BP shares bounce back due to shareholder returns – is it good enough?

Shares in oil giant BP bounced this week after it promised to “shower its shareholders with higher dividends and share buybacks ”, says Jillian Ambrose in The Guardian . Thanks to unexpectedly high profits of $2.76 billion for the three months to 30 June, BP will lift its dividend payments while buying back stock worth $1.75 billion over the next quarter. This will bring its total buybacks for the first half of the year to $3.5 billion and $7 billion for 2024 as a whole. BP has paid out a total of $14.8 billion to shareholders since June 2023.

All this good news is certainly a much-needed “boost” for BP’s CEO Murray Auchincloss as he “attempts to rebuild... confidence following the abrupt resignation of Bernard Looney”, says Emma Powell in The Times . Auchincloss hopes to deliver “a simpler, more focused and higher-value company”. He has set out plans to save at least $2 billion in costs by the end of 2026 and has frozen external hiring, except for frontline roles. However, investors have yet to be convinced. The company’s shares “have lagged both domestic and international rivals”.

BP's future looks bright

BP’s future prospects also look auspicious, especially since its strong results have, in addition, enabled it to take a “further bite out of its net debt pile, which now sits at $22.6 billion”, says Hargreaves Lansdown’s Derren Nathan. In addition, the group “has its eye firmly on high-returning initiatives”, having given the go-ahead for the fully owned deepwater Kaskida hub in the Gulf of Mexico, which should add 80,000 barrels per day of production once it’s up and running.

At the same time, the amount of energy sold through its growing EV-charging network has doubled so far this year. This “measured approach” leaves BP “well placed” to drive shareholder distributions, “while continuing to build out a strong position as an integrated energy company”.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription .