BP investors send shares soaring as new CEO woos them with buyback boost to $1.75bn a quarter

BP Plc surged to a two-month precocious aft accelerating stock buybacks, arsenic nan company’s caller leader sought to woo investors that person been skeptical of its clean-energy strategy.

After fourth-quarter profit exceeded estimates, nan London-based lipid and state awesome said it will repurchase $1.75 cardinal of shares each 4th successful nan first half of nan year, compared pinch $1.5 cardinal successful nan anterior 3 months. The institution went moreover further to reassure shareholders, immoderate of whom person criticized its low-carbon plans, saying it intends to support astatine slightest this gait of buybacks until nan extremity of adjacent year.

“We’ve sewage existent confidence,” Chief Executive Officer Murray Auchincloss, who was appointed past month, said successful an question and reply pinch Bloomberg connected Tuesday. “And that assurance successful nan maturation has allowed america to rumor caller guidance connected really we’re reasoning astir buybacks.”

Shares of nan institution roseate 6% to 481.15 pence arsenic of 9:09 a.m. successful London.

BP follows a beardown group of results for Big Oil successful nan 4th quarter, pinch Exxon Mobil Corp., Chevron Corp. and Shell Plc each surpassing expectations. Its net announcement caps a tumultuous fewer months that saw nan abrupt resignation of erstwhile CEO Bernard Looney, a swell of rumors that it was a imaginable takeover target, and astir precocious calls from activistic investor Bluebell Capital Partners to divert spending from renewables into lipid and gas.

BP’s adjusted nett income for nan 3 months ended Dec. 31 was $2.99 billion, compared pinch $4.81 cardinal a twelvemonth earlier and $3.29 cardinal successful nan 3rd quarter. That exceeded nan mean estimate of $2.76 billion.

The summation successful nan buyback is simply a reflection of nan company’s falling nett debt, which astatine $20.9 cardinal is nan lowest successful a decade, according to Auchincloss. While BP still wants to bring that fig down a small further, nan simplification has allowed it to perpetrate to return 80% of surplus rate to shareholders, up from its erstwhile promise of 60%.

This alteration addresses “a spot of feedback we received that sometimes group are a spot uncertain arsenic to what nan buyback is going to be,” Auchincloss added.

BP’s net hit was “relatively debased quality” but nan summation successful nan buyback should beryllium taken very positively, Redburn analysts said successful a note.

As Auchincloss pledged to return much rate to shareholders, he kept a tight rein connected superior expenditure. BP will target spending of $16 cardinal some this twelvemonth and next, compared pinch a erstwhile scope of $14 cardinal to $18 billion.

The tighter spending will mostly travel down to location being “less room” for acquisitions pursuing a slew of purchases specified arsenic Archaea Energy and TravelCenters of America, Auchincloss said.