BP (NYSE:BP) reported second-quarter underlying replacement cost profit of $5.7 billion, up 78% from the first quarter, as stronger commodity prices, improved refining margins and higher trading performance lifted results. The company also raised its dividend per share by 4% and said financial obligations declined by about $7 billion during the quarter.
Chief Executive Officer Meg O’Neill, who said she had reached her 100th day in the role, framed the results alongside a broader effort to simplify the company, strengthen its balance sheet and improve operating performance. She said bp’s recent performance had not consistently met its own expectations or those of shareholders.
Safety performance remains a central concern
O’Neill said safety performance in the first half fell short of bp’s standards. A Castrol employee died following an incident at the Gemlik blending plant in Türkiye in April, and an investigation is underway. The company also recorded more process-safety events in the first half than in the comparable 2025 period, including an increase in Tier 1 events.
“Nothing is more important than the safety of our people,” O’Neill said, adding that bp’s goal remains eliminating fatalities, life-changing injuries and Tier 1 process-safety events across its operations.
Operationally, upstream production averaged 2.2 million barrels of oil equivalent per day in the second quarter, down 6% from the first quarter. The decline reflected planned seasonal maintenance, primarily in the U.S. Gulf of Mexico, Middle East supply disruptions, and operational issues in the North Sea and Indonesia. Stronger performance at bpx partly offset those factors.
Refining throughput was about 1.5 million barrels per day, down 4% sequentially due mainly to planned turnaround activity and lower refining availability.
Profit growth driven by prices, refining and trading
Chief Financial Officer Kate Thomson said group underlying replacement cost profit before interest and tax increased to $10.3 billion from $6.3 billion in the first quarter. Higher tax expense associated with stronger earnings contributed to the group’s $5.7 billion underlying replacement cost profit.
The gas and low-carbon energy segment’s underlying operating profit increased by about $800 million from the first quarter, supported by higher realizations, including price-lag effects. Oil production and operations profit rose by roughly $1.6 billion, reflecting higher liquids realizations, production mix benefits and higher income from equity-accounted entities. Those gains were partly offset by higher exploration write-offs, mainly related to bp’s exit from Bay du Nord, and lower production from Gulf of Mexico maintenance.
Customers and products underlying operating profit increased by approximately $1.8 billion. Thomson cited seasonally higher volumes, higher fuel margins, stronger Castrol results and significantly stronger realized refining margins. Higher planned maintenance activity and the impact of an April third-party event at the Whiting refinery partially offset those gains.
BP recorded net adverse adjusting items of about $1.1 billion, including roughly $800 million of post-tax impairments, mainly related to transition businesses in the gas and low-carbon energy segment. After inventory holding losses of about $700 million, IFRS profit for the quarter was $3.9 billion.
Debt reduction and updated financial outlook
Reported operating cash flow was $10.9 billion after a $1 billion working-capital build and $1 billion in interest payments. Underlying cash generation was $12.9 billion, while total cash sources, including divestment proceeds, reached $13.5 billion.
During the quarter, bp spent $3.1 billion on capital expenditures, paid $1.3 billion in dividends and used $3.1 billion related to perpetual hybrid bonds, including redemption of $2.9 billion. Net debt fell by about $3.1 billion to $22.3 billion at quarter-end.
Thomson said bp expects $2 billion to $3 billion of working capital to unwind during the remainder of 2026, subject to the macroeconomic environment, commodity prices and developments in the Middle East. The company expects financial obligations to decline to approximately $39 billion to $41 billion by year-end under its stated price assumptions, which it said would allow it to meet its $14 billion to $18 billion net-debt target ahead of plan.
- Full-year capital expenditures are now expected to total $13.5 billion to $14 billion.
- Full-year divestment proceeds are expected to total $8 billion to $9 billion.
- The full-year underlying effective tax rate is projected at about 35% to 40%.
- BP plans to repay $1 billion of perpetual hybrid securities in the third quarter.
Portfolio review targets assets that do not meet return goals
O’Neill outlined five priorities: strengthening the balance sheet, simplifying and focusing the portfolio, investing with capital discipline, improving asset reliability and cost efficiency, and addressing the company’s culture and decision-making processes.
As part of the portfolio review, bp plans to market its U.S. renewable natural gas business, Archaea Energy, and has begun a process to market its North Sea business. The company also cited its exit from Bay du Nord as an example of capital discipline. BP recently completed the sale of its Gelsenkirchen refinery in Germany, effective July 31, and has announced the sale of its Austrian mobility and convenience business.
Thomson said bp has achieved $3.5 billion in structural cost reductions since the start of its program, but acknowledged that savings have not yet been sufficiently reflected in earnings and cash flow because of inflation, acquired costs and the complexity of the cost base. Management identified additional opportunities in supply-chain optimization, organizational simplification and technology.
O’Neill said the company intends to retain focus on its integrated upstream, downstream and trading model, which she described as a source of resilience and flexibility through commodity cycles. She said bp’s trading business has delivered an average uplift of around four percentage points to return on capital employed over the past six years.
“Every part of bp has to earn its place,” O’Neill said, emphasizing that future growth must be supported by consistent returns, cash flow generation, safer operations and disciplined project delivery.
About BP (NYSE:BP)
BP plc is a British multinational integrated energy company headquartered in London. Originating in the early 20th century as the Anglo-Persian Oil Company, BP has grown into one of the world’s largest oil and gas companies, operating across exploration and production, refining and marketing, trading, and a range of low-carbon businesses.
The company’s core activities include upstream exploration and production of crude oil and natural gas, midstream and trading operations, and downstream refining, marketing and supply of fuels, lubricants and petrochemicals.
