BP sees annual profits halve but reveals stronger-than-expected end to 2023

BP has revealed profits halved in 2023 as lower oil prices took their toll but the company chalked up a better-than-expected performance in the final three months.

The oil giant reported underlying replacement cost profits – the company’s preferred measure – of 13.8 billion US dollars (£11 billion).

This is down 50% from the record 27.7 billion US dollars (£22.1 billion) notched up in 2022 when oil prices surged following Russia’s invasion of Ukraine.

The cost of crude has since eased back, with oil trading at about 82 US dollars a barrel on average through last year, against 100 US dollars in 2022.

Shares in the FTSE 100 group surged around 6% on Tuesday morning as it reported a better-than-feared drop in profits in the final three months of the year, with underlying profits of 3 billion US dollars (£2.4 billion) against 4.8 billion US dollars (£3.8 billion) a year ago.

Most analysts had expected profits of 2.77 billion dollars (£2.19 billion) for the fourth quarter.

BP joined rival Shell in announcing further cheer for shareholders after two years of bumper profits, with another 3.5 billion US dollars (£2.8 billion) of share buybacks for the first half of the year under plans to buy back at least 14 billion US dollars (£11.1 billion) over 2024-25.

It also increased its dividend by year on year 10% to 7.27 cents a share in the fourth quarter.

BP’s new chief executive, Murray Auchincloss, said: “Looking back, 2023 was a year of strong operational performance with real momentum in delivery right across the business.

“And as we look ahead, our destination remains unchanged… focused on growing the value of BP.”

But campaign group Global Witness hit out at what it said were “reckless shareholder payouts” at BP.

It claimed BP’s shareholders’ returns in 2023 – 12.7 billion (£10.2 billion) – could “cover the projected cost of natural disasters for the next seven years in the UK”.

Jonathan Noronha-Gant, Global Witness senior campaigner, said: “Shareholders should want to protect their long-term positions.

“That means demanding a rapid clean energy transition for companies like BP. These reckless shareholder payouts do the opposite.”

Think tank the Institute for Public Policy Research (IPPR) also criticised BP’s “excessive payouts”.

Joseph Evans, researcher at the IPPR, said: “BP has decided to prioritise its shareholders over investing in the green transition.

“It’s clear that BP and other fossil-fuel giants can’t be trusted to drive the green transition: they will always prioritise their shareholders over the needs of the economy and the planet.”

BP said its fourth-quarter results partly reflected strong gas trading, offset by lower refining margins and weak oil trading.

It marks the first set of figures for new boss Mr Auchincloss after he took over the role of chief executive last month.

Formerly BP’s chief financial officer, he had done the job on an interim basis since September until the board decided on a permanent replacement for Bernard Looney, who left after failing to fully disclose past relationships with company colleagues.