BP is accelerating the pace of share buybacks even as it misses full-year profits

BP also declared a dividend per common share of 7.27 cents for the final three months of 2023, representing a 10% increase compared to the same period the previous year.

The oil giant posted core replacement cost earnings, used as a proxy for net profit, of $13.8 billion for 2023, a sharp decline from the record $27.7 billion the previous year. Analysts were expecting net earnings of $13.9 billion for all of 2023, according to the LSEG consensus.

BP reported fourth-quarter net earnings of about $3 billion, beating analysts' expectations of $2.6 billion.

As the London-listed oil major's shares rose toward the top of the European Stoxx 600 index on Tuesday morning, analysts at RBC Capital Markets described BP's commitment to buy back shares after the first quarter of 2024 as a “welcome positive surprise.”

BP's plan to implement stock buybacks worth at least $14 billion through 2025, provided it maintains a strong investment-grade rating, was likely not anticipated by the market, they added.

“With BP setting specific EBITDA targets for 2025, which are also above consensus expectations, the commitment on the payment front shows confidence in future delivery, we believe,” RBC Capital Markets said in a research note. EBITDA refers to earnings before interest, taxes, depreciation and amortization.

“Looking back, 2023 was a year of strong operating performance with real momentum in delivery across the business,” BP CEO Murray Auchincloss said in a statement.

“We are confident in our strategy of serving as a simpler, more focused, higher value company, and are committed to increasing long-term value for our shareholders.”

BP said fourth-quarter results reflect strong gas trading and “significantly lower” refining margins. Net debt for the period amounted to $20.9 billion at the end of 2023, compared to $21.4 billion at the end of 2022.

British rival Shell on Thursday reported stronger-than-expected full-year earnings, announcing a 4% increase in its dividend and a new $3.5 billion stock buyback program.

In the United States, both Exxon Mobil and Chevron beat quarterly profit expectations, although their results fell sharply from a year ago amid weak fossil fuel prices.

BP's latest results come as the company faces pressure from an activist investor over its strategy.

In a letter to BP Chairman Helge Lund and then-interim CEO Murray Auchincloss in October, Bluebell Capital Partners urged the company to increase its investments in oil and gas and reduce spending on clean energy. The message was first reported by Financial Times last week.

Bluebell Capital's Giuseppe Bivona has since expressed frustration with BP's “completely underwhelming” share price performance compared to its US and European peers. Bivona told CNBC's “Squawk Box Europe” on Jan. 30 that BP should consider deploying its capital “in a rational way.”

In response to the letter's publication, a BP spokesperson said at the time that the company “welcomes constructive engagement” with its shareholders.

BP has also faced a change in leadership through the media. The company appointed Murray Auchincloss as permanent CEO last month, nearly four months after his predecessor, Bernard Looney, resigned after less than four years in the position.

Under Looney's leadership, BP has promised that its total emissions will be 35% to 40% lower by the end of the decade.

The company, which was one of the first energy giants to announce plans to cut emissions to net zero “by 2050 or earlier,” eased those climate plans last year. baby He said Nearly a year ago it said it would instead target a 20% to 30% cut, indicating it needed to continue investing in oil and gas to meet demand.