Despite a dip in profit and revenue for the first half of 2025, BP shares saw an uptick on Tuesday as weaker oil prices and a less than stellar trading performance took their toll.
The London-based oil giant reported total revenue of $95.6bn (£72bn), a decrease of 2.7 per cent from the same period last year, while pre-tax profit slipped to $6bn from $5.9bn, as reported by City AM.
However, second quarter profit came in at $2.4bn, down 14 per cent but still comfortably surpassing the company’s own analyst consensus of $1.8bn.
Shares rallied nearly two per cent as markets opened, reaching 413.84. The first half of the year has been marked by fluctuating oil prices amidst an uncertain geopolitical landscape.
Prices plummeted to four-year lows in April with a barrel of Brent crude oil priced at $59.23 following President Donald Trump’s sweeping tariffs across the US’ trading partners, sparking fears of a global trade war.
However, escalating conflict in the Middle East led to a price surge of more than nine per cent to as much as $81 – the most dramatic increase in over three years – as Israel targeted Iran’s nuclear bases in June. Tax pressures also put a squeeze on BP’s profit for the first half with total taxation reaching $3.1bn, only slightly down from $3.4bn despite a smaller profit.
This was due to a sharp rise in BP’s average tax rates in the first quarter of the year, climbing to 50 per cent from 36 per cent, as a larger share of profits originated from regions with higher tax regimes.
BP divisions take a beat
While BP’s core segments remained in the black, each experienced significant profit declines.
The gas and low carbon energy division of BP saw profits plunge by nearly 20 per cent to $2.5bn, while its oil production and operations suffered a drop of over 16 per cent to $5.2bn.
Profits for the firm’s customers and products line also took a hit, falling more than eight per cent to $2.2bn.
Nevertheless, BP announced a $750m share buyback and increased its dividend per share by four per cent to 8.32 cents.
The company managed to trim operating expenses during the period, noting that structural cost reductions were balanced out by growth and inflationary pressures.
Under the scrutiny of activist investor Elliott Management, BP has been urged to aggressively cut costs throughout its operations. Elliott has challenged BP’s chief Murray Auchincloss to find an additional $5bn in cost savings, building on his February announcement targeting $4bn to $5bn in savings by 2027.
BP reported achieving $938m in structural cost reductions in the first half of 2025, adding to the $750m saved in 2024.
Derren Nathan, head of equity research at Hargreaves Lansdown, commented that shareholders are likely to appreciate the “financial discipline” shown by the falling net debt and increasing cost savings.
He noted: “But with production still set to fall over the year as a whole, management are still being cautious on shareholder payouts, maintaining the buyback at the reduced run rate of $750 million per quarter and raising the dividend by a modest 4 per cent to 8.32c. per share.”
The oil behemoth has already declared a cull of nearly 4,700 roles this year, alongside trimming down 3,000 contractors.
Come Monday, BP struck black gold with its most significant oil find in a quarter of a century off the coast of Brazil, giving the company a hefty leg-up.
Lale Akoner, a market maven at eToro, commented: “We think this new find adds meaningful long-term value and supports CEO Murray Auchincloss’s renewed focus on traditional energy.
“It’s the kind of discovery investors want to see as it is deepwater, large-scale, and in a proven basin. While the energy transition remains part of its long-term plan, BP is clearly leaning back into its oil roots, which is positive. The company isn’t the cheapest among its peers like Shell, but it’s finally delivering on its promise of reliable earnings and stronger shareholder returns. “.
In its mid-year brief, the company boasted of kick-starting five major projects and notching up 10 exploration finds in the first half of the year.
Auchincloss has voiced that the oil titan is “fully focused” on its “performance improvement” game plan, aiming to pump up cash flow and investor returns.
