BP shares rose in early trading after the company reported a sharp jump in second-quarter replacement cost profit, driven by stronger refining margins and improved integrated earnings, even as production stayed under pressure. The results also came alongside a raised interim dividend and a plan to explore a sale of Archaea Energy, while BP reiterated expectations for weak upstream output in 2026.
BP’s quarterly performance underscored the resilience of its refining and marketing businesses within its integrated model, but management’s forward guidance maintained a cautious tone for volumes across the upstream portfolio.
Key takeaways
- Profit improved: Replacement cost (RC) profit rose to $4.628 billion in the second quarter, versus $2.036 billion a year earlier.
- Dividend increased: BP lifted its interim dividend by 4% to 8.660 cents per ordinary share, payable September 18.
- Production remained weak: Reported production was 765 mboe/d, down 2.1% year over year.
- Strategy update: BP launched a process to market Archaea Energy for a potential sale.
- 2026 outlook cautious: BP expects weak upstream production for fiscal 2026, with reported output forecast below 2025 levels.
What drove the move
BP reported second-quarter replacement cost profit of $4.628 billion, compared with $2.036 billion in the prior-year period. Underlying RC profit climbed to $5.732 billion from $2.353 billion a year earlier, reflecting a meaningful earnings recovery tied to the company’s refining and liquids performance.
BP said the improvement primarily reflected significantly higher realized refining margins and higher liquid realizations, which supported earnings despite weaker volumes. Underlying RC profit per ordinary share increased to 36.92 cents from 15.03 cents last year, while underlying RC profit per American Depositary Share (ADS) rose to $2.22 from $0.90.
The company also posted stronger overall profitability: profit before taxation reached $7.821 billion, compared with $2.883 billion a year ago. Profit attributable to BP shareholders totaled $3.911 billion versus $1.629 billion previously, and earnings per ADS increased to $1.47 from $0.62.
Market reaction and guidance
While earnings grew, BP’s production profile remained a key swing factor for investors focused on upstream delivery. Reported production in the quarter totaled 765 thousand barrels of oil equivalent per day (mboe/d), down 2.1% from the comparable period in 2025. Underlying production declined 2.2%, driven by base decline, partially offset by ramp-ups from major projects.
Looking at the near-term, BP expects reported upstream production for the third quarter of 2026 between 2,100 and 2,250 mboe/d, compared with 2,201 mboe/d in the second quarter of 2026.
For the full year 2026, BP lowered its reported upstream production outlook to a range of 2,180 to 2,270 mboe/d, versus 2,312 mboe/d in 2025. BP’s guidance said the forecast incorporates disruption in the Middle East, the divestment of the Culzean gas field in the UK North Sea, a reduced equity interest in Latin America, and an estimated 15 mboe/d impact from potential seasonal weather events in the Gulf of America.
The company also cautioned that heightened volatility in oil and gas prices could affect production-sharing agreement contracts, adding a further variable to future cash flow visibility.
Dividend and portfolio developments
BP raised its interim dividend by 4% to 8.660 cents per ordinary share. The payment is scheduled for September 18 for shareholders and ADS holders registered as of August 14.
In addition to shareholder returns, BP announced it is launching a process to market Archaea Energy for a potential sale. The move suggests BP is assessing strategic options for the business as part of ongoing portfolio management, though the company did not provide sale timing or expected proceeds in the report.
Bigger picture for investors
BP’s second-quarter results illustrate the contrast between earnings strength and volume pressure. The reported and underlying improvements were attributed largely to refining and liquid realizations, reinforcing how BP’s integrated operations can dampen the impact of weaker upstream output in the near term.
At the same time, management continues to signal that upstream performance for 2026 will be constrained, with multiple assumptions embedded in the production outlook. Investors may therefore focus on whether margin support can persist as BP navigates planned asset changes and geographic production pressures, particularly given the sensitivity of production-sharing economics to commodity price volatility.
In the overnight trading session on the New York Stock Exchange, BP shares were up around 1.36%, trading at $44.86.
What to watch next: Investors will likely look for updates on third-quarter upstream guidance, further clarity on how refining margins trend into the second half of 2026, and any developments related to the Archaea Energy sale process. BP will also be expected to provide additional detail as upcoming earnings reports and macro data—particularly those tied to rates and energy demand—feed into sentiment around oil and gas earnings.
