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(Alliance News) - BP PLC on Tuesday posted a swing to first quarter profit and said shareholders will soon have buybacks to look forward to alongside its "resilient dividend".
BP shares were 2.7% higher at 304.65 pence each in London early on Tuesday morning, making it the top performer in the FTSE 100 in opening trade.
The oil and gas firm achieved its net debt target and will buyback USD500 million worth of stock in the second quarter of 2021.
"Net debt reduced by USD5.6 billion to reach USD33.3 billion at the end of the quarter. Having reached USD35 billion net debt, BP is now retiring this target and remains committed to maintaining a strong investment grade credit rating," the company explained.
"We are commencing share buybacks in the second quarter which, alongside our resilient dividend, support the growth in distributions to shareholders."
Its dividend per share for the quarter was halved to 5.25 cents, from 10.50 cents a year earlier. Quarter-on-quarter, the payout was unchanged.
BP reported a replacement cost profit for the first quarter of 2021 of USD3.33 billion, swinging from a loss of USD628 million a year ago, while underlying RC profit jumped to USD2.63 billion from USD791 million.
"This result was driven by an exceptional gas marketing and trading performance, significantly higher oil prices and higher refining margins," the company said.
Brent oil was trading at USD66.05 a barrel on Tuesday morning, triple its value a year ago.
BP noted it pocketed USD4.84 billion from divestments and "other proceeds", up from USD4.17 billion in the fourth quarter.
The company added: "This quarter demonstrates what we mean by performing while transforming. With the acceleration of divestment proceeds, together with strong business performance and the recovery in the price environment, we generated strong cash flow and delivered on our net debt target around a year early.
"And at the same time, we've delivered disciplined strategic progress right across BP - including building a high-quality offshore wind business, making great strides in our electrification agenda and setting ourselves up for further growth in the Gulf of Mexico."
Group output fell 12% during the period. Upstream output alone, excluding Rosneft, fell 14%.
"Oil demand is expected to recover in 2021 due to strong growth in US and China and as the distribution of vaccinations gains momentum and lockdown restrictions are gradually lifted," BP added.
"We expect higher product demand across our customer businesses in the second quarter as restrictions begin to ease and vaccination rollouts continue. This should help provide some support to industry refining margins. However, realized refining margins are expected to show a smaller improvement due to the slower recovery in diesel and jet demand and a narrower North American heavy crude oil differential. In addition, we expect a higher level of turnaround activity in our refining portfolio."
Upstream output in the second quarter will slip, due to divestments and seasonal maintenance work, BP added.
For 2021, BP expects disposal proceeds to reach USD5 billion to USD6 billion during the "latter stages" of the year.
"As a result of this quarter's divestments, our target of USD25 billion of disposal and other proceeds between the second half of 2020 and 2025 is now underpinned by agreed or completed transactions of around USD14.7 billion with approximately USD10 billion of proceeds received," BP added.
On 2021 output, reported upstream production will fall due to its divestment programme, BP cautioned.
"However, underlying production should be slightly higher than 2020 with the ramp-up of major projects, primarily in gas regions, partly offset by the impacts of reduced capital investment and decline in lower-margin gas assets," the company said.
By Eric Cunha; ericcunha@alliancenews.com
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