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So there’s still life in the BP (LSE: BP) share price. After a dismal run, which has seen the FTSE 100 stock fall almost 10% in the last year, and 17% over two, investors finally have something positive to look at.
Today’s (5 August) Q2 results are stronger than expected, with underlying replacement cost profit rising to $2.4bn, up from $1.4bn in Q1. That’s comfortably ahead of the $1.8bn analysts had forecast. It’s a big jump given the backdrop of falling energy prices, and a much-needed bit of momentum for a company that’s lost its way lately. As I write this, the shares are up 2%.
FTSE 100 energy play
Today’s stronger showing was boosted by improved refining margins, seasonal strength in its customer business, and a strong oil trading performance. Together, these helped offset weaker oil and gas prices.
Operationally, things were tight. Refining availability was 96.4%, while plant reliability came in even better at 96.8%.
Cash generation also impressed, with operating cash flow hitting $6.3bn, up from $2.9bn the previous quarter, helped by a $1.1bn settlement payment related to the Gulf of Mexico disaster. BP trimmed net debt to $26bn, helped by £900m of cost savings, but that’s still up from £22.6bn one year ago. There’s a way to go here.
Shareholders were rewarded with a 4% dividend increase to 8.32 cents per share. A further $750m share buyback was also announced, same as in Q1. Yet these will remain under pressure, with production still set to fall over the year as a whole.
It’s an oil stock again
Strategically, BP’s pivot back to fossil fuels continues. CEO Murray Auchincloss confirmed the company had brought five oil and gas projects onstream so far in 2025 and made 10 exploration discoveries, including the Santos Basin find in Brazil, its biggest in 25 years.
Derren Nathan, head of equity research at Hargreaves Lansdown, described it as “a slick turnaround plan”, and pointed out how underlying profits had surged by nearly $1bn in a single quarter, even as energy prices fell.
BP is now two quarters into its 12-quarter transformation plan, a reset that’s seen it move away from its earlier green ambitions and back towards its oil-producing roots. It won’t please everybody, but so far the results are showing through.
Toppy valuation
BP shares remain well below their 2022 highs. The price-to-earnings ratio looks ridiculously high at 226. That could limit the scope for recovery. Still, share buybacks may offer some support to the price, while the dividend yield is a tempting 5.86% on a trailing basis. Stock holders can reinvest their quarterly payouts while they wait for the recovery.
It’s still a tough market out there. Geopolitics, oil price volatility and energy transition threats all loom large. BP’s shift back to black gold is showing signs of delivering. But long-term success still hinges on keeping the cash flowing, costs under control, and investors convinced the plan is more than just a quick fix. It isn’t out of the woods yet.
BP shares are worth considering after today’s results, but let’s not get ahead of ourselves. The recovery still has a long way to run.
