Published On: Tue, Aug 2nd, 2022

BP Triples Profit, Earning $8.5 Billion Windfall

BP, one of the world’s largest oil companies, easily beat expectations for second-quarter profit on Tuesday as high prices and constrained supply have driven up earnings for energy companies.

BP reported an underlying profit of $8.5 billion, up from $6.2 billion in the previous quarter and triple the $2.8 billion in the same period last year. Its shares rose more than 4 percent in early trading in London, where the company is based.

The results mean that the five biggest Western oil companies — BP, Chevron, Exxon Mobil, Shell and TotalEnergies — generated some $60 billion in profit for the second quarter. The surge in earnings followed a spike in crude oil, natural gas and gasoline prices this year, resulting mostly from Russia’s invasion of Ukraine.

The five energy giants also spent about $25 billion in the first half of the year buying back their own shares, which primarily rewards shareholders by raising the value of stocks. BP said it spent $3.9 billion on buybacks in the first half, and planned $3.5 billion worth of buybacks in the third quarter. The company said it would devote 60 percent of its “surplus cash flow” this year to share buybacks. It also raised its dividend by 10 percent.

BP announced its exit from Russia in February, and in the first quarter wrote off about $25 billion in the value of its stake in Rosneft, Russia’s state-controlled oil company, and other ventures. Analysts considered that a paper loss with little relevance to BP’s future performance.

Energy companies’ windfall profits have brought political pressure on them to do more to increase production and lower costs to consumers. President Biden has accused oil companies of profiteering off surging energy prices and Britain, home of BP and Shell, has announced a special tax on the industry’s “extraordinary” profits.

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