Panoramic view of the BP sign and petrol station forecourt sign in Southend, UK, January 22, 2024.
John Keble | Getty Images News | Getty Images
British oil major BP reported stronger-than-expected second-quarter net profit on Tuesday and raised its dividend despite earlier warnings of a sharp decline in refining margins.
The oil and gas giant reported second-quarter underlying replacement cost earnings, used as a proxy for net income, of $2.8 billion. That beat analysts’ expectations of $2.6 billion, according to consensus compiled by LSEG.
BP reported a net profit of US$2.7 billion in the first three months of this year and a net profit of US$2.6 billion in the second quarter of 2023.
The energy company announced a 10% increase in its dividend to 8 cents per share from 7.27 cents. It also maintained its stock repurchase program for the next three months at $1.75 billion.
BP Chief Financial Officer Kate Thomson said on Tuesday the company’s decision to boost shareholder returns “reflects our confidence in our performance and cash generation prospects”.
BP said earlier this month that weak refining profits and lower oil trading performance could cost the company as much as $700 million in second-quarter results. The company on Tuesday confirmed a $1.5 billion writedown, in part due to plans to reduce refining operations at its Gelsenkirchen plant in Germany.
“We are driving focus and cost reduction across the business while building momentum towards our 2025 ambitions,” BP Chief Executive Murray Auchincloss said in a statement.
“Our recent advancement of the Kaskida development business in the Gulf of Mexico and our decision to fully own bp Bunge Bioenergia while scaling back plans for new biofuel projects demonstrates our commitment to creating a simpler, more focused and higher value project company,” he added.
As of the end of the second quarter, BP’s net debt was $22.6 billion, down from $23.7 billion a year earlier.
investor confidence
Shares in the London-listed company fell about 2.8%% year to date.
By comparison, UK rivals’ share prices shell The company’s shares are up nearly 8% so far this year, while those of U.S. oil giant ExxonMobil are up more than 16%.
BP’s second-quarter results come as the company seeks to rebuild investor confidence in its strategy. The company is under pressure from activist investor Bluebell Capital Partners to increase oil and gas investments and scale back green commitments.
Bernard Looney resigned in September after less than four years in the job.
The company was one of the first energy giants to announce plans to cut emissions to net zero “by 2050 or earlier,” but has since downplayed those climate plans. BP said in a strategy update last year that it was targeting a 20% to 30% cut, noting the need to continue investing in oil and gas to meet demand.
Reuters reported in late June that BP Chief Executive Murray Auchincloss had frozen hiring and suspended renewable energy projects as part of a cost-cutting plan to boost returns. BP said at the time that Auchincloss set out six priorities “to become a simpler, more focused and higher-value company.”
Shell is due to report second-quarter results on Thursday, with Exxon Mobil and Chevron preparing to follow suit on Friday.
Norwegian oil and gas producer Equinor reported a 4% drop in second-quarter profit on Wednesday, beating analysts’ expectations.
