BP and Shell Report Record Profits

BP and Shell Report Record Profits

BP has reported a record profit of $28 billion for 2022, spurred on by the surge in energy prices since the Russian war in Ukraine.

BP‘s announcement of a record profit follows similar reports from other oil companies – namely  Shell, Exxon Mobil and Chevron last week.

“We are strengthening BP, with our strongest upstream plant reliability on record and our lowest production costs in 16 years, helping to generate strong returns and reducing debt for the eleventh quarter in a row,” Bernard Looney, chief executive said in a statement.

The company also said that it had slashed its emissions reduction targets by a third, and will produce much more oil and gas by the end of this decade than previously thought.

Underlying replacement cost profit – the figure most followed by analysts – reached 27.7 billion dollars (£23 billion) last year.

BP’s previous record profit had been in 2008 when it made around 26 billion dollars. It also said it would hand around 4.4 billion dollars to shareholders in a full-year dividend and announced plans to buy back 2.8 billion worth of its own shares.

The announcement came hot on the heels of Shell, which reported its highest profit on record at nearly 40 billion dollars.

Together with US giants Chevron and ExxonMobil, some of the biggest oil majors have announced joint earnings of around 160 billion dollars.

Unions and pressure groups voiced outrage that BP is making enormous profits while ordinary people struggle to afford the energy it sells.

Perhaps more significantly in the long term, BP slashed its environmental targets too.

The company had been one of the first oil and gas majors in the world to announce an ambition to cut emissions to net zero by 2050. As part of this it has previously promised that emissions will be 35-40% lower by the end of this decade.

However, the company has now said that it was significantly revising this target – targeting a 20-30% cut instead.

BP boosted dividends by 10% to 6.610 cents per share. It halved its dividend to 5.25 cents in July 2020 for the first time in a decade in the wake of the pandemic.

The company also announced plans to repurchase $2.75 billion worth of shares over the next three months after buying $11.7 billion in 2022.

BP said it will increase spending on its oil and gas business by $1 billion a year, or up to a cumulative $8 billion by 2030.

At the same time, the company also increased spending plans for its energy transition investments by $1 billion a year over the same period.

It increased the upper range of its forecast overall annual investments to 2030 to $14 billion to $18 billion from $14-$16 billion previously.