BP p.l.c. Sponsored ADR (BP.US) exceeded earnings expectations in Q2. The new chairman will lead reforms and launch a comprehensive review of the business.

After a period of high volatility in global oil and gas prices, BP p.l.c. Sponsored ADR (BP.US) announced better-than-expected earnings for the second quarter on Tuesday. The energy giant, which is currently in a period of adjustment, reported core replacement cost profit of $2.35 billion for the three months ending in June, well above analysts' consensus expectation of $1.81 billion compiled by the London Stock Exchange Group (LSEG). In comparison, BP p.l.c. Sponsored ADR had a net profit of $2.76 billion in the second quarter of last year and $1.38 billion in the first quarter of 2025. BP p.l.c. Sponsored ADR also announced that the dividend for the second quarter will be raised from $8 per share to $8.32 per share, while maintaining the size of its $750 million share buyback program. Earnings exceeding expectations, marginal improvement in financial indicators or rebuilding confidence Previously, the company had lagged behind its industry peers in long-term performance, and at the time of the earnings release, BP p.l.c. Sponsored ADR is attempting to rebuild investor confidence. CEO Murray Auchincloss said in an interview on Tuesday, "Upstream performance was extremely strong, operational efficiency hit record levels, and five major new projects have been brought online." The company announced on Monday that it had discovered its largest oil and gas field in 25 years off the coast of Brazil, which could provide significant momentum for its continued expansion in the oil and gas business. CEO Auchincloss stated in the financial report, "We have made significant breakthroughs in exploration, with 10 commercial exploration discoveries made this year. Just yesterday, we announced the major success of the 'Bumerangue' oil field in Brazil, which is particularly exciting." Recently, BP p.l.c. Sponsored ADR has been caught up in acquisition rumors, prompting domestic competitor Shell (SHEL.US) to publicly state at the end of June that they are "not interested" in acquiring BP. When asked if they had been in contact with potential buyers amidst the ongoing acquisition rumors, Auchincloss said that BP p.l.c. Sponsored ADR is focused on business growth, "This is the key to driving share price higher for shareholders." So far, BP p.l.c. Sponsored ADR's share price has risen by approximately 3.3% year-to-date. BP p.l.c. Sponsored ADR is the last of the five international oil giants to release its earnings report. Previously, Shell, Exxon Mobil Corporation (XOM.US), and Chevron Corporation (CVX.US) all exceeded expectations, while TotalEnergies (TTE.US) fell short. On Tuesday, Saudi Aramco announced a net profit decline for the tenth consecutive quarter, as the impact of falling oil prices outweighed the boost from production growth. The international oil market has become more turbulent this quarter, with multiple factors such as the trade war initiated by U.S. President Trump, OPEC+ policy adjustments, and Israel's attack on Iran causing Brent crude oil prices to fall by about 9% during the quarter, currently hovering around $70 per barrel, which is the benchmark level for BP p.l.c. Sponsored ADR's financial targets. Under pressure for transformation: New chairman to initiate comprehensive business review In addition, BP p.l.c. Sponsored ADR announced that the new chairman will conduct a comprehensive review of the company's overall business portfolio and plans to further reduce costs on the existing targets. BP p.l.c. Sponsored ADR has appointed former CEO of CRH, a construction materials company, Albert Manifold as the new chairman, whose term will begin on September 1st, with current Chairman Helge Lund stepping down on October 1st. Elliott has publicly stated that BP p.l.c. Sponsored ADR's existing transformation plan is not sufficient and has called for urgent improvement in the company's cost structure and capital efficiency. Auchincloss stated in the financial report, "The new chairman, Albert Manifold, will conduct a thorough review of our business portfolio to ensure that we maximize shareholder value through efficient capital allocation. BP p.l.c. Sponsored ADR is capable of and will create greater returns for investors." The oil and gas giant is working hard to reverse years of performance decline and is facing increasing pressure for transformation, including from the activist investment firm Elliott Management. The firm purchased BP p.l.c. Sponsored ADR shares earlier this year with the aim of forcing the company to undergo comprehensive reform and has been calling for deeper cost cuts. BP p.l.c. Sponsored ADR stated that it has already reduced $900 million in structural costs in the first half of the year, and expects to recoup approximately $3 billion through completed or announced asset divestment projects. In February of this year, BP p.l.c. Sponsored ADR announced a transformation plan aimed at reducing structural costs by $4-5 billion by the end of 2027, with $800 million of the target already achieved last year. The company also pledged to cut spending and divest $20 billion in assets by the end of 2027, and has already initiated further cost reviews. As of the end of the second quarter, BP p.l.c. Sponsored ADR's net debt had decreased to $26.04 billion, down from nearly $27 billion in the first quarter of this year.