BP share price soars as the oil giant offers $1.4bn share repurchase and dividend boost - here's why

The huge oil conglomerate has confirmed that it will be holding a share buyback after posting positive second quarter results.

Tuesday, 3rd August 2021, 4:38 pm
BP share price soars as the oil giant offers $1.4bn share repurchase and dividend boost - here's why (Photo by BEN STANSALL/AFP via Getty Images)

After its second quarter result saw reported profits for British Petroleum (BP) of $3.1 billion (£2.2 billion) compared to $4.7 billion (£3.4 billion) for the first quarter of 2021, the British oil company’s share price rose by over three percent today.

Following the announcement, the oil giant’s share price has boomed in the UK since it announced its huge dividend boost and share repurchase scheme as part of resurgent efforts to appeal to investors after lulls in profit over the last year.

Here’s what you need to know.

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What is BP’s share price today?

The BP plc share price opened at 296 points this morning on August 3 as the firm’s quarter two results were published, with the company’s share price sharply increasing to 300 points just after 8am and continuing to tick upwards.

As of 4.35pm today, BP plc was trading up at 306.10 points at over 5%.

This comes after the firm’s share price dipped by almost 14% since its last share price high of 332.7 on Tuesday June 15, with a recent low share price of 278.45 recorded on July 19 as British companies were hit by market anxiety over the lifting of coronavirus restrictions in England.

Its share price lift on August 3 has lifted FTSE 100 prices across the board, with the UK index up at 7,110.55 points just before 9am.

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What are the headline figures from BP’s Q2 report?

BP’s quarter two results show that the company’s net debt fell to $32.7 billion (£23.4 billion) in the second quarter, as 60% of its surplus cash flow from the first half of 2021 will now go towards an initial $1.4 billion share buyback scheme.

The company saw a surplus cash flow of $0.7 billion this quarter and $2.4 billion in the first half of 2021 in total after reaching its net debt target of $35 billion.

BP now looks to capitalise on the opportunity to lure back investors after concerns grew over the firm’s ability to meet growing demands for green energy and more environmentally aware business practices.

Having announced the initial buyback of its shares to the sum of $1.4 billion, the firm has boosted its dividend to 5.46 cents per share after halving it in 2020 to cope with the economic impact of the Covid-19 pandemic.

Will there be more share buybacks at BP?

The four percent annual dividend lift is to be maintained through to 2025 along with share buybacks of around $1 billion every quarter.

Bernard Looney, chief executive officer of BP, said: "We are a year into executing BP's strategy to become an integrated energy company and are making good progress - delivering another quarter of strong performance while investing for the future in a disciplined way.

"Based on the underlying performance of our business, an improving outlook for the environment and confidence in our balance sheet, we are increasing our resilient dividend by 4% per ordinary share and in addition, we are commencing a buyback of $1.4 billion from first half surplus cash flow.

Mr Looney continued: “On average at around $60 per barrel, we expect to be able to deliver buybacks of around $1.0 billion per quarter and to have capacity for an annual increase in the dividend per ordinary share of around 4%, through 2025.

“This shows we continue to perform while transforming bp - generating value for our shareholders today while we transition the company for the future."

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