BP Shares Jump After Upbeat Q2 Update Points to Stronger Profits and Falling Debt

Shares in BP (LON: BP.) rose more than 3% on Tuesday morning after the energy major issued a trading statement signalling a marked improvement in second-quarter performance, driven by higher oil prices and stronger refining margins.

The London-listed oil giant said Brent crude averaged $103.85 a barrel in the second quarter, up sharply from $81.13 in the first quarter, boosting realizations across its upstream business.

BP flagged a positive earnings impact of $1.8-2.1 billion from oil production and operations realizations alone, while gas and low carbon energy realizations are expected to add a further $0.5-0.7 billion versus the prior quarter.

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Refining also provided a tailwind, with realized margins expected to improve by $1.2-1.4 billion, even as throughput is set to dip to 1,445-1,475 thousand barrels a day amid heavier turnaround activity and lingering disruption from April’s third-party event at its Whiting refinery.

Investors appeared most encouraged by BP’s balance sheet progress. Net debt is expected to fall to $22-23 billion from $25.3 billion in the first quarter, aided by the $2.9 billion redemption of perpetual hybrid bonds in June and continued deleveraging efforts.

Combined with hybrid reductions and Gulf of America settlement payments, BP said total debt-like obligations should shrink by $6.3-7.3 billion quarter-on-quarter — a signal likely to reassure income-focused shareholders eyeing dividends and buybacks.

Not all the news was positive: reported upstream production is set to fall to 2,170-2,220 thousand barrels of oil equivalent per day, reflecting seasonal maintenance in the Gulf of America and Middle East disruption, while the group also flagged around $1 billion in impairment charges and a higher effective tax rate of 33-37%.

Nonetheless, the combination of stronger pricing, improved margins and faster debt reduction outweighed the production setbacks in investors’ eyes, lifting the stock in early trading ahead of full results due August 4.