Continuing momentum expected at BP and Shell as they ready first quarter updates

Oil majors’ commitment to energy transition and impact of windfall taxes will be in focus

The OPEC production cuts which helped drive a recent rally in oil prices will have come too late to be reflected in upcoming quarterly earnings numbers from BP (BP.) and Shell (SHEL), published on 2 and 4 May respectively, but investor expectations will still be pitched high.

Shell expects a rise in LNG volumes in Q1

Strong earnings are a doubleedged sword as they will be welcomed by the market but will create further pressure for these to be taxed.

Shell teased its results in some detail on 6 April so there are unlikely to be too many surprises. For BP there may be interest in how the new strategy announced alongside its fourth quarter 2022 results is being implemented. The company has scaled back plans to reduce oil and gas production.

Berenberg analyst Henry Tarr flags some of the key questions investors will be asking. He says: ‘Where is the additional capex announced at Q4 being spent? How much of it is linked to rising inflation versus new activity? Is the company experiencing higher tax rates across different countries through windfall taxes?’

Tarr adds that attention will likely be focused on the extent to which BP favours dividends or share buybacks when determining shareholder returns. He expects a cash return from BP of around 14% in dividends and buybacks for 2023. [TS]