BP beats earnings expectations after warning of weaker oil refining

A general view of the BP logo and petrol station forecourt sign on January 22, 2024 in Southend, United Kingdom.

John Keeble | News from Getty Images | Getty Images

British oil giant BP reported stronger-than-expected second-quarter net profit on Tuesday and raised its dividend, despite previously warning of significantly lower refining margins.

The oil and gas giant reported second-quarter profit on a replacement cost basis, which is used as a proxy for net profit, of $2.8 billion, beating analysts' expectations of $2.6 billion, according to a consensus compiled by LSEG.

BP reported net income of $2.7 billion for the first three months of the year and $2.6 billion for the second quarter of 2023.

The energy company announced that it had increased its dividend by 10% and extended its share buyback program into the fourth quarter.

BP said earlier this month that weak refining margins and lower oil trading results would likely reduce the company's second-quarter results by as much as $700 million. The company also forecast write-downs of between $1 billion and $2 billion due to a plan to scale back refining operations at its Gelsenkirchen plant.

Shares of the London-listed company fell by around 2.8% year to date.

For comparison: The shares of the British competitor Sleeve have risen nearly 8 percent so far this year, while shares in U.S. oil giant Exxon Mobil have gained over 16 percent.

BP's second-quarter results come as the company seeks to restore investor confidence in its strategy. The company is under pressure from activist investor Bluebell Capital Partners to increase its investments in oil and gas and scale back its environmental pledges.

Reuters reported in late June that BP CEO Murray Auchincloss had imposed a hiring freeze and suspended renewable energy projects as part of a cost-cutting plan to boost earnings. BP said at the time that Auchincloss had introduced six priorities “to operate as a simpler, more focused and more valuable company.”

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