LONDON: BP raised its quarterly dividend for the second time in six months and said more share buybacks were on the cards, showing how the British oil company’s asset sales are providing more cash for investors.
Shareholders have urged big oil companies such as BP and Shell to control spending and give back more cash because of concerns over rising costs in the oil and gas industry and their impact on profitability. “As well as progressive growth in the dividend per share, we expect to use surplus cash to support further distributions through share buy-backs or other mechanisms,” Chief Executive Bob Dudley said in a statement.
BP yesterday reported a 24 percent drop in first-quarter underlying replacement cost profit to $3.2bn, slightly ahead of a consensus forecast of $3.1bn.
The profit fall reflected weaker refining margins and lower production as the company has shed assets to raise funds for shareholder payouts. The group also wrote off $521m related to its decision not to proceed with a shale project in the Utica basin in the United States.
Profits were also hit by a drop in the contribution from BP’s stake in Russian oil company Rosneft. BP, the largest foreign investor in Russia through its nearly 20 percent stake in the Kremlin’s state oil champion, has said repeatedly that it will stand by its investments in Russia since Moscow’s intervention in Ukraine.
BP said this week it was considering what US sanctions against Rosneft head Igor Sechin, would mean for its business.
The share of profits BP generated from Rosneft shrank by 75 percent in the quarter for two reasons — the weakening rouble as Russia’s economy comes under pressure from the standoff with the West over Ukraine, plus the absence of a tax charge boost in the previous period.
Russian production made up about a third of BP’s output in the first quarter.
Cash flow came in at $8.2bn, more than double the amount from the same period last year.
BP, Europe’s third biggest oil company by market capitalisation, will raise its quarterly dividend to 9.75 cents per share, to be paid in June, 8.3 percent higher than a year earlier. This is also above the 9.5 cents announced in October and paid for the subsequent two quarters.
Reuters
