Energy benchmark BP increases its dividends by 10 percent

Despite surpassing second-quarter profits on strong refining margins and trading, British oil major BP increased its dividend and increased share buybacks on Tuesday.

The giant energy company reported $8.5 billion in underlying replacement cost profit for the second quarter, a stand-in for net profit.

In contrast, the first quarter of the year saw a profit of $6.2 billion.  According to Refinitiv, analysts had projected BP to announce profit of $6.3 billion in the first quarter.

During morning trading in London, shares of BP increased by 4% while trading close to the top of the pan-European Stoxx 600. Year to date, the stock price has increased by more than 23%.

The figures from BP once again highlight the sharp difference between those suffering from a worsening living cost crisis and Big Oil's profit boom.

Following a spike in commodity prices brought on by Russia's invasion of Ukraine, global major oil and gas firms have just broken earnings records. Returning money to investors through repurchase plans seems to be top priority of large oil companies at the moment.

The London-based corporation announced it will add to the $3.8 billion it already repurchased in the first half by repurchasing $3.5 billion worth of shares over the coming three months, in line with the actions of the majority of its competitors. Additionally, it raised the dividend by 10%.

A prior pledge to boost the distribution by about 4% yearly until 2025 was improved by raising the dividend to 6 cents per share. At the conclusion of the period, net debt was $22.82 billion, down from $32.7 billion in the previous year.

According to Redburn analysts, the data demonstrated that BP is "delivering across all three key areas earnings/cash, capital discipline, and shareholder distributions."

The adjusted net income for BP in the second quarter was $8.45 billion, the highest figure since 2008 and much exceeding the top analyst projection. Increased crude and natural gas prices weren't the only factor in this; the refineries of the corporation also had significant profit margins, and their oil traders performed exceptionally.

The corporation never makes public how much money its oil traders make, but it did report that its refining and trading division's adjusted earnings before interest, taxes, depreciation, and amortization were $3.73 billion, up from just $301 million in the previous year.

The oil industry is accused of benefiting off the impact of Russian-Ukraine tension while simultaneously neglecting to invest so much in new drilling, and its soaring profits come at a politically sensitive moment. Along with its earnings report, BP provided a lengthy list of the investments it is making in the UK.

The five largest multinational oil firms in the world collectively generated more revenue in the second quarter than they ever have, totaling more than $60 billion.

There have been rumors that the second quarter may eventually wind up being the pinnacle for Big Oil this year as recession fears grow. Due to delays in the Russian supply, low stockpiles, and decreased spare capacity, BP stated that it anticipates crude oil and natural gas prices to remain high as well as refining margins in the third quarter.