BP keeps dividend despite profit decline, to relief of Irish pension funds

Oil major BP has maintained its shareholder dividend — bringing relief to Irish and British pension funds, many of whom are invested in the company — despite falling profits and rising debt levels.

BP’s first-quarter profit tumbled by two thirds and its debt climbed to its highest in at least five years as the coronavirus crisis hammered oil demand, but the energy major kept its dividend despite warning of exceptional uncertainty.

BP reported an underlying replacement cost profit, its definition of net income, of $800m (€740m), beating the $710m forecast by analysts. The company reported $2.4bn profit a year earlier.

Including inventory charges of $3.7bn for oil it holds, the company reported a loss of $4.4bn.

But BP, whose net debt climbed to its highest since at least 2015, kept its dividend of 10.5c per share and said it had repurchased shares worth $776m in the quarter.

The company said oil and gas production faced “significant uncertainties” linked to tumbling oil demand and plunging prices, as well as due to a deal between Opec, Russia and other producers to cut global supplies of crude by about 10%.

“I can see many reasons why this recovery will take longer and therefore I think we’re in this for quite some time,” chief executive Bernard Looney said.

BP has so far resisted cutting its dividend after raising it in February, even though some investors have said top oil and gas companies should consider reducing shareholder payouts.

Mr Looney said BP aimed to reduce costs so it could generate profits and pay dividends at an oil price of $35 a barrel in 2021, down from a breakeven $56 a barrel in 2019. He said spending could be cut further next year.

Oil was up slightly at just over $20 per barrel.

- Additional reporting Reuters