BP PLC (LSE:BP.) shares gushed higher as it picked up the pace of its share buyback plans as fourth-quarter profit came in ahead of expectations.
The oil major said fourth-quarter underlying replacement cost profit was US$2.99 billion, down from US$4.81 billion the year prior, but ahead of City forecasts of US$2.76 billion.
BP announced a quarterly share buyback of $1.75 billion, pledged a further $3.5 billion buybacks in the first half of 2024, and at least $14 billion through 2025.
This compared to buybacks of US$1.5 billion in the first three quarters of 2023.
BP said the results reflected a strong gas marketing and trading result, higher oil realisations, higher gas realisations, significantly lower industry refining margins, a weak oil trading result, higher exploration write-offs, and a higher level of refining turnaround activity.
Operating cash flow in the quarter was US$9.4 billion with capital expenditure of US$4.7 billion.
Underlying earnings per share fell to 17.77 US cents from 26.44 cents before while the dividend was increased 10% to 7.270 cents per share.
Looking ahead to the first quarter of 2024, BP said it expects reported upstream production to be higher compared to fourth-quarter 2023.
In its customers business, it expects seasonally lower volumes across most businesses and the absence of one-off positive effects from the fourth quarter.
In products, BP expects a significantly lower level of refinery turnaround activity compared to the fourth quarter, plus lower industry refining margins.
The shares, which last month sank to a 16-month low below 442p, climbed 5% to 481.3p on Tuesday morning.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “BP has beaten expectations for the final quarter of 2023, but fallen slightly short for the year. The company went through a significant amount of change last year and this, combined with a declining oil price, has had an impact on overall performance."
Nevertheless, he said BP is still in "resilient shape", with positive surplus cashflow, lower net debt and management optimism reflected in the 10% increase in dividend distributions.