Profit companies

BP triples its profits and gains $8.5 billion

BP, one of the world’s largest oil companies, easily beat second-quarter profit expectations on Tuesday as high prices and tight supply pushed up profits at energy companies.

BP reported underlying profit of $8.5 billion, up from $6.2 billion in the previous quarter and triple the $2.8 billion in the same period last year. Its shares rose more than 4% in early trading in London, where the company is based.

The results mean that the five biggest Western oil companies – BP, Chevron, Exxon Mobil, Shell and TotalEnergies – generated some $60 billion in profits in the second quarter. The rise in profits followed a surge in crude oil, natural gas and gasoline prices this year, resulting primarily from Russia’s invasion of Ukraine.

The five energy giants also spent about $25 billion in the first half of the year to buy back their own shares, which primarily rewards shareholders by increasing share value. BP said it spent $3.9 billion on takeovers in the first half and expected $3.5 billion in takeovers in the third quarter. The company said it would spend 60% of its “excess cash flow” this year on stock buybacks. It also increased its dividend by 10%.

BP announced its exit from Russia in February and in the first quarter wrote off about $25 billion worth of its stake in Rosneft, Russia’s state-controlled oil company, and other businesses. Analysts considered it a paper loss of little relevance to BP’s future performance.

Windfall profits for energy companies have put political pressure on them to do more to increase production and reduce costs for consumers. President Biden has accused oil companies of profiting from soaring energy prices and Britain, home of BP and Shell, has announced a special tax on “extraordinary” industry profits.