BP BP.L made a profit of $5 billion in the first quarter of 2023, up from the previous three months on the back of strong oil and gas trading, but the company's shares fell as it slowed a share buyback program.
BP's results, which beat forecasts, follow a strong showing by rivals including Exxon Mobil and Chevron last week as oil majors continue to benefit from energy prices that remain strong despite some softening since the start of the year.
BP's shares, however, were around 4.5% lower by 0923 GMT - compared with a drop of around 1.3% for an index of European oil companies - after it said it would repurchase $1.75 billion worth of shares over the next three months, down from $2.75 billion in the previous three.
First-quarter underlying replacement cost profit, the company's definition of net income, reached $4.96 billion, up from $4.8 billion in the fourth quarter of 2022 and above expectations of $4.3 billion in a company-provided survey of analysts.
The profit reflects "an exceptional gas marketing and trading result, a lower level of refinery turnaround activity and a very strong oil trading result", BP said, noting the partial offset from lower oil and gas prices and refining margins.
Benchmark Brent crude oil prices averaged $81 per barrel in the first three months of the year, down 16% from a year earlier and 7% from the fourth-quarter.
BP had reported a $6.25 billion profit in the first quarter of 2022, on its way to a record $28 billion year.
The London-based company repurchased $11.7 billion of shares in 2022 and the $1.75 billion indicated on Tuesday still means it will exceeded its goal of using 60% of surplus cash for the purpose, but investors were disappointed.
The lower share buyback "will more than offset the good operational performance as BP is the first international oil company...to cut buybacks this quarter," Jefferies analysts said in a note.
Its dividend remained unchanged at 6.61 cents per share after a 10% increase in February. BP had previously halved its payout in the wake of the pandemic.
BP said it expects oil and European gas prices to remain strong in the second quarter even as refining profit margins are expected to weaken due to lower diesel prices.
Fuel demand in Europe has been "a little bit" soft while consumption in China has been strong following the lifting of pandemic restrictions, BP Chief Financial Officer Murray Auchincloss told analysts on a call.
BP also said it expects to pay $1 billion under Britain's windfall tax on the oil and gas sector between May 2022 and April 2023.
BP's profit https://tmsnrt.rs/44h3PGl
BP's operating cashflow https://tmsnrt.rs/44jcd8e
(Reuters - Reporting by Ron Bousso and Shadia Nasralla/Editing by David Goodman, Kirsten Donovan)