BP (BP.L) turned over a profit of £4bn ($4.96bn) in the first three months of the year, reigniting a debate over windfall gains by oil and gas firms.
The underlying profits of $5bn, which exceeded average analyst forecasts of $4.3bn, were driven by “exceptional” and “very strong” performances from its gas and oil trading teams, BP said.
It comes as families across the UK have been struggling to pay their energy bills and feed their households during the energy crisis.
The company rewarded shareholders with a 6.6 cents per share dividend payment — up from 5.4 cents a year ago. BP also revealed on Tuesday it will repurchase a further $1.75bn of shares over the next three months after snapping up $2.75bn the previous quarter.
“This has been a quarter of strong performance and strategic delivery,” chief executive Bernard Looney said.
Bumper profits from energy firms have led to calls for them to pay more tax as households face high bills amid the cost of living crisis.
Labour leader Keir Starmer renewed calls for a “proper windfall tax on oil and gas giants” to fund a freeze on council tax to protect struggling households against increasing fees.
Politics is about choices.
The Tories let energy companies make record profits while people struggle with the cost of living.
Labour would would deliver a proper windfall tax on oil and gas giants to freeze council tax this year. https://t.co/aut4MztlNV
— Keir Starmer (@Keir_Starmer) May 2, 2023
Last year, the UK government introduced a windfall tax on profits made from extracting UK oil and gas — called the Energy Profits Levy — to help fund its scheme to lower gas and electricity bills.
The UK's windfall tax rate is 35%. Oil and gas firms also pay 30% corporation tax on their profits as well as a supplementary 10% rate.
BP said it had incurred $3.4bn of taxes worldwide during the quarter, including $650m on its UK North Sea business.
Neil Shah, director at Edison Group, said: “In a move that is likely to bolster investor confidence, BP has announced a $1.75bn share buyback, while shareholders will receive an increased dividend payment of 6.6 cents per share, up from 5.4 cents a year ago.
“This reward for investors comes off the back of a steady performance in Q1, which surpassed analyst expectations by $700m, even with a slight decrease in profits.
“The company's Q1 underlying replacement cost profit was $5bn, which is lower than the $6.2bn in the same period last year but higher than the $4.8bn reached in the previous quarter.
'Key drivers of these results, according to BP, include outstanding gas marketing and trading, reduced refinery turnaround activity, and robust oil trading.”
Looking ahead, BP said it expects oil prices to remain 'elevated', amid the Opec cartel's recent decision to cut production and stronger demand in China.