BP, the British Oil Giant, Sees Largest Stock Drop in 3 Years Despite Strong Earnings

Largest Stock Price Drop in 3 Years
Q1 Earnings Announcement...6.6 Trillion Won Net Profit

British oil giant British Petroleum (BP) posted massive profits that exceeded market expectations this year despite the decline in oil prices. However, despite the strong performance, the company reduced the scale of its share buybacks, causing its stock price to record the largest daily drop in three years.

On the 2nd (local time), BP announced in its earnings report that its first-quarter net profit reached $4.96 billion (6.66 trillion KRW). This significantly surpassed the market estimate of $4.27 billion. However, it was much lower compared to the same period last year ($6.26 billion), when energy prices surged due to the Russia-Ukraine conflict.

Oil prices have been moving within a $70-$80 range since the end of last year. Brent crude oil prices averaged $81 in the first quarter of this year, down 16% from the same period last year and 7% from the previous quarter.

BP stated that despite the decline in international oil prices and refining margins in the first quarter, it maintained high profits due to increased oil and gas trading and reduced refinery shutdowns for maintenance.

[Image source=Reuters Yonhap News]

Following the earnings announcement, BP said in a conference call that it would repurchase an additional $1.75 billion of its shares in the second quarter. This is $1 billion less than the $2.75 billion share buyback in the first quarter.

BP's dividend remained unchanged at 6.61 cents per common share, following a 10% increase announced in early February.

Despite the strong earnings, disappointment over the smaller-than-expected share buyback led to a 5% drop in BP's stock price on the London Stock Exchange. This decline marked the largest daily drop since March 2020.

Bernstein analyst Oswald Clint said, "The announced share buyback was less than expected," and predicted, "There will be downward pressure on the stock price."

Last month, the two major U.S. oil majors ExxonMobil and Chevron also reported record-breaking profits.

ExxonMobil, the largest U.S. oil company, posted a first-quarter net profit of $11.4 billion (15.3 trillion KRW), setting an all-time record for the first quarter. Chevron reported profits of $6.6 billion (8.9 trillion KRW), an increase from $6.4 billion in the same period last year.