BP climbs on stock buyback plans, earnings
BP (BP) reported fourth quarter earnings that topped analyst estimates. The oil giant also announced plans to buy back $3.5 billion in stock in the first half of 2024.
Yahoo Finance Reporter Ines Ferré joins the Live show break down the latest development for BP and what it could mean for the company moving forward.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Nicholas Jacobino
Video Transcript
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RACHELLE AKUFFO: BP is the latest energy giant to report results, boosting the pace of its buybacks. The company did however see profit fall back from the record levels it saw in 2022. Let's bring in Yahoo Finance's Ines Ferré to give us more details. Hey, Ines.
INES FERRÉ: Hey, Rachelle. Yeah. And we had been expecting those profits to scale back from the prior year, because you had the Russian invasion of Ukraine, and the prices are soaring for oil in 2022. So it was a tough comp. But when the results came in, they did come in better than expected on the bottom line, with adjusted earnings per share coming in at $17-- $17.77. You see that there. The estimate came in lower than expected, $1.07 compared to the estimate of $0.98. Weaker energy prices, lower refining profit margins, that was part of the reason why you did see the profits decline on a year-over-year basis.
But look, the bottom line with this company is the focus on boosting shareholder-- the shareholder price. And BP announcing $1.7 billion of share buybacks in each quarter in the first half of this year, analysts really liking that share buyback program, with analysts saying-- one from Morgan Stanley saying that this is an important signal of confidence when it comes to BP's target for 2025. The company also talking about investing with discipline, with CapEx through 2025 coming in at $16 billion. The range had been before talked about between $16 and $18 billion, but they've been able to narrow it down to $16 billion.
And the CEO was asked a question about that hedge fund that sent the letter to BP saying that they should scale back on some of their green energy projects. And basically, he said, look, we don't agree with that premise. They do have an integrated model, they've talked about this before, where they invest in hydrocarbons and also at the same time in the green energy transition as a green energy transition player. They're proud of their projects when it comes to wind, when it comes to solar. But again, the bottom line is returning cash to shareholders, dividends, and the share buyback program, this enhanced program, which analysts really liked.
AKIKO FUJITA: Yeah. Ines, a similar theme that we saw from US oil majors-- we were just talking about this yesterday-- we've seen some pretty resilient profits in the quarter. What does the outlook look like?
INES FERRÉ: Yeah. And look, as far as the outlook is concerned, I mean, you've got the-- when-- when you compare this sort of landscape from what we've seen from the oil majors, increased production is what they're all talking about. And we did see with Chevron, we saw with ExxonMobil, their acquisitions that they announced last year. Increased production is what all of them are sort of banking on and continuing on with-- with this production as even when we're talking about this energy transition. What they're saying is you still need fossil fuels to get to that energy transition. You still need natural gas that is being used more and more to get to that energy transition.
And with respect to the profits for 2023 by the way, guys, on an annual basis, BP, these were the second largest annual profits in 10 years. That's on par with what happened also with Chevron and with ExxonMobil even though Chevron and ExxonMobil have larger market caps.
AKIKO FUJITA: OK. Ines Ferré staying on top of the energy story for us today. Thanks so much.
