BP’s first quarter results will do nothing to quell talk of a windfall tax on oil and gas companies,” says AJ Bell investment director Russ Mould.
The oil giant might have hoped attention would focus on an apparent $20.4 billion loss – created by impairments linked to its exit of interests in Russia – but the strongest underlying profit in a decade of $6.25 billion was more revealing of the impact of surging oil and gas prices on the business.
“What feels like an achievement worth celebrating almost needs an apology by BP – and there may almost be an element of regret on its part that the numbers are so far ahead of forecasts,” said AJ Bell’s Russ Mould.
“The argument for the windfall tax goes something like this – BP’s profit and cash flow is being artificially inflated by the war in Ukraine and ordinary people are already paying the price through much higher household bills. Shouldn’t BP, with its broader shoulders, share the burden? Particularly given it feels able to boost shareholder returns with an enhanced share buyback programme.
“It was no surprise to hear chief executive Bernard Looney talking about ‘backing Britain’ and flagging billions of pounds worth of investment in projects to boost domestic energy security.
“Whether this will be enough to stave off a new levy remains to be seen. The political pressure to do so is only likely to escalate as the cost of living continues to surge in the UK.
“The exit from Russia, while bringing with it considerable costs, arguably helps with the transformation of the group and strong cash flow is helping to bring down debt.
“BP has ambitious plans to become cleaner and greener but today’s update is a reminder that fossil fuels, with all the environmental and geopolitical mess they entail, remain central to the company for now.”