British energy company BP's profit falls due to lower oil and gas prices

British energy company BP reported underlying profit of 2.7 billion dollars (62.8 billion Kč) in the first quarter, down 45 percent year on year. The decline was mainly due to lower oil and natural gas prices, the company said today in a statement. The result fell short of analysts' estimates. In the final quarter of last year, profit was almost three billion dollars.

BP defines underlying profit as earnings after taking into account the cost of replacing production. The result is used in the industry as an equivalent of net profit. BP said it had significantly weaker margins on fuel than it had initially expected. Analysts surveyed by LSEG had forecast average profit of 2.9 billion dollars.

Some rivals also saw their profits fall at the start of the year, mainly due to lower oil and gas prices on global markets. Europe’s gas reserves reached record levels over the winter, reflecting efforts by European countries to protect themselves against possible shortages. After Russian troops invaded Ukraine in February 2022, the European Union began rejecting Russian gas, forcing member states to source it elsewhere, mostly at higher prices.

Rival British company Shell announced last week that its first-quarter profit fell by about a fifth to 7.7 billion dollars. Energy companies are nevertheless focusing on shareholder returns through dividend payments and share buybacks. BP plans to buy back 3.5 billion dollars of its shares in the first half of this year.

BP Chief Executive Murray Auchincloss said the company was continuing its efforts to simplify its business. It plans to save two billion dollars by the end of 2026.

The company appointed Auchincloss as permanent chief executive in January. His predecessor, Bernard Looney, resigned after less than four years in the role over undisclosed personal relationships with female colleagues from before he became chief executive. There was suspicion that Looney had subsequently helped those colleagues advance their careers, but an investigation found no evidence that he had breached internal rules, CNN reported. Looney joined BP in 1991, when he was 21.