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The BP logo is seen at a petrol station in Pienkow, Poland. File photo: REUTERS/KACPER PEMPEL
The BP logo is seen at a petrol station in Pienkow, Poland. File photo: REUTERS/KACPER PEMPEL

London — BP’s second-quarter profit soared to $8.45bn, its highest in 14 years, as strong refining margins and trading prompted it to boost its dividend and spending on new oil and gas production.

The strong performance caps a blowout quarter for the top Western oil and gas companies on the back of soaring energy prices that have increased pressure on governments to impose new taxes on the sector to help consumers.

“The company is running well and it continues to strengthen. We have real strategic momentum,” CEO Bernard Looney said.

BP shares were up 3.6% at the opening of trading in London.

Looney, who took office in 2020 with a vow to rapidly shift BP away from fossil fuels to renewables, said that the company will increase its spending on new oil and gas by $500m in response to the global supply crunch.

“We will direct more investment towards hydrocarbons to help with energy security in the near term,” Looney said. “We’ll probably direct about a half a billion dollars for hydrocarbons.”

BP plans to maintain its overall capital expenditure this year in a range of $14bn to $15bn.

BP increased its dividend by 10% to 6.006c per share, more than its previous guidance of a 4% annual increase. It halved its dividend to 5.25c in July 2020 for the first time in a decade in the wake of the pandemic.

The company also increased its share repurchases plan for the current quarter to $3.5bn after it bought $4.1bn in the first half of the year.

The company said it expected crude oil and gas prices as well as refining margins to remain “elevated” in the third quarter and said it would stick to its target of using 60% of its surplus cash on share buybacks.

The surge in revenue also allowed BP to sharply reduce its debt to $22.8bn from $27.5bn at the end of March.

‘Exceptional’ oil trading 

BP brings the second quarter profit tally for the top Western oil and gas companies to $59bn after rivals including ExxonMobil and Shell reported record earnings last week.

Its underlying replacement cost profit, its definition of net earnings, reached $8.45bn in the second quarter, the highest since 2008 and far exceeding analysts' expectations of $6.8bn. That was up from $6.25bn in the first quarter and $2.8bn a year earlier.

The strong performance was driven by strong refining margins, “exceptional” oil trading performance, as well as higher fuel prices, though gas trading was weaker, BP said.

An outage at a US Gulf Coast liquefied natural gas (LNG) plant, also weighed on profits. The Freeport LNG plant supplies BP with 4-million tonnes a year of LNG, out of a total portfolio of 18-million tonnes.

The company has been able to redirect cargoes to customers to cover for the lost supply but at an elevated cost that weighed on profits, CFO Murray Auchincloss said. The company has allocated money to cover for the extra costs of LNG supply as a result of the Freeport outage, he said.



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