bp has announced profits of nearly $2.8 billion in the second quarter of 2024 (Q2 2024), surpassing analysts’ forecasts by 9%, due to higher oil prices and solid retail earnings, which compensated for the impact of weak refining margins. It also reported a dividend increase and the continuation of its share repurchase program, following the release of its Q2 2024 results.
CEO Murray Auchincloss, a 53-year-old Canadian who assumed office in January, has pledged to restructure bp’s operations and concentrate on its most lucrative segments, primarily in the oil and gas sector.
In a sign of change from his predecessor Bernard Looney’s strategy to grow renewables and reduce fossil fuel output, bp said it had given a green light to the development of the Kaskida oilfield in the US Gulf of Mexico, a highly complex project in deep geological formations.
This project, located in deep geological formations, is expected to commence production in 2029 with an expected capacity of 80,000 barrels per day (bbl/d) of oil.
bp has also plans to proceed with a low-carbon hydrogen project at its Castellon refinery in Spain.
Despite the positive quarterly results, bp’s shares closed 0.3% down on Tuesday, in contrast to the flat performance of the broader European energy index. The stock has underperformed this year due to investor concerns about the company’s energy transition strategy and skepticism regarding its ability to meet its 2025 earnings targets.
Auchincloss has emphasized the company’s efforts to reduce costs by $2 billion annually by 2026. bp has already implemented a hiring freeze and halted investments in new offshore wind projects, according to Reuters.
“We are driving focus across the business and reducing costs, all while building momentum in our drive to 2025,” Auchincloss stated.
bp has raised its dividend by 10% to 8 cents per share and will maintain its share buyback program at a rate of $1.75 billion over the next three months, reaffirming its commitment to repurchasing $14 billion of shares this year and next.
Underlying replacement cost profit, the company recorded net income of $2.76 billion in the quarter, exceeding the $2.54 billion forecast and increasing from the $2.7 billion profit in the previous quarter and the $2.6 billion reported a year earlier.
Though reporting weaker refining margins due to lower diesel demand and a high level of refinery maintenance, the results were offset by higher oil prices, strong retail margins, and a lower-than-expected tax rate.
bp’s oil trading contribution was subdued following a strong performance in the previous quarter.
Auchincloss noted that global demand for gasoline and diesel remained weak but anticipated that inventories would decrease during the summer driving season, supporting refining margins.
bp will maintain its capital expenditure at $16 billion per year through 2024 and 2025.
The company also recorded a $1.3 billion impairment charge in the quarter, primarily related to capacity reduction at its Gelsenkirchen refinery in Germany.
bp’s net debt decreased by $1.4 billion in the quarter to $22.6 billion, and its debt-to-equity ratio fell to 21.6% from 22% at the end of March.
