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(Bloomberg) — BP Plc maintained the pace of its share buybacks and increased its dividend as strong second-quarter earnings from pumping crude offset weakness in other parts of the business.
In an effort to underpin the future of its profitable upstream division, BP also gave the go-ahead to the Kaskida oil project in the US Gulf of Mexico, potentially the first of a series of new developments in the region. The company, which has embraced the transition to clean energy more vigorously than most of its peers, expects fossil fuel production to grow this year.
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The British oil major reiterated that it will purchase $3.5 billion of shares through to the end of this year, while boosting its dividend by 10% to 8 cents a share, as expected. Shareholder returns were underpinned by falling net debt and strong operating cash flow, which was almost 30% higher than a year earlier at $8.1 billion.
Shares of the company rose 2.1% to 462.65 pence as of 8:01 a.m. in London.
European oil companies are making more money from oil production as OPEC+ cuts support prices, but less from refining amid greater competition from imports. Last week, France’s TotalEnergies SE reported a drop in profit that exceeded analysts’ expectations on the back of weaker fuel-processing margins. That looks like it may continue in the third quarter, with margins remaining “sensitive” to shifts in the cost of supply, according to BP.
BP’s adjusted net income for the second quarter was $2.76 billion, beating the average analyst estimate of $2.69 billion.
“We are driving focus across the business and reducing costs, all while building momentum,” Chief Executive Officer Murray Auchincloss said in a statement on Tuesday. “This all supports growing returns for shareholders, as we have announced today.”
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Kaskida, which should start in 2029, will produce up to 80,000 barrels a day from very high-pressure fields deep below the seabed in the Paleogene geological zone, one of several potential developments in the region.
Under Auchincloss, who was formally appointed to the position at the start of the year, BP has said its net-zero destination remains unchanged but the pathway will be different than under his predecessor, Bernard Looney.
Auchincloss’s action suggest he’s shifting back toward oil and gas, with less emphasis on the rapid decarbonization of the business. That would mirror the course taken by Wael Sawan, the CEO at closest rival Shell Plc. BP said it will provide an update on its medium-term strategy in February.
—With assistance from Will Kennedy.
(Updates with share price in fourth paragraph.)
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