BP second-quarter profit jumps as energy prices surge

The company’s underlying cost replacement profit - its preferred measure of profit - rose to $8.45bn in the second quarter from $6.25m in the first and $2.8bn in the second quarter a year earlier. This was well ahead of analysts’ expectations of $6.8bn.

This was driven by strong realised refining margins, a continuing "exceptional" oil trading performance and higher liquids realisations, BP said.

This was partly offset by an average gas marketing and trading contribution, down from the exceptional result in the first quarter, including an impact from the ongoing outage at Freeport LNG.

BP lifted its dividend by 10% to just over 6 cents per share from 5.46 in the first quarter. It also announced a further $3.5bn share buyback over the next three months.

"On average, based on BP’s current forecasts, at around $60 per barrel Brent and subject to the board's discretion each quarter, BP continues to expect to be able to deliver share buybacks of around $4.0bn per annum and have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025," it said.

At 0815 BST, the shares were up 3.6% at 406.65p.

Richard Hunter, head of markets at Interactive Investor, said: "Of course, the oil price has been a major factor in enabling this largesse. Despite a recent dip relating to demand concerns in the event of a global recession, the price of oil remains up by 27% in the year to date, and the current level of Brent at around $100 per barrel compares to what BP describes as its 'cash balance point' of $40.

"The demand/supply imbalance also continues in energy prices generally following the Russian invasion of Ukraine, while the longer term requirement for fossil fuels remains intact, even though the oil majors are investing substantially to drive the use of renewable energy forward. What is likely to be a multi-decade transition is still in its relatively early stages, with the viability and reliability of many renewables as yet unproven.

"In the meantime, a near 200% increase in profit quarter over quarter is further indication of the success of BP’s previous efforts to streamline its business during the tough times of the pandemic and, despite its sheer scale and size, there remains plenty of room for financial manoeuvre with the oil price at current levels."