BP raises dividend, begins US$1.4b share buyback

BP Plc followed its Big Oil peers by increasing dividends and share buybacks as higher crude prices boosted profit, Bloomberg reports.

The oil majors -- with the notable exception of Exxon Mobil Corp. -- are raising returns as they move past the worst of the slump caused by the coronavirus pandemic.

Their goal is to woo investors who are becoming increasingly wary about the future of the fossil fuels in a changing climate.

BP posted “another quarter of strong performance while investing for the future in a disciplined way,” Chief Executive Officer Bernard Looney said in a statement on Tuesday.

“We are increasing our resilient dividend by 4 percent per ordinary share, and in addition we are commencing a buyback of US$1.4 billion from first half surplus cash flow.”

Both are significant pledges that go further than the distributions policy outlined earlier this year. The turnaround reflects the impact of higher energy prices, but also demands from shareholders, who weren’t happy in early 2021 with BP’s plans.

The London-based company’s second-quarter adjusted net income was US$2.8 billion, compared with a loss of US$6.68 billion a year earlier, according to the statement.

That was above the average estimate of US$2.13 billion in a Bloomberg poll of 19 analysts.

Having surpassed its net debt target of US$35 billion in the first quarter, BP said it would return at least 60 percent of surplus cash flow to shareholders this year.

If prices remain at current levels, buybacks could be “material” over the coming years, Looney said earlier this month.

BP’s net liabilities dropped further to US$32.71 billion, thanks to the sale of assets.

The firm has a goal of reaching US$25 billion of divestments by 2025 to fund the expansion of its low-carbon business.