Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
BP’s profits fell by half in the first quarter, the oil major said on Tuesday, as it announced the departure of the executive who was in charge of strategy during its failed pivot to renewable energy.
Weakness in gas marketing and trading was largely responsible for a 49 per cent year-on-year fall in adjusted profit to $1.38bn in the first quarter, below analysts’ consensus estimate of $1.64bn.
Lower cash flow in the quarter contributed to a $4bn rise in net debt since December to $27bn.
BP, which this year abandoned its strategy to become a leader in green energy, also said one of the architects of that plan would leave the company in June. Giulia Chierchia, its head of strategy, will not be replaced, BP said.
Chierchia was not on stage in February when BP announced it would pivot back to oil and gas in a bid to revive its ailing share price. Recently, she also became a target for activist investor Elliott Management, which is pushing BP for deeper spending cuts and wants to see the company produce $20bn of free cash flow by 2027.
BP is the first of the energy majors to report its first-quarter earnings, with rivals Shell, TotalEnergies and ExxonMobil all scheduled to publish updates later this week.
The world’s largest oil companies are braced for their toughest year since the Covid-19 pandemic, as falling crude prices squeeze profits. BP is seen as the most exposed to the oil price, which fell to a four-year low earlier this month, because of its weak balance sheet.
Its current strategy is based on an oil price of $71.5 a barrel this year, while Brent crude was trading at $65 a barrel on Tuesday morning.
BP did not say how it would respond to lower prices but said it would trim its capital spending by $500mn for the year. Chief executive Murray Auchincloss said the group would “continue to monitor market volatility and changes and remain focused on moving at pace” with its plans.
The FTSE 100 group said it now planned to sell at least $3bn to $4bn of assets this year and remained confident it would be able to reduce its debt to a range of $14bn to $18bn by the end of 2027.
Despite the weakness, BP said it would buy back $750mn of shares, down from $1.75bn in the previous quarter and at the bottom of the range of analysts’ expectations.
The oil major’s shares fell 3.8 per cent in early trading on Tuesday and have now fallen more than 13.5 per cent in the year to date, compared with a near 3.5 per cent fall for rival Shell and a 3 per cent rise for Total.
https://www.ft.com/content/5fc95bea-2849-4994-9b5b-15bdcf750ba4
