BP reported a decline in first-quarter profits, falling below analyst expectations due to a weaker margin in fuels and lower gas and oil prices. The company’s underlying replacement cost profit was $2.7 billion, down from $3 billion the previous quarter, and below the estimated $2.9 billion. The decrease in profits was attributed to lower oil and gas realizations and a weaker fuels margin. Compared to the same period in the previous year when profits totaled nearly $5 billion, the results were significantly lower.
Many other companies in the oil and gas industry have also experienced declines in year-on-year first-quarter profits, primarily due to a sharp drop in gas market prices. European gas stocks reached a record high during the winter as countries sought to protect against potential disruptions in Russian gas supplies following the invasion of Ukraine in 2022. BP’s rival Shell reported adjusted earnings of $7.7 billion for the first quarter of 2024, down from $9.6 billion in the previous year. Despite the challenging market conditions, energy firms have remained focused on delivering shareholder returns.
BP reaffirmed its commitment to share buybacks, announcing plans to repurchase $3.5 billion in shares for the first half of 2024. CEO Murray Auchincloss highlighted the company’s “resilient quarter” and emphasized ongoing efforts to simplify the business and achieve $2 billion in cash cost savings by the end of 2026. Auchincloss, who was appointed as permanent CEO in January, took over from Bernard Looney, who resigned after less than four years in the role due to undisclosed personal relationships with colleagues prior to becoming CEO. Looney’s departure marked a significant change in leadership at BP.
Overall, BP’s first-quarter results reflect the broader challenges faced by the energy industry, including declining margins, lower gas and oil prices, and geopolitical uncertainties. Despite these headwinds, the company remains focused on delivering value to shareholders through cost-saving measures and share buybacks. The appointment of Murray Auchincloss as CEO signals a new chapter in BP’s leadership, as the company navigates a rapidly changing energy landscape. With ongoing efforts to streamline operations and improve efficiency, BP aims to address the current market challenges and position itself for long-term success. As the energy sector continues to evolve, BP’s strategic focus on financial discipline and value creation will be critical in driving sustainable growth in the future.
