bp reported profit for 4th quarter of $2.3 billion
Underlying results and cash flow
Underlying replacement cost profit* for the quarter was $4.1 billion, compared with $3.3 billion for the previous quarter. This result was driven by higher oil and gas realizations, higher upstream* production volumes and stronger refining commercial optimization, partly offset by a significantly lower oil trading result and an average contribution from gas marketing and trading and the impact of higher energy costs.
Reported profit for the quarter was $2.3 billion, compared with a loss of $2.5 billion for the third quarter 2021. The reported result includes adjusting items* before tax of $3.0 billion with net impairments of $1.1 billion and adverse fair value accounting effects* of $0.9 billion primarily due to further increases in forward gas prices compared to the third quarter.
Operating cash flow* of $6.1 billion includes a working capital* build of $2.2 billion (after adjusting for inventory holding gains* and fair value accounting effects).
bp received $7.6 billion of divestment and other proceeds in the full year including $2.3 billion during the fourth quarter. bp expects to receive proceeds of $2-3 billion in 2022.
For full year 2021 ROACE* was 13.3%.
Building a track-record of delivery against our disciplined financial frame
- For the fourth quarter bp has announced a dividend of 5.46 cents per ordinary share payable in March 2022.
- Net debt* fell to $30.6 billion at the end of the fourth quarter – a reduction of $8.3 billion compared to fourth quarter 2020.
- Capital expenditure* in the fourth quarter and full year was $3.6 billion and $12.8 billion respectively. bp now expects capital expenditure of $14-15 billion in 2022 and continues to expect a range of $14-16 billion per annum through 2025.
- During 2021 bp generated surplus cash flow* of $6.3 billion.
- Share buybacks of $1.725 billion were executed during the fourth quarter including $1.25 billion announced with third quarter results and $475 million to complete the buybacks announced with second quarter results.
- bp intends to execute a further $1.5 billion share buyback from 2021 surplus cash flow prior to announcing its first quarter 2022 results.
- For 2022, and subject to maintaining a strong investment grade credit rating, bp is committed to using 60% of surplus cash flow for share buybacks and intends to allocate the remaining 40% to strengthen the balance sheet.
- On average, based on bp’s current forecasts, at around $60 per barrel Brent and subject to the board’s discretion each quarter, bp expects to be able to deliver share buybacks of around $4.0 billion per annum and have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025.
- In addition, to date in 2022, bp has executed a share buyback of $500 million to offset the expected full year dilution from the vesting of awards under employee share schemes in 2022.
- The board will take into account factors including the cumulative level of and outlook for surplus cash flow*, the cash balance point* and the maintenance of a strong investment grade credit rating in setting the dividend per ordinary share and the buyback each quarter.
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