BP reports blockbuster profit for the first quarter but slows from 2022’s record-breaking pace

High energy prices have been lighting up BP’s profits, but the peak may have passed (PA) (PA Wire)

BP reported more blockbuster profits today, but was not on course to break last year’s earnings  record and slowed the pace at which it is returning cash to investors.

The UK oil giant’s key earnings measure for the first quarter hit was £4 billion, down by almost £1 billion from the same part of a record-breaking 2022, but more than City experts had forecast.

It left the company braced for further calls for deeper windfall taxes after Russia’s invasion of Ukraine left high energy prices as a hot-button political issue. BP slowed the pace at which it is returning cash to investors.

That knocked its stock, which fell 28p to 507p, a loss of around 5% and the biggest fall on the FTSE 100.

BP’s key earnings figure for the first quarter ­­­– underlying replacement cost profit – came in at $5 billion, down from $6.2 billion in the same period a year ago, but up from the $4.8 billion in the preceding quarter. It was also more than the $4.3 billion forecast.

The slower pace of capital return means it will buy back stock worth $1.75 billion in the next three months, down from $2.75 billion in the preceding quarter. That also comes with oil prices are off their peaks of around $130 a barrel, now trading around $80. Its shrebuyback targets are based on oil prices at around $60 a barrel.

Russ Mould, investment director at AJ Bell pointed out that much of BP’s revenue is beyond the reach of the UK tax man.

“The issue for those who see the headline numbers and think the UK’s cost of energy problem could be solved at a stroke is that the lion’s share of its profit and cash flow is being generated outside the UK,” he said.

Nonetheless, the sheer scale of profits in the sector is likely to energise calls for deeper taxes, not least via the government’s Energy Price Levy which was part of the way it paid for price caps on soaring domestic energy pills.

BP faced criticism at the time of its record $28 billion annual earnings in February for also scaling back its plans to cut fossil fuel production in its move toward renewable energy.