BP’s first-quarter earnings fell by two-thirds and its debt rose to its highest level in at least five years, after the coronavirus crisis hit oil demand, but the oil company kept its dividend despite that they warned of exceptional uncertainty.
The London-based company said it expects to achieve significantly lower refining margins in the second quarter, when global travel restrictions to contain the spread of the coronavirus peaked, sinking consumption of gasoline, diesel and jet fuel.
BP shares were down 2% at 0750 GMT Tuesday, after several analysts questioned whether keeping the dividend and increasing debt is a prudent strategy. The European energy sector index fell 0.9%.
“I can see many reasons why this recovery will take longer and therefore I think we will be in this for quite some time,” Chief Executive Bernard Looney, who took office in February, told Reuters.
The oil company said hydrocarbon production faces “significant uncertainties” related to falling oil demand and prices, as well as due to an agreement between OPEC, Russia and other producers to reduce world crude oil supplies by about 10%.
BP posted an ordinary profit at replacement cost – its definition of net profit – of US $ 800 million, exceeding the 710 million analysts expected in a survey provided by the company. A year ago, BP announced a benefit of $2.4 billion.
Still, the oil company, whose net debt rose to its highest level since at least 2015, maintained its dividend of 10.5 cents per share and said it has repurchased shares worth $ 776 million throughout the quarter.