BP hikes dividends, buybacks as profits rise amid high prices

(Bloomberg) — BP Plc raised its dividend and accelerated share buybacks to their fastest pace after earnings jumped.

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The oil and gas industry is boosting shareholder returns as cash piles up, even as an energy crisis sparked by Russia’s invasion of Ukraine threatens the global economy. BP said it expected prices to remain high and highlighted its investment in additional supplies.

“Today’s results show that BP continues to deliver as it transforms itself,” Chief Executive Bernard Looney said in a statement on Tuesday. The company “provides the oil and gas the world needs today – while investing to accelerate the energy transition.”

Following in the footsteps of most of its peers, the London-based company said it would buy back $3.5 billion of shares over the next three months, adding to the $3.8 billion it already bought back in the first half. It also increased its dividend by 10%.

The company’s shares rose 4.1 percent to 408.6 pence as of 8:01 a.m. in London.

BP’s adjusted net income for the second quarter was $8.45 billion, the highest since 2008 and beating even the highest estimate of analysts. This was not just due to high crude oil and natural gas prices – the company’s refiners earned strong margins and oil traders delivered an “outstanding” performance.

The dividend was raised to 6 cents per share, an improvement on a previous commitment to increase the payout by about 4% a year through 2025. Net debt fell to $22.82 billion at the end of the period, down from $32.7 billion previously year.

The oil sector’s high profits come at a politically difficult time for an industry accused of cashing in on the fallout from Russian President Vladimir Putin’s aggression while failing to invest enough in new drilling. Alongside its earnings report, BP published an extensive list of investments it is making in the UK, where the rising cost of energy has become a hot political issue and the North Sea oil and gas industry has already been hit by a tax on windfall profits.

As recession fears gather momentum, there has been speculation that the second quarter could prove to be the high point for big oil this year. BP said it expected oil and natural gas prices and refining margins to remain high in the third quarter due to disruptions in Russian supplies, relatively low inventories and reduced spare capacity.

(Updates with the stock price in the fifth paragraph.)

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