(WO) — bp reported stronger second-quarter earnings as higher oil and gas prices and improved refining margins boosted cash flow, while new CEO Meg O’Neill outlined plans to accelerate the company’s portfolio restructuring and strengthen its upstream business.
bp CEO Meg O’Neill. Image: bp.
Underlying replacement cost profit reached $5.7 billion in the second quarter, up from $3.2 billion in the first quarter, while operating cash flow increased to $10.9 billion despite a $1.0 billion working capital build.
The company also reduced the combined total of net debt, hybrid bonds, leases and U.S. Gulf settlement liabilities by $6.9 billion during the quarter as it continued efforts to strengthen its balance sheet.
“This is my first full quarter at bp, and it has been marked by one of the most disrupted periods in the global energy market,” O’Neill said. “We delivered a strong quarter… but there are areas where our performance fell short.”
During the quarter, bp advanced a series of portfolio actions, including the sale of its Gelsenkirchen refinery, an agreement to sell its Austrian retail business, the launch of a process to market its UK North Sea business and plans to divest Archaea Energy, its U.S. biogas business. The company also reached an agreement to bring partners into the Kirkuk redevelopment project in Iraq.
O’Neill said bp’s priorities include strengthening the balance sheet, simplifying the portfolio, tightening capital discipline, improving operational performance and embedding greater accountability across the organization.
Operationally, upstream production averaged 2.2 MMboed, down slightly from 2.3 MMboed in the previous quarter, while upstream plant reliability declined to 92.4% from 95.7%. Refining throughput also fell quarter over quarter, reflecting planned maintenance and disruptions associated with the conflict in the Middle East.
In the upstream business, underlying replacement cost profit before interest and tax rose to $3.6 billion, supported by higher oil and gas realizations, improved production mix and stronger equity-accounted income. The gains were partially offset by exploration write-offs related primarily to the sale of the Bay du Nord project in Canada and lower Gulf of America/Mexico production during seasonal maintenance.
O’Neill said bp will continue to prioritize higher-return investments while simplifying the portfolio and improving operational execution as the company seeks to deliver stronger long-term shareholder returns.
About The Author
