BP Launches Share Buyback as Profits Soar. What It Means for the Stock.

BP Launches Share Buyback as Profits Soar. What It Means for the Stock.

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BP



stock made gains early on Tuesday, as the oil major committed to $500 million share buybacks after profits more than tripled in the first quarter.

The London-listed energy giant cited "exceptional“ gas marketing and trading performance and higher oil prices for the profit rise.

The company reported an underlying replacement cost profit, its definition of net income, of $2.63 billion, up from $791 million the previous year and $115 million in the fourth quarter of 2020. It also smashed the FactSet analyst consensus of $1.48 billion.

The stock rose 2% in early trading before slipping back to trade 1% higher, while the ADRs were 1.1% up in premarket trading. The London stock remains 37% lower than its end of 2019 level.

The back story. The world's largest oil-and-gas companies had a difficult 2020, as the Covid-19 pandemic caused oil demand and prices to collapse. BP reported a $16.8 billion loss in the second quarter of 2020 andcut its dividend for the first time in a decade, lowering long-term oil forecasts. However, the crisis also accelerated the industry's shift toward green energy. BP, along with