Over the past month, the BP (LON: BP) (BP.L) share price is flat. Over the same time period, the FTSE 100 index (INDEXFTSE: UKX) is up 3%.
BP released its first quarter results on 27 April. Reported profit for the period increased to $4.7 billion from $1.4 billion in the final quarter of the 2020 financial year. Underlying replacement cost profit was $2.6 billion versus $0.1 billion for the previous quarter. According to the company, this was largely driven by an exceptional gas marketing and trading performance, as well as higher oil prices and higher refining margins.
For the quarter, operating cash flow was $6.1 billion. Divestment and other proceeds were $4.8 billion. This included $2.4 billion from the divestment of a 20% stake in Oman Block 61 and a $1 billion final instalment for the sale of the firm’s petrochemicals business.
BP confirmed that it was able to reduce net debt by $5.6 billion so that it stood at $33.3 billion at the end of the quarter. This completes its target to reduce net debt to $35 billion. It will return at least 60% of surplus cash flow to shareholders through buybacks in future, subject to it maintaining a strong investment grade credit rating. The other 40% is earmarked for strengthening its balance sheet, according to its update.
The company expects oil demand to recover in 2021 due to strong growth in the US and China as the global vaccine rollout continues. It also expects global gas demand to recover to above 2019 levels and LNG demand to rise as a result of higher Asian imports. It forecasts an improvement in industry refining margins through 2021. The firm also highlights that the behaviour of OPEC+ will be a key factor in oil prices and market rebalancing.
BP is seeking to rebalance its portfolio of assets towards low-carbon energy. During the quarter, it agreed to acquire a stake in Digital Charging Solutions. It is a digital charging software developer. Meanwhile, BP Pulse announced the rollout of new electric vehicle ultra-fast charging hubs in the UK. It also added further strategic convenience sites to its network during the quarter. In addition, it was selected as a preferred bidder for UK offshore wind leases alongside EnBW.
Director deals in the company’s shares included a purchase by Non-Executive Director Tushar Morzaria. They bought 15,596 shares in BP at a price of just under 300p for a total consideration of around £47k.
Over the past year the BP share price has fallen by 4%. It has declined by 16% in the past five years. It is next due to update investors on 27 July when it is scheduled to release its second quarter results.