BP Shares (LON:BP) Rally On Profit Beat and Major Oil Discovery

BP's share price (LON:BP) is gaining traction, adding 2.61% today off the back of stronger-than-expected second-quarter profits and a major oil and gas discovery off the coast of Brazil. The company's Q2 results have boosted confidence, with the company's commitment to shareholder returns and strategic focus on hydrocarbons aiding BP bulls.

BP reported an underlying replacement cost profit of $2.35 billion for the three months ending June 2025, significantly exceeding analyst expectations of $1.81 billion.

This positive surprise reflects BP's ability to navigate a volatile energy market and capitalize on favorable pricing conditions. The company's net profit for the quarter reached $2.76 billion, a substantial increase from $1.38 billion in the first quarter of 2025, though lower than the $2.76 billion recorded in Q2 2024.

The positive results have enabled BP to increase its quarterly dividend to 8.32 cents per share, up from 8 cents, and maintain its share buyback program at $750 million for the second quarter. This commitment to returning capital to shareholders underscores BP's confidence in its financial position and future prospects.

Adding to the positive sentiment, BP recently announced its largest oil and gas discovery in 25 years at the Bumerangue prospect in Brazil's Santos Basin. The discovery features a 500-meter hydrocarbon column in a high-quality pre-salt carbonate reservoir extending over 300 square kilometers.

This significant find aligns with BP's strategic focus on expanding its upstream portfolio and could establish a substantial production hub in Brazil. Shares rose approximately 1.3% following the announcement of the Brazilian discovery, outperforming the broader European energy index.

The company’s recent strategic pivot back to fossil fuels, increasing its annual investment in oil and gas production to $10 billion, has also resonated with investors seeking a more balanced approach to the energy transition. This decision reflects BP's commitment to strengthening its core hydrocarbon business while continuing to invest in renewable energy projects.

BP's net debt stood at $26.04 billion at the end of the second quarter, a decrease from nearly $27 billion at the end of the first quarter. The company's ongoing cost reduction initiatives, targeting $4-5 billion in savings by the end of 2027, are contributing to improved financial performance and debt management. To date BP has realized $1.7 billion in structural cost savings against its 2023 baseline.

Despite ongoing takeover speculation, which prompted Shell to publicly deny any intention of making an offer, BP remains focused on organic growth. As CEO Auchincloss stated, “That’s what is going to drive the share price up for shareholders.” This focus on internal growth and shareholder value appears to be resonating with the markets.

While BP faces ongoing challenges related to the energy transition and volatile oil prices, the combination of strong financial results, a major resource discovery, and a commitment to shareholder returns are providing a solid foundation for future growth.