BP reveals plans for group-wide costs and business review as profits fall
BP has been under pressure from shareholders to boost profits and cut costs, with activist investor Elliott Management recently taking a 5% stake in the group.
The group saw half-year profits tumble by nearly a third as weaker oil prices weighed on earnings, although it posted a better-than-expected performance for the second quarter.
It reported a 32% fall in underlying replacement cost profits – the group's preferred profit measure – to 3.73 billion US dollars (£2.81 billion) for the six months to June 30.
Underlying profits fell 15% year-on-year to 2.35 billion dollars (£1.77 billion) between April and June, although this was a significant improvement from 1.38 billion dollars (£1.04 billion) in the first quarter and better than most analysts had forecast.
BP's aims to ramp up its overhaul process follows talks with incoming chairman Albert Manifold who starts next month, Mr Auchincloss said.
Mr Auchincloss said: 'He and I have been in discussions and have agreed that we will conduct a thorough review of our portfolio of businesses to ensure we are maximising shareholder value moving forward.
'We are also initiating a further cost review and, whilst we will not compromise on safety, we are doing this with a view to being best in class in our industry.'
'BP can and will do better for its investors,' he added.
In another move to appease shareholders, the FTSE 100 firm also said it would buy back another 750 million dollars (£565 million) in shares and hike the quarterly dividend payout by 4%.
The group's results showed it has already stripped out 900 million dollars (£677 million) in costs over the first half, or 1.7 billion dollars (£1.3 billion) since 2023.
It was not immediately available to comment further on the scope of the new cost review.
Mr Auchincloss said: 'We are two quarters into a 12-quarter plan and are laser-focused on delivery of our four key targets – and while we should be encouraged by our early progress, we know there's much more to do.'
Mr Manifold was recently named to replace incumbent chairman Helge Lund after a difficult past few years in the role.
Formerly chief executive of building materials firm CRH for 10 years, Mr Manifold joins the oil giant as chairman-elect on September 1 before taking over as chairman on October 1.
In a major rejection, Mr Lund received a near 25% vote against his re-election at the firm's annual general meeting in April.
The vote was largely seen as a protest because Mr Lund had already announced his departure at the time of the AGM.
BP is already working on a plan announced in February to cut costs by up to five billion dollars (£3.8 billion) by the end of 2027.
It has also said it will offload 20 billion dollars (£15.1 billion) of assets by the end of 2027.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The National
3 hours ago
- The National
Trust selling Skye clan estate and historic castle under probe
The Clan Donald Lands Trust (CDLT) has overseen Clan Donald's lands on the Isle of Skye since the 1970s, which includes the famous Armadale Castle and visitor centre. The National reported in March how the trust had made the "difficult" decision to sell the entire 20,000-acre estate due to financial challenges. The decision was met with criticism from locals and families around the world with ties to the clan, which is one of the oldest and largest in Scotland. READ MORE: Ross Greer says bullying within Scottish Greens left him hospitalised twice Now, the Sunday Mail reports that the Scottish Charity Regulator (OSCR) has opened an investigation into the CDLT's governance and finances, following complains. A spokesman told the Sunday Mail: "OSCR has received a number of concerns from the public about the CDLT. "We are now engaging with the charity trustees to establish the facts of this case, and we have sought extensive information and explanation from them. "We are specifically looking to understand the current financial position of the charity and the circumstances that led to the decision to put significant charitable assets up for sale." The watchdog added that it would decide if further action is necessary once it has established the facts. The CDLT was founded in 1971 to manage the clan's assets and to "promote and preserve the history and heritage of Clan Donald". The estate, which covers most of the island's southern Sleat peninsula, is used by tenant crofters and farmers. READ MORE: The tax haven firms given cash by the Scottish Government revealed The historic home of the MacDonalds of Sleat, Armadale Castle, is also located on the estate and is a popular tourist destination which includes a museum, cafe and walled garden. The CDLT has four trustees – its chair, London businessman Ranald Macdonald, owner of the Boisdale restaurants, Yorkshire-based landowner Sir Ian MacDonald of Sleat, US-based retired Major Bruce MacDonald, and Diane Carey-Schmitz. When the decision to sell the estate was announced earlier this year, many locals were reportedly taken by surprise. The National reported how Community Land Scotland claimed that residents were "understandably frustrated and disappointed" regarding the trust's decision and called for the sale to be delayed.
Belfast Telegraph
4 hours ago
- Belfast Telegraph
Multi-millionaire pharma tycoon Gareth Sheridan (35) launches bid for Irish presidency
Businessman, who founded US-based company Nutriband, says younger people need to be represented in upcoming electionSheridan, who is married to a US model and former Mormon, says he wants their adopted daughter 'to inherit an Ireland we can all be proud of' Dublin-born entrepreneur says he has 'significant number of councillors and councils behind me' Multi-millionaire businessman Gareth Sheridan (35) has announced he will run for the Irish presidency in this year's election. The Dublin-born entrepreneur exclusively confirmed his intention to the Sunday Independent, and said his candidacy will be partly based on a housing platform.
Telegraph
9 hours ago
- Telegraph
BP defies Ed Miliband to reopen North Sea oil field
BP is to reopen a key North Sea field and pump new oil and gas for at least a decade, despite Ed Miliband's attempts to cut back the offshore industry. The energy giant is reviving the Murlach field, which was declared uneconomic and taken out of use in 2004, has now become viable partly due to new technologies. BP won agreement to reopen Murlach, 120 miles east of Aberdeen, under the previous government and has since been installing equipment, with production potentially restarting next month. The milestone comes despite efforts by the Energy Secretary to bring an end to new fossil fuel production in the North Sea. Mr Miliband and his predecessors have almost doubled the taxation rate on oil and gas profits and banned the issuing of licences for new exploration and production. BP said the Murlach field contained 20 million barrels of recoverable oil and 600 million cubic metres of gas – enough to keep it in production for 11 years. 'Murlach is expected to produce around 20,000 barrels of oil and 17 million cubic feet of gas per day,' it said. It means BP can partially reverse the decline in North Sea output, which has seen oil production fall from 96,000 barrels per day in 2020 to 70,000 last year. Gas production has fallen from 221m square feet a day to 197m. North Sea 'on death's door' The move has infuriated environmental campaigners, who say BP and other energy companies should leave oil and gas in the ground. Dr Doug Parr, Greenpeace UK's policy director, said: 'The North Sea is on death's door. Reserves are drying up and what's left and untapped is barely enough to keep it on life support. The only sensible thing to do is to pivot [from] the North Sea to something we have an abundance of, and something that will never run out – wind.' BP's success at Murlach follows a similar story at Shell, which restarted production from its Penguins oil field north of Shetland earlier this year – despite Greenpeace protesters boarding its new production vessel. The field went into production in 2003 but had to be shut down in 2021 when the Brent Charlie production platform was decommissioned. Production restarted this year with Shell expecting 45,000 barrels a day once in full flow. Mike Tholen, of trade body Offshore Energies UK, said: 'Redevelopment of decommissioned fields is now a feature of the North Sea as new and innovative technologies make such opportunities possible. 'Looking ahead, the independent Climate Change Committee says the UK will need 13 billion to 15 billion barrels by 2050 come what may. We could produce half of this at home. But at the moment only four billion barrels are on track to be realised, which means imports will have to rise and the UK economy will miss out as jobs and capital move overseas.' Recent research from the North Sea Transition Authority, the Government's oil and gas regulator, found that there were over three billion barrels of oil and gas in fields already in production – with another six billion in known potential developments. Another 3.5 billion barrels of potential resources have been tentatively identified as exploration targets. Abandoned oil and gas fields could offer some of the richest opportunities. Robin Allan, chairman of BRINDEX, which represents the UK's smaller independent oil and gas producers, said: 'There are significant oil and gas reserves and resources left in the UK North Sea but output is declining largely because of government policy, not geology. 'We need a policy which incentivises oil and gas exploration and production. The windfall tax should be removed immediately and the ban on exploration removed.' A spokesman for Mr Miliband said: 'We are committed to delivering the manifesto commitment to not issue new licences to explore new fields because they will not take a penny off bills, cannot make us energy secure, and will only accelerate the worsening climate crisis. 'We are delivering a fair and orderly transition in the North Sea, with the biggest ever investment in offshore wind and two first of a kind carbon capture and storage clusters.'
