BP saw its share price plunge nearly nine per cent yesterday, wiping more than £8 billion from its stock market worth, as it faced fresh claims of “profiteering” amid the cost-of-living crisis.

The energy giant beat analysts’ forecasts to report first-quarter profits of nearly $5bn (£4bn) on its preferred underlying replacement cost metric, sparking further calls for the UK Government to increase windfall taxes on oil and gas company profits.

Shadow energy secretary Ed Miliband branded the profits, which were driven by sustained higher oil and gas prices, as “unearned”, while Sharon Graham, general secretary of trade union Unite, declared the company’s “grotesque profiteering is continuing at pace”.

But analysts noted that shares in BP had fallen as investors appeared to react coolly to its plans for returning surplus cash flow to shareholders, and concerns over the outlook for oil and gas prices.

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The company, one of the biggest oil and gas producers in the North Sea, generated surplus cash flow of $2.3bn in the first quarter and said it intends to undertake a £1.75bn share buyback before its second quarter results are announced.

It expects to be able to deliver share buybacks of around $4bn per annum, at the lower end of its $14bn-$18bn capital expenditure range, and have the capacity for an annual increase in the dividend of around 4% per ordinary share.

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Russ Mould, investor director at stockbroker AJ Bell, observed that it “says something that this total, and the accompanying forward guidance around dividends and buybacks, was disappointing to shareholders and a likely reason behind a fall in the share price despite reporting better-than-expected profit".

He said: "It also hints at the longer-term challenge facing BP as the company looks to balance investing in the energy transition while still doling out plenty of cash to keep investors happy.”

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Another analyst flagged that the outlook for oil prices “remains somewhat unclear”, despite recent output cuts announced by the OPEC+ group of leading oil producers.

“Continuing uncertainty surrounding the global economy, exacerbated by recent turbulence in the banking industry, could see energy prices continue the downward trajectory which started in the middle of last year,” said Roberto Rivero, market analyst at Admirals.

“Naturally, lower oil and gas prices will result in less money for BP, which could see earnings return to more normal levels after a period of outsized profits. If this is the case, BP may start to feel the loss of its Rosneft shareholding more acutely, which it exited last year amidst an exodus of Western businesses from Russia.”

BP’s first-quarter profits at BP were up on the $4.8bn made in the fourth quarter of last year, but down on the $6.2bn it made at the same stage in 2022, when it benefited from the sharp rise in oil and gas prices that followed Russia’s invasion of Ukraine. Beyond that, the results posted yesterday were the best BP had reported in a decade, and around $700m (£560m) more than analysts had thought it would make.

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But the results sparked renewed criticism from the Labour Party, which branded the profits “unearned” and criticised the windfall tax regime, which allows companies to take advantage of significant tax breaks if they invest in North Sea extraction projects.

Mr Miliband said: "These enormous profits are the unearned, unexpected windfalls of war. And every excess pound that the energy giants rake in is at the expense of British families.

"Yet, after all this time, the Tory windfall tax is still full of get-out clauses with billions being bunged at oil and gas companies in special subsidies not available in any other part of the energy sector."

While wholesale gas prices have eased in recent months, UK households continue to face high energy bills. In last month’s Budget, the UK Government extended the energy price guarantee for a further three months, meaning that from April to June typical household energy bills will be capped at £2,500 per year.

Ms Graham at Unite said: “BP’s grotesque profiteering is continuing at pace. Last year Shell and BP’s combined profits stood at £55bn, and all the indications point to Shell taking billions in the first quarter of this year.

“Profiteering by big oil and other major sectors is a blight on the economy. Profiteering is driving prices higher, leaving workers poorer while businesses struggle to keep the lights on. Sunak’s government is asleep at the wheel. It needs to wake up and learn from the Norwegian government, which takes billions more out of North Sea oil profits than the UK does.”

While politicians and consumer groups have attacked the windfall tax, major oil and gas companies such as Harbour Energy have said the energy profits levy threatens investment in the North Sea at a time when the UK is striving to boost domestic energy supplies.

Mr Mould at AJ Bell pointed out that BP was making the bulk of its profits outside the UK.

He said: “The issue for those who see the headline numbers and think the UK’s cost of energy problem could be solved at a stroke is that the lion’s share of its profit and cash flow is being generated outside the UK and therefore beyond the auspices of HMRC.”

BP chief executive Bernard Looney said: “This has been a quarter of strong performance and strategic delivery as we continue to focus on safe and reliable operations.”

Shares in BP closed down 8.6%, or 46.05p, at 488.35p.