By Geoffrey Smith
Investing.com -- BP 's (NYSE:BP) exit from Russia cost it dearly in the first quarter, the writedown of its stake in oil giant Rosneft driving the oil and gas giant to a $20.38 billion loss.
The move is much the largest individual writedown by any western oil and gas major in the wake of Russia's invasion of Ukraine, which has led to the sector distancing itself ever more completely from Russian oil and gas.
Even so, the company's underlying profit was better than expected at $6.25 billion, up more than 50% from the previous quarter and more than double the result for the same quarter last year. The numbers were well ahead of analysts' forecasts
The surge in prices for both oil and natural gas has created optimal trading conditions for companies such as BP.
As a result, net debt, which has been a cause of concern for analysts since the pandemic started, fell by over $3 billion to $27.46 billion. The underlying improvement in the balance sheet allowed the company to raise its buyback program by $2.5 billion over the next quarter - the eighth quarter in a row it has managed that.
The company said its trading division had had its best-ever quarter in what CEO Bernard Looney described as the "most volatile quarter ever" in oil markets. The company expects both volatility and prices to remain high, against a backdrop of high uncertainty with regard to the availability of supply from Russia and from OPEC, whose members have struggled to keep pace with their promised output increases in the last six months.
However, the company also noted downside risks to prices such as the impact of COVID-19 on Chinese demand, which has run at around 1 million barrels a day lower than expected so far this year.
BP (LON:BP) stock rose 1.8% in the first five minutes of trading in London in response.