BP posts $5bn Q1 profit as windfall tax debate reignites

The debate around windfall profits on energy companies was reignited on Tuesday when oil giant BP reported a better-than-expected first quarter profit of $5bn.

The results beat analyst expectations of a $4.3bn quarterly profit. Underlying replacement cost profit, BP’s measure of net income, hit $4.96bn up from $4.8bn in the final three months of 2022 and beating expectations of $4.3bn in a company-compiled survey of analysts.

It represents the second-best first-quarter results since 2012 when it made $4.7bn, but was lower than last year’s $6.2bn.

BP also said it would buy back a further $1.75bn in shares over the next three months after buying $2.75bn in the prior quarter. The dividend remained unchanged at 6.61 cents per share after a 10% increase in February.

Free cash flow fell to $4bn from $5.3bn, and net debt came in $6.2bn lower at $21.2bn.

BP said it had incurred $3.4bn of taxes worldwide during the quarter, including $650m on its UK North Sea business.

Oil and gas producers have cashed in on surging prices caused by Russia’s unprovoked invasion of Ukraine, and while gas prices have fallen in recent months this has not fed through to consumers, who have faced soaring bills since 2021.

The commodity price boom led the UK government to introduce a windfall tax on North Sea operators.

Paul Nowak, general secretary of the Trades Union Congress said the latest "eye-watering" earnings were "an insult to working families as millions struggle with sky-high bills".

"The government has left billions on the table by refusing to impose a proper windfall tax on the likes of BP. And even now ministers are refusing to take action to fix our broken energy market and stop this obscene price gouging."

“We could have lower household bills and an energy system that served the public, if government taxed excessive profits, introduced a social tariff and created public ownership of new clean power.”

Reporting by Frank Prenesti for Sharecast.com