British oil giant BP reported a significant drop in fourth-quarter profit due to weaker refining margins. Despite the decline, the company announced a $1.75 billion share buyback and plans to fundamentally overhaul its strategy. BP CEO Murray Auchincloss stated that the company will focus on driving performance improvements and enhancing cash flow and returns.
British oil company BP announced a significant decline in fourth-quarter profit, attributing the drop to weaker refining margins . Despite this, the company launched a $1.75 billion share buyback for the quarter and pledged to fundamentally reset its strategy. BP reported underlying replacement cost profit (RC profit), a key measure of profitability, at $1.169 billion for the fourth quarter, down 48% from $2.99 billion in the same period last year. Analysts had projected RC profit at $1.
2 billion.The company cited various factors for the profit decline, including lower refining margins, the impact of maintenance activities, seasonally lower customer volumes and fuel margins, and increased charges in other business segments and corporate overhead. BP's net debt reached nearly $23 billion in the fourth quarter, a 10% increase year-on-year. Capital expenditure (capex) decreased to $3.7 billion in the October-December period, down from $4.7 billion in the fourth quarter of the previous year.Despite the profit dip, BP initiated a $1.75 billion share buyback for the fourth quarter and paid a dividend of $0.08 per ordinary share. Analysts had previously speculated that BP might reduce its share buybacks to address its balance sheet concerns. However, the company indicated a plan to continue buybacks through the first quarter results, though no further guidance was provided. BP's gas & low carbon energy segment experienced a 15% year-on-year drop in RC profit to $1.84 billion, while oil production and operations surged 37% annually. The company reported a weaker contribution from its oil trading division due to narrower refining margins.BP CEO Murray Auchincloss stated that the company is reshaping its portfolio, making progress in cost reduction, and planning further overhauls. He emphasized the company's intention to fundamentally reset its strategy, focusing on driving performance improvements and enhancing cash flow and returns. This marks a new direction for BP. The oil industry has faced headwinds in the past year as crude prices retreated following the initial spike after Russia's invasion of Ukraine and subsequent sanctions. BP has lagged behind its peers, with shares declining roughly 9% in the past year compared to a 6% gain for the sector. However, BP shares saw a boost on Monday following reports that activist investor Elliott Management has acquired a stake in the company, fueling speculation about potential pressure from the hedge fund to change course on its core oil and gas businesses
BP Oil Profit Share Buybacks Strategy Reset Refining Margins Energy Industry Activist Investors
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