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BP Shares Jump After Surprise Q4 Profit Beat, Dividend Boost

BP shares bucked the trend of weaker oil major earnings with surprisingly solid fourth quarter profits under the final months of outgoing CEO Bob Dudley.

BP Plc  (BP)  shares traded at the top of the London market Tuesday after Europe's second-largest oil company boosted its quarterly dividend and posted stronger-than-expected profits despite the ongoing slide in global crude prices. 

BP said underlying profit for the three months ending in December fell 26.2% from the same period last year to $2.57 billion, but topped analysts' forecasts of a $2.1 billion tally. BP also managed to increase cash flow by some 10% over the whole of 2019, to $25.8 billion, thanks in part to a surge in production from its U.S.-focused unit, BPX Energy, which gained access to  the Permian Basin through its purchase of BHP Billiton's  (BHP)  shale assets in 2018. 

The cash-flow increase allowed BP to boost its dividend by 2.4%, to 10.5 pence per share, and said it was ahead of its target to deliver $10 billion in asset sales before the end of the year.

"BP is performing well, with safe and reliable operations, continued strategic progress and strong cash delivery," said outgoing CEO Bob Dudley. "This all supports our commitment to growing distributions to shareholders over the long term and the dividend rise we announced today." 

"After almost ten years, this is now my last quarter as CEO. In that time, we have achieved a huge amount together and I am proud to be handing over a safer and stronger BP to (incoming CEO Bernard Looney) and his team," he added. "I am confident that under their leadership, BP will continue to successfully navigate the rapidly-changing energy landscape."  

BP shares were marked 4.2% higher in early London trading Tuesday and changing hands at 471.55 pence each. Its U.S.-listed shares rose 4.6% in New York to trade at $36.87 each. 

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CFO Brian Gilvary said that global oil demand over the whole of 2019 rose by 900,000 barrels per day, a pace that trailed the average of the past ten years, and noted that the ongoing spread of the coronavirus in China -- the world's biggest energy importer -- has already clipped between 200,000 and 300,000 barrels per day in world demand. 

Last week, U.S. oil giant Exxon Mobil  (XOM)  said djusted earnings for the three months ending in December came in at 41 cents per share, down more than 70% from last year and 2 cents shy of the Street consensus forecast as oil majors around the world see profits declining alongside global crude prices.

Net income was pegged at $5.69 billion, the weakest in three years while group revenues fell 6.6% to $67.17 billion .

Exxon's biggest U.S. rival, Chevron Corp.  (CVX) , also disappointed investors with weaker-than-expected fourth quarter earnings while Royal Dutch Shell RDS.A, Europe's biggest oil company, said fourth quarter profits nearly halved from last year, to $2.9 billion, and cautioned the global demand weakness linked to the spreading coronavirus would cloud energy markets for at least the first half of the year.

Global oil prices, in fact, fell to the lowest levels in more than a year Monday, extending losses from one of the biggest January declines since the early 1990s, as investors count the cost to China's economy from the ongoing coronavirus outbreak. 

Crude posted modest rebounds on Tuesday, however, with Brent futures rising 46 cents a barrel to $54.91 each, but are still in technical 'bear market' territory after slumping more than 20% since their January 6 peak of $68.91 each.