London-based oil and gas company BP has surpassed expectations with earnings of $3 billion in the final quarter of 2023, bringing its total profits for the year to half of its record-breaking 2022 figure. The company reported an underlying replacement cost profit of $3.3 billion in the previous quarter. Although this represents a decline in comparison to the previous quarter's earnings, it highlights the company's resilience in a challenging energy market.
In 2022, BP recorded earnings of $27.7 billion, largely driven by the surge in oil and natural gas prices following Russia's invasion of Ukraine. However, energy prices have since fallen due to weakened global demand amid a sluggish economy. As a consequence, BP's total earnings for 2023 stand at $13.8 billion, representing a significant drop from the previous year.
Despite the decline in annual profits, BP has made the decision to maintain its dividend and announced plans to buy back $1.75 billion in shares. Additionally, the company has committed to $3.5 billion in additional share buybacks for the first half of 2024. This strategy reflects BP's confidence in its future prospects and its determination to deliver value to its shareholders.
CEO Murray Auchincloss highlighted the strong operational performance of BP in 2023, expressing confidence in the company's strategy of becoming a simpler, more focused, and higher-value entity. Auchincloss took over as permanent CEO last month, following the resignation of Bernard Looney. Looney stepped down after it was revealed that he had not disclosed past relationships with colleagues to the board.
However, BP's financial success has drawn criticism from environmentalists and other groups who argue that the company, along with other fossil fuel giants, prioritizes its shareholders over the urgent need to combat climate change. Joseph Evans, a researcher at the Institute for Public Policy Research, stated that BP and similar companies cannot be trusted to drive the green transition, as they will always prioritize their shareholders' interests over those of the economy and the planet.
BP's commitment to shareholder value coupled with a challenging energy landscape presents a complex predicament. Balancing the interests of investors and stakeholders with the need to transition to cleaner and more sustainable energy sources is a delicate task that energy giants like BP will continue to grapple with in the coming years.
