bp has reported a stronger second quarter, with underlying replacement cost profit rising to $5.7 billion, up from $3.2 billion in the previous quarter. The energy major said the improvement was driven by higher oil prices, stronger refining margins and a better trading result, even as production was hit by maintenance and disruption in the Middle East.
In its results, bp said net debt fell to $22.3 billion at the end of June, down from $25.3 billion at the end of March, underlining further progress in strengthening the balance sheet. The company also said the quarter included around $1 billion of post-tax impairments, mainly linked to transition businesses in its gas and low carbon energy arm.bp+1
bp’s upstream production was lower in the period, with reported output expected to come in between 2.17 million and 2.22 million barrels of oil equivalent per day, compared with 2.339 million in the first quarter. The company attributed that decline to seasonal maintenance, particularly in the Gulf of America, alongside disruption in the Middle East.
Meg O’Neill, Chief executive officer, said: “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. Through that, bp’s team has stepped up, working tirelessly to keep energy flowing for our customers.
“Financially, we delivered a strong quarter, with an underlying replacement cost profit of $5.7 billion ($2.5 billion higher than last quarter) and an operating cash flow of $10.9 billion, after a working capital build of $1.0 billion.
“We made good progress strengthening bp’s balance sheet. We also took steps to simplify and strengthen bp. In recent weeks, we sold our Gelsenkirchen refinery, agreed to sell our retail business in Austria and announced our intention to sell our North Sea business in the UK. Today, we are announcing our intention to sell Archaea, our biogas business in the US.
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“But there are areas where our performance fell short. Operationally, our plants didn’t run as well as they did last quarter – upstream plant reliability was 92.4%, compared to 95.7%, and production was down and our refineries processed less crude. This was due, in part, to planned maintenance and the conflict in the Middle East, but this is a reminder that we have more to do to deliver consistent operational performance.”
The result comes after a trading update in July, when bp said stronger oil and gas prices, robust trading and higher refining margins were likely to boost earnings, while also warning of impairment charges. Brent crude averaged $103.85 a barrel in the quarter, up sharply from $81.13 in the first quarter, while the bp RIM refining benchmark also strengthened.
