BP Reports 70% Drop in Second-Quarter Profits Amid Weaker Fossil Fuel Prices
London, UK – Oil major BP has reported a nearly 70% year-on-year drop in second-quarter profits due to weaker fossil fuel prices, following a trend seen across the energy industry. The British energy giant recorded second-quarter underlying replacement cost profit, used as a proxy for net profit, of $2.6 billion. This figure fell short of analysts’ expectations, as estimates collated by Refinitiv had predicted second-quarter profit at $3.5 billion.
Compared to the first three months of the year, BP’s second-quarter profits dropped from $4.96 billion to $2.6 billion. Similarly, profits in the second quarter of 2022 were at $8.5 billion. The decline in earnings is primarily attributed to significantly lower realized refining margins, increased turnaround and maintenance activity, and a weak oil trading result, BP stated.
Despite the challenging financial results, BP announced a 10% increase in its dividend for the second quarter, amounting to 7.27 cents per ordinary share. Additionally, the company revealed plans to repurchase $1.5 billion of its shares over the next three months. BP CEO Bernard Looney expressed satisfaction with the company’s performance, stating that the strong quarter allowed the board to proceed with the dividend increase and share buyback program.
BP’s disappointing financials mirrored the performance of other oil majors. British rival Shell and French oil major TotalEnergies reported significant drops in second-quarter profit, while U.S.-based Exxon Mobil saw a 56% year-on-year decline in its second-quarter profit. These oil companies haven’t been able to replicate the bumper profits seen during the same period of last year, largely due to lower commodity prices.
In 2022, the West’s five largest oil companies collectively amassed profits nearing $200 billion, as oil and gas prices surged following Russia’s invasion of Ukraine. BP itself reported a record profit of $27.7 billion for the full year of 2022. However, the global economic uncertainties in the first half of this year have put pressure on oil and gas prices, undermining the financial performance of these companies.
Despite the challenging market conditions, BP’s shares have shown resilience, with a year-to-date increase of approximately 1.7%. The company remains hopeful for future growth and stability in the energy sector as it continues to balance performance and transformation.