BP CEO on Q4 results: ‘over 40% of capital will go to energy transition’

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BP plc (NYSE: BP) was up in premarket trading on Tuesday after the oil giant reported solid results for its fiscal fourth quarter and launched a $1.5 billion share repurchase programme.

It’s been another good quarter. We’re strengthening the balance sheet. Seventh quarter in a row now where net debt has come down. At the same time, we’re accelerating the transition. We call it performing while transforming.

BP also declared a quarterly dividend

BP’s commitment to shareholder returns was the highlight of its earnings press release this morning. On top of stock buyback that it plans on executing in Q1, the board also declared 5.46 pence a share of quarterly dividend.

The London-based company is currently in the middle of transitioning into green energy. On CNBC’s “Squawk Box Europe”, CEO Bernard Looney said:

I’m excited about the opportunities that the transition presents for our company to get to net zero and that’s why we’ve announced accelerated plans around our emissions today. We can create up to $10 billion of EBITDA by 2030 from these transition growth businesses. That means over 40% of our capital by the middle of this decade will go into transition.

ROACE printed at 13.3% for the year

BP said its underlying replacement cost profit printed at $4.07 billion in the recent quarter – a massive increase from $115 million in Q4 of fiscal 2020. The market consensus was for $3.93 billion.

At $12.82 billion, its underlying RC profit for the full year climbed above 2019’s $9.99 billion. BP had $6.1 billion operating cash flow in the fourth quarter and its ROACE stood at 13.3% for the year. CEO Looney agreed higher oil prices helped deliver strong results but said:

In the last two years, we’ve taken out $2.5 billion of costs six months ahead of schedule. We’re on track for $3.0 billion to $4.0 billion of cost to come out. We’ve just completed the largest restructuring in our history.

The stock trades at a PE multiple of 16.94 and is up more than 20% for the year.

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