Higher Oil Prices Drive Profits At European Energy Companies

Europe's major energy companies are profiting from a rise in oil prices and reporting big increases in first-quarter earnings.

Last year, demand collapse during the worst of the pandemic forced BP (NYSE:BP), Royal Dutch Shell (NYSE:RDS.A) and Equinor (NYSE:EQNR) to slash their dividends and preserve cash. But now, with oil prices recovering from an April 2020 low of $16 a barrel to above $67 a barrel, most of the companies managed to drive profits back above levels seen before the pandemic struck the global economy.

BP's first-quarter profit of $2.6 billion U.S. exceeded its first-quarter profit of $2.4 billion U.S. in 2019 and was more than 200% higher than in 2020.

France's Total (NYSE:TOT) reported profits of $3 billion U.S. in the first three months of 2021, up 69% from last year and 9% above the first quarter of 2019. Norway's Equinor came in with a first-quarter profit of $5.5 billion U.S., also exceeding its pre-pandemic profit of $4.2 billion U.S.

Shell was the lone outlier among European energy companies. Its first-quarter profit climbed 13% from 2020 to $3.2 billion U.S., although that was below 2019's profit of $5.3 billion U.S.

Despite recovering profits, dividends are still below pre-pandemic levels with the exception of Total, which had kept its dividend steady throughout the pandemic.

While Shell has increased its dividend twice in the past six months, the 17 cents U.S. it paid per share in the first quarter was below the 47 cents U.S. it paid out before the pandemic.

Equinor also raised its dividend to 15 cents U.S. per share, but this was short of 2019's 26 cents U.S. per share. BP's 3.8 British pence per share first-quarter dividend was about half of what it paid back in 2019.