BP Smashes 14‑Year Record in Q2, Cashing In on Big Oil Gains
BP’s Q2 earnings blew past the 14‑year high, hitting an eye‑watering $8.45 billion (S$11 billion). Strong refining margins and a hot trading market let the company raise both its dividend and its spend on fresh oil and gas exploration.
Top‑Line Praise from the CEO
- “The company is running smooth and keeping the momentum going.” – Bernard Looney, CEO.
- Brought the company to the spotlight in 2020 when he pledged a quick shift from fossil fuels to clean energy.
Shares jumped 3.6% as London markets opened.
New Motive: Pump Up Hydrocarbon Investments
Looney said the company will add another $500 million to oil and gas projects because the world is running low on supplies.
“We’re putting more cash into hydrocarbons to keep the lights on for the short term,” he explained, promising roughly $500 million for new projects.
Capital Expenditure, Dividend Boost, and Share‑Buy‑backs
BP will stay within a $14‑$15 billion cap for the year’s total capital spend.
The dividend was bumped up 10% to 6.006¢ per share – far above the earlier plan of a 4% rise.
During the pandemic last July, the dividend had stopped at 5.25¢ for the first time in ten years.
A fresh $3.5 billion share‑buyback plan for the quarter was announced after the first half’s buy‑back hit $4.1 billion.
Cash Strategy
BP is sticking to its goal of putting 60% of surplus cash back into buying shares.
It expects oil and gas prices and refining margins to stay “elevated” in Q3.
Debt Decline
Thanks to the profit surge, BP cut its debt from $27.5 billion to $22.8 billion at the end of March.
Big oil Bonanza
BP Strikes Gold in Q2: $59 Billion Profit Surge
BP’s second‑quarter numbers have just come in, and the company has smashed through the $59 billion mark, making it the high‑scorer among Western oil and gas giants. Exxon Mobil and Shell also posted record earnings just last week, but BP’s haul is nothing to sneeze at.
Replacing Cost Wins the Day
- Underlying Replacement Cost Profit: $8.45 billion
- That’s the tallest figure the company has shipped out since 2008.
- Analysts were hovering at $6.8 billion, so BP beat the forecast by a comfy margin.
To give you a sense of the climb:
- Q1 profit: $6.25 billion
- Same period last year: $2.8 billion
What Fuelled the Boom?
BP’s executives point the finger at three main drivers:
- Hard‑hitting refining margins – the refinery business was all that’s H‑A‑T.
- “Exceptional” oil trading – BP’s traders turned the market into a gold mine.
- Higher fuel prices – the jet fuel and gasoline prices went up, and buyers were happy to pay.
Gas trading took a dip, but that was a minor blip in the overall picture.
Freeport’s Outage – A Heavy Punch
A hiccup at the Freeport LNG plant on the Gulf Coast tried to bite into the profits. The plant delivers 4 million tonnes of LNG a year to BP out of a 18 million‑tonne portfolio. The outage forced the company to sit on the sidelines and then get creative:
- Redirection of cargoes to keep the customer lines up.
- Extra costs on top of the usual – a price tag that grew the bottom line.
CFU Updates
The CFO, Murray Auchincloss, puts a spotlight on the extra spending. The company allocated a budget specifically to cover the “above‑average” costs sparked by the Freeport glitch, keeping the overall financial picture relatively stable.
Bottom Line
Despite a tough blow from LNG supply disruptions, BP sprinted through Q2 with record‑setting profits driven by refinery strength, stellar trading, and a fuel price uptick. The company’s strategic response to the Freeport outage is proving to be a clever move that feels like a test‑drive to help them keep the momentum rolling into Q3.
