BP is handing out £2.9bn to investors as anger mounts over oil giant’s huge profits amid skyrocketing energy bills
- BP launched another share buyback after a £2bn buyback earlier this year
- It posted its highest quarterly profit in 14 years
BP’s shareholders are lining up for a massive £2.9bn windfall as it launched another share buyback after posting its highest quarterly profit in 14 years.
The amount, announced alongside the company’s second quarter results, follows a £2 billion ($2.5 billion) buyback unveiled earlier this year.
While the results have sparked outrage among motorists, utility bill payers and politicians, they are good news for shareholders, many of whom are long-term investors.
BP shareholders line up for a £2.9bn windfall as it launched a new share buyback
The buybacks will boost the country’s pension fund, as well as private investors and institutional lenders, including Legal & General and Royal London Asset Management.
They are popular with investors because they reduce the number of shares in a company that are available for trading, increasing the value of the remaining shares.
BP also increased its quarterly dividend by 10 percent to $0.06 per share, bringing the payout to around £820 million.
The bumper payments came as the energy giant reported profits for the three months to the end of June had tripled to £6.9 billion, from £2.3 billion last year.
It’s a hefty reward for investors in the oil giant, which saw its shares crash to a 26-year low in 2020 as lockdown measures pushed energy demand down.
The stock has since regained most of its lost ground, rising a further 2.8 percent or 11p to 403.35p following the quarterly results.
But Chris Beauchamp, chief market analyst at IG, said the buyback and dividend hike could serve as a “high water point” for the company.
BP benefits from rising oil and gas prices
BP has benefited from rising oil and gas prices fueled by the supply disruption caused by the war in Ukraine, as well as a rebound in demand as the global economy recovers from the Covid-19 pandemic.
In recent months, Russia has cut natural gas supplies to Europe, raising fears that it could turn off the taps altogether as winter approaches and push prices up in international energy markets.
The crisis has also caused energy bills in the UK to skyrocket, with the average household expected to pay more than £3,600 a year by early 2023. Last year, BP boss Bernard Looney described the energy market as an ‘ATM’.
But the huge gains across the industry have sparked outrage among politicians and campaigners, who have argued that the companies are taking advantage of the tight cost of living.
In an effort to assuage growing anger among the population, Looney, 52, and BP’s finance chief Murray Auchincloss have also said they will donate their £400 off the government’s energy bill to charity. .
But the gesture is unlikely to cause much financial pain for Looney, who received nearly £4.5 million from BP last year.
He is on track to receive £11.4 million this year if the bonus targets are met.