BP is to resume share buybacks after reporting a doubling in third-quarter profit in the clearest sign yet that the oil company is confident about a turnaround. Silvia Antonioli reports.
BP is surprising shareholders with an early Christmas present. The British oil producer said it would resume share buybacks at a rate of some 1-point-6 billion- dollars a year- becoming the first European major to do so since the 2014 crude price slump. This, as it beat forecasts by doubling its third-quarter profit, a sign that years of austerity under CEO Bob Dudley are starting to pay off. After the announcement BP shares climbed to their highest level in over three years. SOUNDBITE (English) CMC Markets, Market Analyst, Michael Hewson "Mr. Dudley has restructured the business over the course of the last seven or eight years. And ultimately the dividend yield of around about 5 or 6 percent is a very decent number in this low yield environment. And while the oil price remains at current levels around 60 dollars a barrel then ultimately yes I think there's certainly potential for further upside." BP is shaking off the impact of the deadly 2010 Deepwater Horizon spill. The environmental scandal cost it over 63-billion-dollars in clean-up costs and penalties. And while the latest results highlight the progress made in the turnaround Some think the cash would be better spent elsewhere. SOUNDBITE (English) CMC Markets, Market Analyst, Michael Hewson "My concern is that rather than indulging in a share buyback they should be looking to get those debt levels down....if there's a significant downturn over the course of the next few months then I think that dividend could well come under threat at the moment. The markets are discounting that and I think that remains a little bit of a concern." BP said it is now balancing its books with oil at 49-dollars-a-barrel. This is compared with a 60-dollar breakeven point last year. Now crude prices soaring above the 60-dollar-mark again this week might boost investors hopes for even more 'presents'.