BP plc To Reward Shareholders With $10bn By 2015

Shares in BP (LSE: BP) added 4p to 493p during early trade this morning after unveiling better profits than analysts expected. Q1 profits of £3.2bn were $1bn down on the same period last year, but the market had been braced for worse.

BPBP further cheered investors by hiking the quarterly dividend for the second time in six months to 9.75c per share. BP is nearing the end of its $8bn share buyback programme, but the oil explorer expects to continue to reward shareholders on $10bn in additional divestments by the end of 2015.

BP has divested $3bn so far — including an agreement last week to sell its interests in four oil fields in Alaska — which was reflected in lower production and profits. Likewise, a weaker refining environment contributed to the profits drop.

The chief executive, Bob Dudley, commented:

“This is a very solid start to 2014. Operating cash flow was strong in the first quarter, we have seen further exploration success and upstream project start-ups, and the upgraded Whiting refinery is ramping up steadily. We remain confident of delivering our 10-point plan targets that we set in 2011 for delivery in 2014.”

Prior to today, analysts were expecting BP’s 2014 results to reveal earnings per share of 47.7p, while after this morning’s price movement shares in BP may trade on a forward P/E of 10. The full year dividend is expected to increase marginally to 24.6p, which would yield 5% at today’s share price, and the dividend is covered twice by earnings per share.

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Mark does not own shares in BP.