Energy giant BP has reported its second highest annual profit in a decade, despite it being half the level it announced in the previous year.
Profits were $13.8bn (£11bn) in 2023, down from the record $27.7bn in 2022 when oil prices soared in the aftermath of Russia’s invasion of Ukraine.
The price of oil fell back last year, which has cut profits at all energy firms.
However, BP said it was stepping up its plans to return cash to shareholders.
The results are the first released by BP since the company announced Murray Auchincloss as its new chief executive.
Previous boss Bernard Looney resigned last September after admitting he had not been “fully transparent” about his past personal relationships at the firm. BP’s board said Mr Looney had committed “serious misconduct”, resulting in him forfeiting up to £32.4m in pay and benefits.
The fall in BP’s annual profits echo the results from rival Shell, who last week said profits fell to $28.2bn last year, down from $39.9bn in 2022.
However, excluding 2022’s results, BP’s annual profit figure was the biggest since 2012.
In the final three months of 2023, BP reported profits of $3bn, which was higher than expected, and its shares were up more than 5% by Tuesday afternoon.
The company also said it planned to increase returns to investors during the first three months of the year through $1.75bn of share buybacks. It has also committed to $3.5bn of buybacks over the first half of 2024.
BP said it expected “underlying production from oil production and operations to be higher” this year, but output from gas and low carbon energy to be lower.
The company came under fire last year from environmental groups after it scaled back plans to reduce the amount of oil and gas it produces by 2030.
Reacting to the latest results, campaign group Global Witness criticised BP’s policies.
“Shareholders should want to protect their long-term positions. That means demanding a rapid clean energy transition for companies like BP. These reckless shareholder payouts do the opposite,” said Jonathan Noronha-Gant from the group.
However, last week, the Financial Times reported that one investor group – BlueBell Capital Partners – had called on BP to scrap its targets for lower oil and gas output altogether, calling them “irrational”.
But speaking to analysts on Tuesday, Mr Auchincloss said: “We just disagree with them if I’m honest.
“We are very happy with the direction of travel, and the shareholders at the top tier are happy as well.”
Susannah Streeter from Hargreaves Lansdown said the priorities of BP’s new boss had been made clear.
“Although on appointment he pledged that BP’s strategy to transition from an international oil company to an integrated energy company was unchanged, the big share buy-back announcement shows the immediate focus is on boosting the share price and returning value to shareholders.”
Nick Butler, a former head of strategy at BP, told the BBC’s Today programme there had been talk that the company could be a takeover target.
“The real defence against takeovers is performance and if that’s going to be the new chief executive’s focus I think we can be a bit more optimistic about the company,” he said.