BP shares jump after oil major ups dividend and launches buyback
BP shares jumped on Tuesday despite the firm recording a hit to profit and revenue in the first half of 2025 as weaker oil prices and lower trading performance weighed on takings.
The London-listed oil major posted total revenue of $95.6bn (£72bn), down from 2.7 per cent from the same previous last year, while profit before tax dipped to $6bn from $5.9bn. Second quarter profit hit $2.4bn, down 14 per cent but breezing past a company-compiled analyst consensus of $1.8bn.
Shares rallied nearly two per cent as markets opened to 413.84.
The first half of the year has included a see-sawing of oil priced amid an uncertain geopolitical environment.
Prices fell to four-year lows in April with a barrel of Brent crude oil at $59.23 after President Donald Trump slapped sweeping tariffs across the US’ trading partners sparking fears of a global trade war.
But the escalating conflict in the Middle East helped prices spike more than nine per cent to as much as $81 – its most dramatic jump in over three years – as Israel struck Iran’s nuclear bases in June.
Tax pressures also squeezed BP’s profit for the first half with total taxation hitting $3.1bn, only slightly down from $3.4bn despite a smaller profit. This was due to a sharp increase in BP’s average tax rates in the first quarter of the year, rising to 50 per cent from 36 per cent, as higher shares of profits came from regions with elevated tax regimes.
BP divisions take a beat
Whilst all core segments remained profitable, they each took a hefty hit.
Profit in BP’s gas and low carbon energy division sank nearly 20 per cent to $2.5bn, whilst oil production and operations was down over 16 per cent to $5.2bn.
The firm’s customers and products line recorded an over eight per cent hit tumbling to $2.2bn.
Still, the firm launched a $750m buyback and raised dividend per share four per cent to 8.32 cents.
Cost saving takes centre stage
Operating expenses edged down for the period with the firm adding structural cost reductions were offset by growth and inflation.
BP has received immense pressure from activist investor Elliott Management to slash costs across operations. Elliott has tasked BP chief Murray Auchincloss to add another $5bn of cost savings to the target he announced in February of $4bn to $5bn in savings by 2027.
The firm achieved $938m in structural cost reductions in the first half of 2025, following on from a previous reduction of $750m in 2024.
Auchincloss told the FT on Tuesday the firm would launch a fresh review of its cost saving strategy, as the boss pledged “can and will do better”.
BP’s incoming chair, Albert Manifold, will assist Auchincloss to “conduct a thorough review” of the business in a bid to “ensure we are maximising shareholder value”.
The oil major’s boss said the firm would are “bringing in” tech juggernaut Nvidia for help “moving forward so we can reduce cycle time to get ahead of the competition”.
The $4tn chipmaker unveiled a major AI push alongside Prime Minister Sir Keir Starmer at London Tech Week earlier this year.
Derren Nathan, head of equity research at Hargreaves Lansdown, said shareholders will welcome BP’s “financial discipline” with net debt falling and cost savings rising.
“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 giant has already announced near 4,700 job cuts this year and a reduction of 3,000 contractors.
On Monday, BP made its largest oil discovery in 25 years off Brazil’s Atlantic coast, providing a major boost for the firm.
Lale Akoner, global market analyst at eToro, said: “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.
The company said in its half-year updates it had started five major projects in the first six months of the year along with 10 exploration discoveries.
Auchincloss said the oil major remained “fully focused” on its “performance improvement” strategy in a bid to grow cash flow and returns.