A general view of the BP logo and gas station sign in Southend, England, on January 22, 2024.
John Keble | Getty Images News | Getty Images
British oil giant BP on Tuesday reported better-than-expected second-quarter net profit and increased its dividend, despite earlier warning of a big drop in refining margins.
The oil and gas giant said its underlying replacement cost profit, used as a proxy for net profit, came in at $2.8 billion in the second quarter, beating analysts’ expectations of $2.6 billion, according to a consensus compiled by LSEG.
BP reported net profit of $2.7 billion for the first three months of the year and $2.6 billion for the second quarter of 2023.
The energy company said it increased its dividend by 10 percent to 8 cents a share from 7.27 cents, and also maintained the rate of its share repurchase program at $1.75 billion over the next three months.
BP Chief Financial Officer Kate Thomson said on Tuesday the company’s decision to increase profit returns to shareholders “reflects our confidence in our operating performance and cash generation outlook.”
BP said earlier this month that lower refining margins and reduced crude trading could reduce its second-quarter results by as much as $700 million. The company acknowledged a $1.5 billion impairment on Tuesday, in part due to plans to scale back refining operations at its Gelsenkirchen, Germany, plant.
“We are focusing on all our businesses, reducing costs and building momentum to 2025,” BP CEO Murray Auchincloss said in a statement.
“The recent approval of the Kaskida development in our Gulf of Mexico operations, as well as the decision to acquire full ownership of bp Bunge Bioenergia and scale back plans for new biofuels projects, demonstrate our commitment to operating as a simpler, more focused and more valuable company,” he added.
BP’s net debt was $22.6 billion at the end of the second quarter, down from $23.7 billion a year earlier.
Shares in London-listed companies have fallen about 2.8% since the start of the year.
By comparison, shares in British rival Shell have risen nearly 8 percent so far this year, while shares in U.S. oil giant Exxon Mobil have risen more than 16 percent.
BP’s second-quarter results come as the company seeks to restore investor confidence in its strategy and is under pressure from activist investor Bluebell Capital Partners to boost investments in oil and gas and scale back its environmental efforts.
Under the leadership of Bernard Looney, who resigned in September after less than four years in the position, BP had pledged to cut its total emissions by 35-40% by the end of the decade.
The company was one of the first major energy companies to announce plans to achieve net-zero emissions “by 2050 or sooner,” but has since watered down those climate plans. In a strategy update last year, BP said it needed to keep investing in oil and gas to meet demand, and would instead target a 20% to 30% reduction.
Reuters reported in late June that BP CEO Murray Auchincloss had implemented a hiring freeze and suspended renewable energy projects as part of a cost-cutting plan to boost profits. BP said at the time that Auchincloss had introduced six priorities to “deliver as a simpler, more focused and more valuable company.”
Shell is due to report second-quarter results on Thursday, with Exxon Mobil and Chevron due to follow on Friday.
Norwegian oil and gas producer Equinor on Wednesday reported a 4% fall in second-quarter profit, which beat analysts’ expectations.