BP Reports profit of $4.7 billion for 1st quarter 2021
Compared with $1.4 billion profit for the fourth quarter 2020.
- Underlying replacement cost profit* was $2.6 billion, compared with $0.1 billion for the previous quarter. This result was driven by an exceptional gas marketing and trading performance, significantly higher oil prices and higher refining margins.
- Operating cash flow* of $6.1 billion was underpinned by strong business performance, with a working capital* build (after adjusting for inventory holding gains) of $1.2 billion including $0.5 billion of severance payments. This build was largely offset by other timing differences.
- Divestment and other proceeds were $4.8 billion in the quarter, including $2.4 billion from the divestment of a 20% stake in Oman Block 61 and $1.0 billion final instalment for the sale of the petrochemicals business.
Net debt target achieved, $500 million share buybacks in the second quarter
- Net debt* reduced by $5.6 billion to reach $33.3 billion at the end of the quarter. Having reached $35 billion net debt, bp is now retiring this target and remains committed to maintaining a strong investment grade credit rating.
- bp is introducing an intent going forward to offset dilution from vesting of awards under employee share schemes through buybacks. Surplus cash flow* is now defined after the cost of buying back these shares.
- In addition, bp remains committed to returning at least 60% of surplus cash flow to shareholders through share buybacks, subject to maintaining a strong investment grade credit rating. In considering the quantum of buybacks, the board will take account of the cumulative level of, and outlook for, surplus cash flow with the intention to provide guidance on a quarter-forward basis while macro uncertainties remain.
Bernard Looney, BP Chief executive officer, Commented;
“This quarter demonstrates what we mean by performing while transforming. With the acceleration of divestment proceeds, together with strong business performance and the recovery in the price environment, we generated strong cash flow and delivered on our net debt target around a year early. We are commencing share buybacks in the second quarter which, alongside our resilient dividend, support the growth in distributions to shareholders. And at the same time, we’ve delivered disciplined strategic progress right across bp – including building a high-quality offshore wind business, making great strides in our electrification agenda and setting ourselves up for further growth in the Gulf of Mexico”.
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