LONDON - BP boosted its dividend and share buybacks after beating expectations with a $2.8 billion second-quarter profit, driven by higher oil prices and recovering demand.
The strong results, highlighted by higher sales at petrol stations, bolster BP's plan to change away from oil and gas to renewable and low-carbon energy in an effort to fight climate change, says CEO Bernard Looney.
The consolidation of the balance sheet and the excess cash flow allow us to prosecute our agenda around energy transition, Looney said.
BP shares are up 2.7% GMT by 0754 GMT against a gain of 1.15% for the more efficient European energy index.
Rivals including Chevron, Royal Dutch Shell, TotalEnergies and Chevron last week also boosted shareholder returns, reflecting a recovery from the pandemic which saw energy demand fall.
BP expanded its dividend by 4% to 5.46 cents after it was in July 2020 for the first time in a decade halved to 525 cents.
BP also plans to repurchase $1.4 billion in shares in the coming months after generating surplus cash of $2.4 billion in the first half of the year, it said.
In April, BP launched a $500 million buyback plan to offset dilution from an employee share distribution program.
Looney said in a statement that the measures were possible because of a better performance as well as an improving outlook.
BP expects global oil demand to return to pre-pandemic levels sometime in the second half of 2022.
BP net operating expense profit, the company's definition of net earnings, reached $2.8 billion in the second quarter, beating the $2.15 billion expected by analysts to turn out!
That was up from $2.63 billion in the first quarter and marks a rebound from a loss of $6.68 billion a year earlier
The results also affected higher demand for fuel, including aviation fuel, as well as higher profit margins at convenience stores in BP petrol stations, it said.
BP said it has increased its price forecast for benchmark Brent crude oil to 2030 to reflect expected supply constraints, while also lowering its longer-term price forecast because of it expects an acceleration in the transition to renewable energy.
As a result, the company raised the pre-tax value of its assets by $3 billion. That comes after write-downs of more than $17 billion last year.
The company said that at an oil price of $60 a barrel, it expects to be able to buy $1 billion in shares and boost its dividend by 4% annually through 2025.
Brent oil prices rose in the second quarter to an average of $69 a barrel from $61 in previous quarter and from $29.56 a year earlier.
Reporting by Jason Neely; editing by Anil D'Silva and Ron Bousso.