New BP boss Bernard Looney’s first three months in charge did not turn out as badly as some feared, as the producer weathered an oil price storm to hold on to its dividend and beat expectations.
Mr Looney was able to reassure investors on Tuesday that he would pay out a dividend for the last quarter, even raising it by 0.25 US cents to 10.5 cents (8.5p) per share.
The news came as BP revealed that underlying replacement cost profit, the most closely watched figure used by the oil major, reached 800 million US dollars (£644 million). Analysts had expected to see 710 million dollars (£572 million).
The world has been gripped by the unprecedented physical, emotional and economic impacts of COVID-19. Despite these challenging times we are determined to perform with purpose and remain committed to delivering our net zero ambition $BP— bp (@bp_plc) April 28, 2020
Although it beat expectations, this is still down from 2.4 billion US dollars (£1.9 billion) in the same period last year, as oil prices dropped significantly in the quarter.
“We are dealing with an exceptionally challenging environment, and the unprecedented effects of demand destruction and price impacts that can be seen in these results are expected to continue through the second quarter,” said finance director Brian Gilvary.
The impacts may not just continue, but the situation could significantly sour over the next three months. The last quarter ended before the oil price had time to collapse to 22-year lows.
The price of Brent oil averaged 50 US dollars per barrel in the first quarter of 2020, down from 63 dollars in both the first and fourth quarters of last year.
But Brent was languishing at below 19 dollars on Tuesday morning, having fallen off significantly as demand was pressed by an economic standstill sparked by the coronavirus.
“The economic impact of the Covid-19 pandemic coupled with pre-existing supply and demand factors have resulted in an exceptionally challenged commodity environment,” BP said.
After banks and other dividend-heavy businesses have scrapped their payouts, Mr Looney will be breathing a sigh of relief that he was able to reward shareholders, at least during his first quarter in charge.
He took over from Bob Dudley earlier this year. The American spent a decade in charge, steering BP through its response to the Deepwater Horizon oil disaster in the Gulf of Mexico.
The oil spill was the last time BP did not pay out a dividend.
Our industry has been hit by supply and demand shocks on a scale never seen beforeBernard Looney, BP chief executive
Mr Looney said: “Our industry has been hit by supply and demand shocks on a scale never seen before, but that is no excuse to turn inward.
“BP, like many other companies, is stepping up and extending a helping hand to those in need. We do it not because it is expected of us – but because we want to. That is consistent with our purpose.
“We are taking decisive actions to strengthen our finances – reinforcing liquidity, rapidly reducing spending and costs, driving our cash balance point lower.”