BP PLC-Spons Q2 earnings exceed expectations, new chairman takes the lead in reform and will initiate a comprehensive business review

According to the Zhitong Finance APP, after a period of high volatility in global oil and gas prices, BP PLC (BP.US) announced a better-than-expected second-quarter earnings report on Tuesday. The energy giant, which is in a period of adjustment, reported that its core replacement cost profit (used as a substitute for net profit) reached $2.35 billion for the three months ending in June, significantly exceeding the analyst consensus estimate of $1.81 billion compiled by the London Stock Exchange Group (LSEG). In comparison, BP's net profit for the second quarter of last year was $2.76 billion, and it was $1.38 billion in the first quarter of 2025. BP announced that the second-quarter dividend will be raised from $0.08 per share to $0.0832 per share, while maintaining the stock repurchase program at $750 million. Earnings Exceed Expectations, Marginal Improvement in Financial Metrics May Rebuild Confidence Previously, the company had long underperformed compared to industry peers, and at the time of this earnings release, BP is attempting to rebuild investor confidence. CEO Murray O'Kinklos stated in an interview on Tuesday, "The upstream business performed extremely strongly, with operational efficiency reaching record levels, and five large new projects have been launched." The company announced on Monday that it discovered its largest oil and gas field in 25 years offshore Brazil, a finding that could significantly boost its ongoing investment in oil and gas operations. CEO O'Kinklos noted in the earnings report: "We have made significant breakthroughs in exploration, with 10 commercial exploration discoveries this year. Just yesterday, we announced the significant achievement of the 'Boomerang' (Bumerangue) oil field in Brazil, which is particularly exciting." Recently, BP has been embroiled in acquisition rumors, prompting domestic competitor Shell (SHEL.US) to publicly state at the end of June that it had "no intention" of launching a takeover. When asked if he had been in contact with potential acquirers amid ongoing acquisition rumors, O'Kinklos stated that BP is focused on business growth, "which is key to driving shareholder stock prices up." So far this year, BP's stock price has risen approximately 3.3%. BP is the last of the five major international oil giants to release its earnings report. Previously, Shell, ExxonMobil (XOM.US), and Chevron (CVX.US) all reported better-than-expected results, while TotalEnergies (TTE.US) fell short of expectations. On Tuesday, Saudi Aramco reported a decline in net profit for the tenth consecutive quarter, as the impact of falling oil prices outweighed the boost from increased production. This quarter, the international oil market has become increasingly turbulent, affected by multiple factors including the trade war initiated by U.S. President Trump, OPEC+ policy adjustments, and Israel's attacks on Iran. Brent crude oil prices fell about 9% during the quarter and are currently hovering around $70 per barrel, which is the benchmark level BP uses to set its financial targets. Seeking Transformation Under Pressure: New Chairman to Launch Comprehensive Business Review Additionally, BP announced that the new chairman will conduct a comprehensive assessment of the company's overall business portfolio and plans to further cut costs based on existing targets. BP has appointed former CRH CEO Manny Fol as the new chairman, whose term will begin on September 1, while current chairman Helge Lund will step down on October 1 Elliott has publicly stated that BP's current transformation plan is insufficient and has called on Bernard Mannes to urgently improve the company's cost structure and capital allocation efficiency. O'Kinklos pointed out in the earnings report statement: "New Chairman Albert Mannes will conduct a thorough review of our business portfolio to ensure that we can maximize shareholder value through efficient capital allocation in the future. BP has the capability and will create better returns for investors." The oil and gas giant is striving to reverse years of performance decline while facing increasingly urgent transformation pressures, including those driven by activist investment firm Elliott Management. The firm purchased BP shares earlier this year with the aim of forcing the company to undergo comprehensive reforms and has consistently called for deeper cost reductions. BP has stated that it has cut $900 million in structural costs in the first half of this year and expects to recover about $3 billion through completed or announced asset divestiture projects. BP announced its transformation plan in February this year, aiming to reduce structural costs by $4 billion to $5 billion by the end of 2027, with $800 million of the reduction target already achieved last year. The company has also committed to cutting spending and divesting $20 billion in assets by the end of 2027 and has initiated further cost reviews. As of the end of the second quarter, BP's net debt has decreased to $26.04 billion, down from nearly $27 billion in the first quarter of this year