British Petroleum (bp) reported an underlying replacement cost (RC) profit of $5.73 billion for the second quarter (Q2) of 2026, up 144% year-on-year (YoY), according to a press release by bp.
Replacement cost profit is bp’s own measure of net income. Instead of using the market value of oil and gas inventories,which can swing sharply with price changes, bp calculates profit based on the cost of replacing those inventories.
The management attributed the earnings surge to higher liquid and gas prices, stronger refining margins, and improved customer results, which offset planned maintenance turnarounds and regional market disruptions. The company’s operating cash flow came at $10.9 billion, after a working capital build of $1.0 billion.
Under the management of its new CEO, Meg O’Neill, the company is embarking on a plan to streamline its portfolio, cut debt, and shift capital toward higher‑value projects in regions like the U.S., Brazil, and Africa . Accordingly, it agreed to sell its Austrian retail business, completed the divestment of its Gelsenkirchen refinery in Germany, launched the sale of its UK North Sea business, and announced plans to market Archaea Energy, its US biogas subsidiary. bp reduced its net debt by more than 11% QoQ to $22.25 billion and now targets $8 billion to $9 billion in total divestment proceeds for full-year 2026.
“This is my first full quarter at bp, and it has been marked by one of the most disrupted periods in the global energy market.” said O’Neill. However, he added “We made good progress strengthening the balance sheet. We also took steps to simplify and strengthen bp”.
Globally, bp reported average upstream production of 2.20 million barrels of oil equivalent per day (mmboe/d) in Q2 2026, down from 2.34 mmboe/d in Q1 2026 due to seasonal maintenance turnarounds and Middle East market disruptions. Reported gas and low-carbon energy production reached 765,000 boe/d, while oil production and operations averaged 1.44 mmboe/d.
In July 2026, bp forecast upstream production of between 2.17 million and 2.22 mmboe/d in Q2 2026, down from 2.339 mmboe/d in Q1, according to its latest trading update. The company attributed the lower output to seasonal maintenance, mainly in the Gulf of America, and disruptions in the Middle East.
bp highlighted significant momentum across its Egyptian portfolio during the first half (H1) of 2026. The company confirmed a natural gas discovery at the Nidoco N-2 exploration well in the East Nile Delta concession. Italian Eni operates the well in partnership with bp and the Egyptian General Petroleum Corporation (EGPC).
The company also reaffirmed key first-quarter (Q1) milestones in Egypt, which included signing a memorandum of understanding (MoU) with South Valley Egyptian Petroleum Holding Company (Ganope) for the award of Block 6 in the Red Sea. The company also underscored the significance of its Denise W-1 gas and condensate discovery in the Temsah Concession offshore Egypt, describing it as one of the major milestones announced during the first quarter of 2026. The company has also finalized an investment decision for the El Burg Offshore area via Arcius, a joint venture (JV) between bp (51%) and XRG (49%), to develop the Harmattan gas field.
