The shareholders of British Petroleum (BP) will be handed over a $500m cash windfall as the energy giant reported its biggest quarterly profit since the start of the Covid-19 pandemic began because of the recovery of the oil markets form the pandemic induced slump.
The first quarter profits of the company was at $3.3bn as reported by it which was significantly higher than the a loss of $628m reported by the company in the same quarter a year ago when the global oil prices had started to slide because of the economic slowdown in China due to the pandemic.
Compared to the last quarter of 2020, the quarterly profit figure for BP for the latest completed quarter was four time higher which has prodded the firm to begin a scheme to buy back shares from its investors worth $500m a year earlier than it had previously expected.
The he first quarter’s results demonstrate “what we mean by performing while transforming”, said Bernard Looney, the BP chief executive.
Compared to the first quarter of last year, the company generated almost six times as much as kin operating cash flows in the first quarter of 2021 at more than $6.1bn in cash. The oil company said that this was enough for it to start buying back the shares it has paid to investors in lieu of dividends.
The recovery in global oil prices resulted in the cash boom. In April last year, the global oil prices had dropped to a 21-year low of less than $20 a barrel because of the sudden halt in global travel and economic activity.
The sharpest slump in global oil demand in the industry’s history was caused last year because of the impact of the Covid-19 pandemic. But the fastest surge in demand in response would be witnessed in the years to come, according to predictions of experts.
Compared to an average of just over $61.60 a barrel in January last year, global oil prices fell to an average of $21.40 a barrel in April 2020. However during the first quarter of 2021, the average price of Brent crude has returned to almost $60 a barrel. That is expected to very beneficial for the biggest oil companies of the world, according to experts.
Looney said, over the last quarter, BP was also able to reduce its debt by $5.6bn to $33.3bn because of the influx of cash which meant that the company could now start its share buyback program – starting in the second quarter itself.
“And at the same time, we’ve delivered disciplined strategic progress right across BP – including building a high-quality offshore wind business, making great strides in our electrification agenda and setting ourselves up for further growth in the Gulf of Mexico,” Looney added.
(Adapted from TheGuardian.com)