BP shares gush as Irish boss takes over

Shares in BP gushed by more than 4% after the oil giant surprised investors with a slight increase in its dividend, bucking the trend in what has otherwise been a bleak earnings season for big oil.

The move came ahead of Irishman Bernard Looney taking over the day-to-day running of the oil major. Mr Looney - a BP veteran who was born in Co Kerry and educated in UCD - formally takes over as BP CEO today.

Formerly head of BP's oil and gas production, or upstream, operations, for four years, Mr Looney was named as successor to long-standing BP CEO Bob Dudley, who is retiring, last October.

In the final set of results under Mr Dudley, BP offered some respite for investors who received nothing but bad news from its peers.

Big payouts, whether as dividends or buybacks, are the only thing attracting many investors to the industry in a world increasingly aware of the impact of fossil fuels on climate change and falling energy prices.

Last week Royal Dutch Shell slowed the pace of its share buybacks due to weak macroeconomic conditions, while Exxon Mobil and Chevron failed to impress.

"We remain confident in delivering the 2021 free cash flow targets and divestment proceeds, and expect to continue to reduce net debt and gearing," Mr Dudley said.

This underpins the company’s "ongoing commitment to sustainably growing distributions to shareholders over the long term," he added.

BP's fourth-quarter adjusted net income was $2.57bn (€2.3bn), exceeding even the highest analyst estimate. That compares with profit of $3.48bn a year earlier. The company’s dividend for the period will rise 2.4% to 10.5 cents a share.

"BP’s results have come in slightly better than expected, but they are still a reflection of the challenging environment for oil and gas companies," said Stuart Lamont, an investment manager at Brewin Dolphin.

Big Oil offers generous returns, but analysts are beginning to question the affordability of these payouts due to high levels of debt, volatile markets and investor pressures to invest in clean energy. BP’s gearing -- a measure of debt to equity -- remained above its target of 30% at the end of 2019.

BP is reducing its debt burden in part by selling unwanted assets. It has announced $9.4bn of deals since the start of 2019, putting it well on course to complete the targeted $10bn of sales in the two years to 2020.

-additional reporting Bloomberg