BP said it would cut $2bn (£1.6bn) in costs from its business by the end of 2026 after reporting worse than expected profits for the first quarter of the year.
The oil company revealed that its underlying profits fell to $2.7bn for the first three months of 2024, down from $5bn in the first quarter of last year, in part due to falling gas prices and an unplanned outage at a large BP refinery in the US.
The first-quarter profits were below analyst predictions of almost $2.9bn.
BP told investors it would maintain the pace of its share buybacks despite the worse than expected start to the year by acquiring $3.5bn of shares in the first half of the year.
BP has paid a total of $27.4bn to shareholders since Russia’s invasion of Ukraine in February 2022 triggered a surge in global oil and gas prices and record profits across the industry, according to analysis by Global Witness. BP’s payouts have lagged behind their rivals after the company was forced to take a post-tax charge of $24.4bn after exiting its almost one-fifth shareholding in the Russian oil company Rosneft and its other businesses in Russia.
BP chief executive, Murray Auchincloss, told investors that the company would begin a programme to save $2bn in cash costs from the business by 2026 compared with 2023 levels.
Auchincloss, who replaced Bernard Looney after the latter’s shock exit last September, said he planned to make the savings through “high grading” BP’s portfolio as well as “digital transformation, supply chain efficiencies and global capability hubs”.
Auchincloss is under pressure to increase BP’s market valuation, which has suffered in the years since his predecessor set out a “net zero” plan that originally aimed to cut the company’s oil production by 2030 while its rivals plan to grow their fossil fuel production.
He has promised a more “pragmatic” approach to BP’s green targets that can create a higher value company for shareholders by moving towards net zero “without wasting money”.
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He prompted concern earlier this year that the company would backtrack from its previous ambition to reduce oil and gas emissions by between 20% and 30% from 2019 levels by the end of the decade after telling the Guardian that the “aim” was not confirmed as a “target” – and would only become one depending on a number of final investment decisions ahead.
BP’s annual profits halved last year to nearly $14bn after weaker oil and gas market prices caused revenues to fall across the industry. However, the better than expected annual profits were still the second-highest reported by BP in more than a decade.
