BP more than doubled its second quarter profit, as chief executive Meg O’Neill set out the company’s asset disposal programme and accused the company of failing to reach its potential.
Its second-quarter underlying replacement cost profit came in at $5.73 billion, up from $2.4bn a year ago and above expectations in a company-provided poll of analysts.
It confirmed the plan to market its North Sea business and said it had reached an agreement to sell its Austrian retail business, agreed terms to bring partners into Kirkuk and completed the sale of Gelsenkirchen refinery. It is marketing its US biogas business Archaea Energy.
Net debt, hybrid bonds and securities, leases and Gulf of America settlement liabilities have fallen by $6.9 billion. The second quarter dividend is of 8.66 cents, a 4% increase.
Ms O’Neill said: “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. Through that, bp’s team has stepped up, working tirelessly to keep energy flowing for our customers.
“Financially, we delivered a strong quarter, with an underlying replacement cost profit of $5.7 billion ($2.5 billion higher than last quarter) and an operating cash flow of $10.9 billion, after a working capital build of $1.0 billion.
“We made good progress strengthening bp’s balance sheet. We also took steps to simplify and strengthen bp. In recent weeks, we sold our Gelsenkirchen refinery, agreed to sell our retail business in Austria and announced our intention to sell our North Sea business in the UK. Today, we are announcing our intention to sell Archaea, our biogas business in the US.
“But there are areas where our performance fell short. Operationally, our plants didn’t run as well as they did last quarter – upstream plant reliability was 92.4%, compared to 95.7%, and production was down and our refineries processed less crude. This was due, in part, to planned maintenance and the conflict in the Middle East, but this is a reminder that we have more to do to deliver consistent operational performance.”
Setting out where BP must improve, Ms O’Neill added: “Since I joined bp, I have spent time with bp’s teams on the frontline and met investors, business partners, governments and other key stakeholders. In four months, I’ve seen enough to know this company can be extraordinary – from our high-quality assets to our integrated model, deep capabilities, strong partnerships and exceptional people.
“However, we are not making the most of our potential. Our performance over the past few years has not met our own expectations, let alone those of our shareholders. We have not delivered consistently; we have written off too much value; and our costs and liabilities are not resilient enough in a low price environment.
“My job is to help make bp the best we can be. We need to take a clear look at ourselves: assessing what needs to change, stopping what holds us back and building strength where it matters. We have to get fit to grow. To do so, I am laying out five priorities to deliver a step change in performance and grow shareholder value.”
Shell asset sale
Shell is selling its European onshore wind and solar business to France’s TotalEnergies as it continues its retreat from renewable energy.
The FTSE 100 oil and gas group did not disclose a value for the deal, announced yesterday, which it said covered about 500 megawatts (MW) of capacity in operation and development across the UK, Italy, the Netherlands and Spain.
The portfolio also includes some of its battery storage assets and a 3.5 gigawatt (GW) pipeline of early-stage projects for future development.
UK assets being sold include the 19MW Iddenshall solar park in Cheshire. A spokesman said that Shell was retaining its interest in the giant Cottam 600MW solar and battery storage project, which spans the Lincolnshire-Nottinghamshire border. It has a share charge over the project, according to planning filings.
Wael Sawan, who has been Shell chief executive since the start of 2023, has abandoned many of the renewable and power sector investments made under his predecessor Ben van Beurden. Early moves included selling its UK household energy supply business to Octopus.
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