LONDON (REUTERS, AFP) – British oil giant BP returned to profit in the second quarter following a big loss due to its exit from Russia over the war in Ukraine, company results showed on Tuesday (Aug 2).

The company reported a net profit of US$9.3 billion (S$12.8 billion) – a threefold increase from the same three-month period last year – following a US$20.4 billion loss in the first quarter.

BP is the latest energy firm to post bumper earnings as oil and gas prices have soared following Russia’s invasion of Ukraine. This has put pressure on governments to impose new taxes on the sector to help consumers.

BP chief executive officer Bernard Looney, who took office in 2020 with a vow to rapidly shift BP away from fossil fuels to renewables, said that the company will increase its spending on new oil and gas by US$500 million in response to the global supply crunch.

“We will direct more investment towards hydrocarbons to help with energy security in the near term,” Mr Looney said. “We will probably direct about a half a billion dollars for hydrocarbons.”

BP plans to maintain its overall capital expenditure this year in the range of US$14 billion to US$15 billion.

BP increased its dividend by 10 per cent to 6.006 US cents per share, more than its previous guidance of a 4 per cent annual increase. It halved its dividend to 5.25 cents in July 2020 for the first time in a decade in the wake of the pandemic.

The company also increased its share repurchases plan for the current quarter to US$3.5 billion after it bought US$4.1 billion in the first half of the year.

The company said it expected crude oil and gas prices as well as refining margins to remain “elevated” in the third quarter and said it would stick to its target of using 60 per cent of its surplus cash on share buy-backs.

The surge in revenue also allowed BP to sharply reduce its debt to US$22.8 billion from US$27.5 billion at the end of March.

Big oil bonanza

BP brings the second-quarter profit tally for the top Western oil and gas companies to US$59 billion after rivals, including Exxon Mobil and Shell, reported record earnings last week.

Its underlying replacement cost profit, its definition of net earnings, reached US$8.45 billion in the second quarter, the highest since 2008 and far exceeding analysts’ expectations of US$6.8 billion. This was up from US$6.25 billion in the first quarter and US$2.8 billion a year earlier. 

The strong performance was driven by strong refining margins, “exceptional” oil trading performance and higher fuel prices, although gas trading was weaker, BP said.