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Shares of BP (NYSE:BP) experienced a 5.7% increase in London following the announcement of a stronger-than-expected Q4 profit and an acceleration in share repurchases by the oil and gas giant.
In the fourth quarter, the company reported adjusted earnings per share (EPS) of 17.77c, a decrease from last year's 26.44c, but surpassing the consensus projection of 16.27c. The adjusted net income of $2.99 billion, though down 38% YoY, exceeded consensus estimates of $2.76 billion.
For the entire year, BP disclosed an underlying replacement cost profit, an alternative net profit measure, at $13.8 billion, a significant drop from the previous year's $27.7 billion. Analysts had anticipated a net profit of $13.9 billion. Adjusted EBIT, at $6.13 billion, was down 34% YoY but surpassed the estimated $5.87 billion.
Adjusted oil production and operations PBIT stood at $3.55 billion, down 20% YoY, while adjusted gas and low carbon energy PBIT was reported at $1.78 billion, a 44% YoY decline.
In Q4, capital expenditure (capex) reached $4.25 billion, up 15% from the same period last year, exceeding analysts' estimates of $4.12 billion. Organic capex rose 21% YoY to $4.67 billion.
Operating cash flow witnessed a 31% YoY decline to $9.38 billion, exceeding analyst expectations of $8.24 billion. Net debt decreased 6.3% quarter-on-quarter to $20.91 billion, surpassing estimates of $20.52 billion.
BP anticipates a total capex of approximately $16 billion in the current fiscal year. The company declared a dividend of 7.27 cents per ordinary share for Q4 2023, marking a 10% increase from the previous year.
CEO Murray Auchincloss expressed confidence in the company's strategy, emphasizing a commitment to delivering as a simpler, more focused, and higher-value entity, dedicated to long-term value growth for shareholders.
Additionally, BP has expedited its share buyback program, with plans to repurchase $1.75 billion worth of shares before unveiling its first-quarter earnings. The company pledged to complete a share buyback totaling $3.5 billion for the first half of the year.
Analysts at Jefferies noted, "BP delivers what investors were asking for: higher distributions and more visibility," praising the outlook for a $1.75 billion quarterly buyback through 2025 and reduced concerns about M&A-driven investments due to tighter capex guidance at $16 billion, falling within the $14-18 billion range.
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