BP earnings Q4 and FY2022

Oil giant BP on Tuesday reported record annual profits, more than double last year’s total, as fossil fuel prices soared following Russia’s sweeping invasion of Ukraine.

The British energy giant reported an underlying replacement cost profit, used as a proxy for net profit, of $27.7 billion for 2022. Compared to $12.8 billion last year.

Analysts polled by Refinitiv had expected full-year 2022 net income of $27.6 billion. BP said its previous record annual profit was $26.3 billion in 2008.

For the fourth quarter, BP reported net income of $4.8 billion, just beating analysts’ expectations of $4.7 billion.

BP announced another $2.75 billion share buyback that the company expects to complete before announcing its first-quarter 2023 results in early May. It also increased its dividend by 10% to 6.61 cents per common share.

BP CEO Bernard Looney described the earnings as “good results”.

“First of all, I hope you see a company that is performing well and transforming at the same time. We’ve had the highest operational reliability in our history, we’ve had the lowest production costs in 16 years, so the business itself is doing very well.” Looney told CNBC’s Squawk Box Europe on Tuesday.

“Second, today we are leaning on our strategy. We announce additional investments of up to $8 billion in energy transition this decade and up to $8 billion more in oil and gas to support energy security and energy affordability in this decade,” he added added. “And third, it’s about making sure we get back to our shareholders.”

BP said net debt was reduced to $21.4 billion in the fourth quarter, compared to $30.6 billion for the same period last year.

BP shares rose over 4% during the early morning deals in London.

The results show BP participating in Big Oil’s profit bonanza.

British competitor Shell posted its highest-ever annual profit of nearly $40 billion on Thursday. Previously, US oil giant Exxon Mobil reported earnings of $56 billion for 2022, marking an all-time high for the Western oil industry. Chevron’s 2022 earnings were a record $36.5 billion.

According to data from Refinitiv, the West’s largest fossil fuel companies are expected to have combined profits of nearly $200 billion this year. France’s TotalEnergies is expected to report full-year results on Wednesday.

The extraordinary level of revenue has drawn renewed criticism of the oil and gas industry and sparked calls for higher taxes.

“People across the country need look no further than their own doorstep – one of Britain’s oil companies – which has made record profits while so many Brits are struggling through no fault of their own,” said Jonathan Noronha-Gant, senior campaigner at advocacy group Global Witness .

“The introduction of a windfall tax to help those struggling financially, coupled with a significant increase in renewable energy and home insulation, could be the beginning of the end of the harmful fossil fuel age, for both people and the planet planets. BP is richer because they’re poorer,” said Noronha-Gant.

John Moore, senior investment manager at RBC Brewin Dolphin, said BP’s record results underpinned the dividend increase and additional share buybacks.

“It’s fair to say that oil prices have softened after the period covered by these results, while BP also emphasizes its investments in renewable energy and its commitment to changing the way the company operates,” Moore said.

“But even taking those factors into account, there will inevitably be a backlash to today’s results in the current climate. They will only contribute to calls for political intervention at some point in the near future.”

In recent quarters, Big Oil executives have sought to defend rising profits, saying the significant disruption in global energy markets due to the war in Ukraine has reaffirmed the importance of resolving the “energy trilemma.” .

According to a statement from BP’s Looney to investors late last year, this refers to “secure, affordable and lower carbon energy”.

BP on target to become a net zero company in 2020″by 2050 or sooner,” recently predicted that oil and gas would become a dramatically smaller part of the global energy mix by mid-century.

In its most recent Annual Energy Outlook published on January 30ththe company said it sees the share of fossil fuels as a primary energy source falling from 80% in 2019 to 55% to 20% by 2050. The share of renewable energy in primary energy, meanwhile, is expected to increase from 10% to between 35% and 65% over the same period.

The range of results reflects several possible pathways for the energy transition. But in each of BP’s three scenarios, the pace at which renewable energy is entering the global energy system is “faster than any previous fuel in history,” according to the report.

— CNBC’s Catherine Clifford contributed to this report.