BP, a British multinational oil and gas company, has boost its share buyback programme with a billion-dollar investment as the company benefits from surging oil and gas prices and strong earnings in the third quarter.
The company said it would repurchase a further $1.25 billion of its shares next year, after buying $900 million during the third quarter. BP also intends to maintain buybacks at a rate of around $1 billion per quarter if oil prices remain at $60 a barrel or over. BP’s net debt fell further to $32 billion from $32.7 billion in the second quarter.
Globally, the prices of natural gas and power surged due to less supplies amid strong demand in economies recovering from the coronavirus pandemic. BP expects natural gas prices to remain strong in the coming months during winter season.
In an interview, BP’s Chief Executive Officer Bernard Looney said that his company is a cash machine at oil and gas prices and its business is running very well.
The company’s net profit reached $3.32 billion in the third quarter, exceeding analysts’ expectations for $3.06 billion. The London-headquartered company earned $2.8 billion in profit in the second quarter and $86 million last year, when energy demand and prices collapsed because of the pandemic.
However, BP reported a loss attributable to shareholders of $2.54 billion because of accounting effects and hedges as a result of fluctuations in LNG prices.
BP shares fell 2.5 per cent by 1320 GMT, compared with a 1.1 per cent decline in the broader European energy index.
The company intends to sharply reduce its carbon emissions in the coming decades by increasing its renewable power capacity 20-fold by 2030, while reducing its oil output by 40 per cent and diverting more funds to low-carbon investments. Its profits today come entirely from oil and gas operations.
The company said it plans to spend $14 to $16 billion in total next year, with around $9 billion going to oil and gas projects.