BP profit triples on soaring energy prices

Oil company reveals profits increased to a 14-year high

BP’s earnings tripled in the second quarter as oil and natural gas prices soared after Russia invaded Ukraine. AP

BP’s earnings tripled in the second quarter as the British energy company profited from the soaring oil and natural gas prices after Russia invaded Ukraine.

London-based BP said on Tuesday that underlying replacement cost profit, which excludes one-time items and fluctuations in the value of inventories, jumped to $8.45 billion, from $2.8 billion in the same period a year earlier.

The soaring earnings allowed BP to return billions of dollars to shareholders, with the company boosting its dividend by 10 per cent and announcing that it would buy back $3.5 billion in shares. BP said it expects to increase dividends by about 4 per cent annually through 2025.

But the good news for BP shareholders was bad news for consumers as soaring energy prices contribute to the cost-of-living crisis in Britain and around the world.

In the United Kingdom, where inflation reached a 40-year high of 9.4 per cent in June, the government has announced a 25 per cent windfall profits tax on the earnings of oil and gas companies that come from British operations.

The opposition Labour Party criticised the government for failing to use more of the revenue from the new tax to help consumers.

BP said the windfall profits tax would increase the headline tax rate on its North Sea operations to 65 per cent from 40 per cent. The company said it plans to set aside $800 million to cover the tax increase.

BP said it received an average of $105.50 per barrel for its oil in the second quarter, up 71 per cent from a year earlier. Gas more than doubled to $8.42 per thousand cubic feet.

Second-quarter net income rose to $9.26 billion from $3.12 billion in the same period the year before.