BP Splashes The Cash On Shareholder Returns Despite Looming Low Carbon Challenges

0
BP Splashes The Cash On Shareholder Returns Despite Looming Low Carbon Challenges
3844328 / Pixabay

“BP plc (LON:BP) isn’t quite throwing caution to the wind, but the company’s steady as she goes approach has been infused with optimism as higher oil prices make immediate prospects look brighter.

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Q2 2021 hedge fund letters, conferences and more

Comus Investment – Q2 Performance Update

ComusComus Investment, LLC performance update for the third quarter ended September 30, 2022. Dear Partners, In the third quarter of 2022, our investments experienced a total return of -2.25% before fees and -2.88% after fees, versus -4.88% for the S&P 500 index. At this point, you will have received reports with the details on your Read More

BP Is Splashing Surplus Cash

With profits for the quarter coming in at $3.1 billion, the company is splashing surplus cash piled up through an annual increase in the dividend by 4% through to 2025 and $1.4 billion in share buy backs.

It expects oil prices to linger higher for longer as supply constraints put it in a more bullish mood and reverse previous write downs of assets to the tune of $3 billion. The group reckons it can offer share buy backs of $1 billion per quarter with Brent crude around $60 a barrel.

That would still leave a 40% chunk of surplus cash to bolster the balance sheet, and although the increase in the dividend pales into comparison with Shell’s 50% dividend rise year-on-year, there are still likely to be concerns that BP isn’t making enough hay while the sun shines.

Net debt has fallen to $32.7 billion, but the company could slim down faster given that it needs to be in fighting form to make the right investments when the roaring twenties of higher oil prices comes to an end as the world accelerates towards a low carbon future.

There is some progress towards its renewable strategy. It has purchased a 9GW solar development pipeline in the US and bidding is planned for offshore wind leases in Scotland and Norway via strategic partnerships. Plans for rapid EV charging networks in cities across Europe are being advanced with London the first to take delivery of a rapid hub. But it’s still unclear what level of returns BP will be able to make from its growing portfolio of green energy investments.

Right now on the tight rope of change, BP is still highly reliant on its fossil fuel portfolio, but there are likely to be wobbles ahead, as green targets loom and BP tries to cross the chasm to reach a low carbon future."

Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown


About Hargreaves Lansdown

Over 1.6 million clients trust us with £132.9 billion (as at 30 April 2021), making us the UK’s largest digital wealth management service. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.

Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)www.valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
Previous article Why This $50 Billion Sector Of The Indian Stock Market May Be Set Up For Sustained Outperformance
Next article Tesla’s Record GAAP Income Of $1.14 Billion

No posts to display