BP (NYSE:BP) on Tuesday reported better-than-expected earnings for the first quarter, following a period of stronger commodity prices and a brighter demand outlook.
It comes as oil and gas majors seek to prove to investors that they have gained a more stable footing amid the ongoing coronavirus crisis.
BP’s first-quarter underlying replacement cost profit, used as a proxy for net profit, came in at $2.6 billion. That compared with a profit of $115 million in the fourth quarter and $791 million for the first quarter of 2020.
Analysts had expected BP to report first-quarter profit of $1.4 billion.
The London-based energy giant said the result was driven by “exceptional” gas marketing and trading performance, “significantly” higher oil prices and stronger refining margins.
Net debt fell $5.6 billion to $33.3 billion at the end of the first three months of the year, meaning BP hit its target of reducing net debt to $35 billion. The company said it would now retire this goal, subject to maintaining a strong investment grade credit rating.
Looking ahead, BP said it intends to resume share buybacks at a cost of around $500 million in the second quarter.
The oil and gas industry was sent into a tailspin last year as the COVID-19 pandemic coincided with a historic demand shock, plunging commodity prices, evaporating profits, unprecedented write-downs and tens of thousands of job cuts.
BP reported its first full-year net loss in a decade in 2020 as the global health crisis took a heavy toll on its business operations, with Looney describing the 12-month period as the “toughest” of his career.
BP said it had generated a surplus cash flow of $1.7 billion in the first quarter after reaching its net debt target a year ahead of schedule.
BP shares climbed 38 cents, or 1.5%, to $25.30.