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BP’s quarterly profit hits $3.3bn as oil price rebounds

·3 min read
<span>Photograph: Alastair Grant/AP</span>
Photograph: Alastair Grant/AP

BP has reported its biggest quarterly profit since the Covid pandemic began, and will hand investors a $500m (£360m) cash windfall, as the global oil markets recover from the crisis.

The oil company reported a profit of $3.3bn for the first quarter, up sharply from a loss of $628m in the same period last year, when oil prices began to slide in line with China’s economic slowdown.

BP’s quarterly profit figure is more than four times higher than in the last quarter of 2020, and has allowed the company to start a $500m scheme to buy back shares from its investors a year earlier than expected.

Bernard Looney, the BP chief executive, said the first quarter’s better than expected results demonstrated “what we mean by performing while transforming”.

The oil company generated more than $6.1bn in cash, almost six times as much as its operating cashflows in the first quarter of 2020 and enough to reduce its debt so it can begin buying back the shares it has paid to investors in lieu of dividends.

The cash boom is in large part owing to the recovery in global oil prices, which fell to 21-year lows of less than $20 a barrel in April last year because of the abrupt halt in global travel and economic activity. The company added that “an exceptional gas marketing and trading performance” also helped to bolster its revenues in the first months of the year.

The return to profit marks the end of BP’s toughest year since the Deepwater Horizon disaster in the Gulf of Mexico a decade ago. The company was forced to cut its dividend, scrap its executive bonus pay and cull 10,000 jobs from its global workforce, while beginning the transition away from fossil fuels and towards a low-carbon energy portfolio.

The impact of the pandemic caused the sharpest slump in global oil demand in the industry’s history, but experts predicted that the years ahead could bring the fastest surge in demand in response.

Global oil prices fell from an average of just over $61.60 a barrel in January last year to an average of $21.40 a barrel in April 2020. During the first quarter of 2021, the average price of Brent crude returned to almost $60 a barrel, and is expected to bolster the fortunes of the world’s biggest oil companies. Brent was trading at $66 on Tuesday morning.

The influx of cash allowed BP to cut its debt by $5.6bn over the last quarter to $33.3bn, meaning its share buybacks can begin in the second quarter, Looney said.

“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,” he said.