BP has swung to a £9.5bn annual profit after notching up more than £3bn in underlying replacement cost profit during the final three months of 2021 alone – up from £85.1m a year earlier.
The latest figures come after the oil giant slumped to its biggest ever annual loss in 2020, when it fell into the red by £13.4bn on a statutory basis.
BP also announced more cash returns for shareholders, with another £1.1bn of share buybacks before its first quarter 2022 results.
The figures follow rebounding oil prices after economies worldwide have reopened following the early stages of the pandemic.
But the results also come amid mounting pressure on the sector as the cost of living crisis deepens, with calls growing for a windfall tax on energy giants.
Last week, Shell also reported a quadrupling of profits.
Shadow Scotland Secretary Ian Murray responded: “With nearly £10billion in profit this year, and following Shell’s momentous year of profits, the boss of BP has described the energy price crisis as a cash machine for his company - unfortunately its families across the country providing that cash.
“With multi billion pound profits for these international corporations, it is utterly shameful that the SNP has sided with the Tories in blocking Labour’s windfall tax on oil and gas companies.”
Liberal Democrat Leader Ed Davey said: “The truth is that this is about basic fairness - it simply cannot be right these energy companies are making super profits whilst people are too scared to turn their radiators on and terrified there will be a cold snap.
“The government has said that a windfall tax would harm investment but this is an absolutely bogus argument, these profits have come out of nowhere, no energy company was expecting them, no investor was either.
“A windfall tax is the best way to get money to the people who need it quickly, but also to make sure there is some sense of trust and proportionality in the system.”
Bernard Looney, chief executive of BP, said: “2021 shows BP doing what we said we would – performing while transforming.
“We’ve strengthened the balance sheet and grown returns, we’re delivering distributions to shareholders with 4.15 billion US dollars of buybacks announced and the dividend increased, and we’re investing for the future.
“We’ve made strong progress in our transformation to an integrated energy company, focusing and high grading our hydrocarbons business, growing in convenience and mobility and building with discipline a low-carbon energy business.”
Commenting on the results, Brewin Dolphin investment manager Stuart Lamont said: “Buoyed by the rising oil price, BP has swung to a substantial profit, cut debt, invested in its business, and upped its shareholder distributions.
“Management is striking a positive tone on its progress as BP transitions towards net zero and the company looks to be in a strong position to deliver on its commitments building up to 2030.”
Laura Hoy, equity analyst at Hargreaves Lansdown, also commented: “Higher oil prices have offered BP a windfall, which the group’s put straight to work rewarding shareholders and expediting its transition toward renewables.
“Alongside its full year results, the group released an updated transition strategy, pledging more investment and expedited returns - on top of that, BP’s planning to keep growing shareholder returns with $4bn worth of buybacks and 4% dividend increases each year.
“The group’s been selling assets as it pares down its legacy oil and gas businesses, which has helped with cash demands, but this can’t continue forever,” she continued, adding: “BP’s been more aggressive than some of its peers when it comes to clean energy, which could be a huge advantage if all goes to plan. However it could also prove to be somewhat of a money pit if BP doesn’t get it right.”
The company's capital spending is set to grow in 2022 to a range of $14bn to $15bn, up from $12.8bn in 2021.
BP is also in line to receive a multi-million pound dividend from the October collapse of household energy supplier Pure Planet, which it co-owned.
Along with its three co-founders, BP is expected to receive a dividend from the administration of Blue Marble Holdings, Pure Planet's parent company, thanks to energy contracts it held on the supplier’s behalf.
Initial estimates suggest they could receive a payout worth about £11m each, despite households across Britain being asked to pay £142m through their energy bills for costs stemming from Pure Planet’s collapse.
Looney insisted last year that there was “no sense here of BP in any way profiting from someone else’s demise”.
He told The Times: “If the administrator does make a distribution to BP as a shareholder, we would intend giving that to charity.”
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