused, and higher-value organization, committed to generating long-term value for its shareholders.
The company’s London-listed stock has experienced a 2.6% year-to-date decline. Meanwhile, rival company Shell reported stronger-than-expected full-year profits, increasing its dividend by 4% and introducing a new $3.5 billion share buyback program.
Despite BP’s positive performance, the company has faced pressure from activist investor Bluebell Capital Partners over its strategic decisions. Bluebell urged BP to increase its oil and gas investments and reduce spending on clean energy, expressing dissatisfaction with the company’s share price performance relative to its peers.
In response to the activist investor’s concerns, BP’s spokesperson emphasized the company’s willingness to engage constructively with its shareholders. BP has also experienced a change in leadership, appointing Murray Auchincloss as the permanent CEO following his predecessor’s resignation after less than four years.
Under previous leadership, BP committed to reducing its overall emissions by 35-40% by the end of the decade, initially aspiring to achieve net-zero emissions by 2050. However, the company revised its climate plans, aiming for a 20-30% emissions reduction and acknowledging the need to continue investing in oil and gas to meet demand.
Overall, BP’s financial performance and strategic decisions have sparked discussions about the company’s future direction, especially in the context of the broader energy industry’s transition towards more sustainable practices. The company’s ability to balance profitability, environmental responsibility, and shareholder value will be critical in shaping its long-term success.