First oil giant to publish results beats forecast, hikes dividend and vows to sell assets and return proceeds to shareholders
BP has kicked off the quarterly results season for top global oil firms with some good news for the sector’s investors – a result beating forecast, a dividend hike and a promise to sell more assets and return the proceeds to shareholders. The company’s shares were up 5% in morning trading at 475.3p.
The world fifth largest investor-controlled oil and gas group by value also reassured investors that capital spending next year would stay steady at between $24bn (£14.9bn) and $25bn, a slight tightening from previous guidance of $24-$27bn for the years up to 2020.
Shareholders throughout the sector have been worried that rising costs would cause spending to balloon, crimping cash flow should oil prices drop and reducing the industry’s ability to offer them returns.
BP’s underlying replacement cost net profit for the quarter was $3.692bn, compared with a company-supplied consensus forecast of $3.170bn.
The figure was sharply lower than last year’s $5.017bn, mainly because of weaker refining margins, divestment of refineries and reduced income from its Russian business, but it was more than the second quarter’s $2.712bn when a big Russian tax charge hit the bottom line.
The company also raised its quarterly dividend by 5.6% to 9.5 cents a share and said it would sell $10bn of assets over the next two years, returning most of the proceeds to shareholders – a higher rate of disposal than previously promised.
BP has already sold $38bn of assets to pay for the Gulf of Mexico oil spill of 2010, but asset sales have become a theme throughout the sector as it struggles with rising costs and eyes potentially lower oil prices in the future.
The company recently won a small victory among its many legal defeats over the Deepwater Horizon oil spill, and in the results it derecognised about $400m of provisions within the $20bn fund it has set aside for certain types of compensation.
It raised its overall cumulative charge for the spill slightly, however, from $42.4bn to $42.5bn.