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2:00 AM 6th August 2022
business
Opinion

Market Analysis: BP

BP - Investors looking for dividend benefit from record-breaking profits; North Sea operations remain strategically important

Allegra Dawes, Senior Analyst for Industrials, Materials & Energy at global primary research firm Third Bridge comments on BP:

“BP reported a quarterly profit of USD 8.5bn, significantly higher than analysts estimates of USD 6.8bn, benefitting from soaring energy prices and strong refining margins. The company plans to boost dividend payments by 10 percent and will also initiate a new share buyback programme, totalling USD 3.5bn.”

“Despite today’s elevated oil and gas pricing environment, our experts don’t expect BP to alter its investment plans in the next 12-18 months. Should they decide to accelerate spending there will face significant challenges, especially for large scale projects.”

“Investors expect more share repurchases and dividends from BP and other oil supermajors thanks to record-breaking profit and cash flow levels.”

“BP is likely to stay committed to GBP 18bn investment in the North Sea despite the windfall tax imposed by the British Government.Our experts say the North Sea remains strategically critical to BP with a resilient hydrocarbon business in the West of Shetland, CCUS on the Northeast coast, and wind projects with various partners in England and Scotland. Some of those investments come with significant tax incentives.”

“BP’s investments in Russia were low cost and good quality. Our experts say there aren’t many good alternatives in the market, except BPX Energy in the US or partnerships with South American and Middle Eastern state oil companies.”

“Inflation will impact BP’s business and energy transition process. However, the current period of higher oil and gas pricing is more than enough to offset any cost increases.”


Third Bridge is a global primary research firm that interviews more than 6,000 internationally recognised industry experts and business leaders a year to compile 360-degree market intelligence for institutional investors. www.thirdbridge.com