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* Profit more than triples from Q1 2020 to $2.6 bln
* Net debt drops below $35 billion
* BP to buy back $500 mln in shares in second quarter
* GRAPHIC: BP profits https://tmsnrt.rs/2PpqAX1
(Adds details)
By Ron Bousso and Shadia Nasralla
LONDON, April 27 (Reuters) - BP's profit more than
tripled to $2.6 billion in the first quarter thanks to stronger
oil prices and bumper revenue from natural gas trading, paving
the way for the energy company to resume share buybacks.
The jump in profits from a year earlier comes as BP says it
expects oil demand to recover in 2021 due to strong growth in
the United States and China as COVID-19 vaccination programmes
accelerate.
In a sign of growing confidence in the economic recovery and
its operations following a year of cutting costs, headcount and
its dividend, BP said it will buy back $500 million of shares in
the second quarter to offset the dilution from an employee share
distribution programme.
Net debt dropped $5.6 billion from the end of December to
$33.3 billion at the end of March, chiefly due to around $4.8
billion worth of disposals and stronger oil prices.
That pushed debt below the company's $35 billion target
sooner than expected, allowing it to deliver on its promise of
buying back shares.
The company said it would provide an update on the third
quarter buyback programme later this year.
As part of Chief Executive Bernard Looney's plan to shift
the focus of the oil major to low carbon energy investments, BP
aims to sell $25 billion of assets by 2025.
BP's shares were 3% higher in early trading, adding to a
more than 15% gain so far this year on the back of stronger oil
prices.
However, it is the weakest performer among the oil majors,
with shares still around a third lower than their pre-pandemic
level as investors fret over the company's energy transition
strategy.
BP's first-quarter underlying replacement cost profit, the
company's definition of net income, rose to $2.6 billion, far
exceeding forecasts of $1.64 billion in a company-provided
survey of analysts.
That compared with a $110 million profit in the fourth
quarter of 2020 and a profit of $790 million a year earlier.
"This result was driven by an exceptional gas marketing and
trading performance, significantly higher oil prices and higher
refining margins."
Benchmark Brent oil prices rose to an average of $61
a barrel in the first quarter from $44 in the previous quarter
and $50 a barrel in the first quarter of 2020.
BP expects global oil inventories, which swelled as the
coronavirus pandemic hit fuel demand, to fall to historic levels
by the end of 2021.
(Reporting by Ron Bousso, editing by Louise Heavens, Kirsten
Donovan)
