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(Alliance News) -Â BP PLC on Tuesday hailed a year of "performing while transforming" as it posted a swing back to profit on improved oil prices after a pandemic-battered 2020.
At the same time, it set out plans to accelerate its move to net zero and plough a greater proportion of funds into businesses such as electric vehicle charging, renewables and hydrogen.
BP shares were up 2.0% at 416.60 pence in London early Tuesday.
BP's underlying replacement cost profit for the fourth quarter of 2021 was USD4.07 billion, surging from just USD115 million a year before.
"This result was driven by higher oil and gas realizations, higher upstream production volumes and stronger refining commercial optimization, partly offset by a significantly lower oil trading result and an average contribution from gas marketing and trading and the impact of higher energy costs," said BP.
Oil prices have jumped in recent months, with the price of a barrel of Brent crude standing at USD92.01 Tuesday morning, versus around USD78.50 at the end of the third quarter of 2021. Prices slumped below USD20 a barrel at the height of the pandemic.
Based on an average Brent price of USD60 a barrel, BP expects to be able to deliver share buybacks of around USD4.0 billion a year and have room for an annual dividend uplift of 4% through 2025.
For the fourth quarter of 2021, BP declared a dividend per share of 5.46 cents, up 4.0% from 5.25 cents a year ago, bringing 2021's total to 21.63 cents, down 18% from 26.35 cents in 2020.
It completed share buybacks worth USD1.73 billion in the fourth quarter, and plans to carry out a further USD1.5 billion from surplus cash flow before announcing its first quarter results for 2022.
For the year ahead, BP plans to use 60% of surplus cash flow for share buybacks and the remaining 40% to strengthen the balance sheet.
The oil major highlighted that it trimmed net debt for the seventh quarter in a row, to stand at USD30.61 billion at the end of 2021, sharply reduced from USD38.94 billion at the same date a year before.
For 2021 as a whole, BP swung to an underlying RC profit of USD12.82 billion from a loss of USD5.69 billion. BP also swung to a pretax profit of USD15.23 billion from a loss of USD24.89 billion.
Total revenue for 2021 amounted to USD164.20 billion, surging 51% from USD109.08 billion in 2020.
While BP's 2021 results were boosted by higher oil prices, it set out ambitions to accelerate its net zero plans.
It now aims to reduce operational emissions by 50% by 2030, compared with an aim of 30% to 35% previously, while targeting net zero lifecycle emissions from the energy products it sells by 2050 or sooner.
The firm plans to let shareholders voice their opinions on its net zero ambition in an advisory vote at its 2022 annual general meeting.
It also expects to increase the proportion of its capital expenditure in transition growth businesses - such as electric vehicle charging, renewables and hydrogen - to more than 40% by 2025 and is aiming for around 50% by 2030. BP wants to generate earnings of USD9 billion to USD10 billion from these businesses by 2030.
BP is aiming to sustain earnings before interest, tax, depreciation and amortisation from "resilient hydrocarbons" at around USD33 billion per year to 2025 and then maintain this in a USD30 billion to USD35 billion range to 2030.
"We enter 2022 with growing confidence. The past two years have reinforced our belief in the opportunities that the energy transition presents - to create value for our shareholders and to get to net zero. The need for, and role of, an integrated energy company has - to our minds - never been clearer. Underpinning all of this is our steadfast commitment to perform while transforming," said Chief Executive Bernard Looney.
By Lucy Heming;Â lucyheming@alliancenews.com
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