BP posted its strongest quarterly profit in more than four years as its refining and trading businesses boomed during the Iran war.
Adjusted net income more than doubled from a year earlier to $5.73 billion in the second quarter, beating the $5.01 billion average analyst estimate compiled by Bloomberg, BP said in a report Tuesday. The company also said it’s launching a process to sell its Archaea Energy renewable natural gas business.
The conflict in the Middle East has provided global energy merchants and producers with opportunities to profit from massive trade dislocations, while bigger jumps in fuel costs than in crude prices have boosted refining margins. Peers from Shell to ExxonMobil Holdings also reported bumper earnings largely due to the market upheaval.
The result gives chief executive Meg O’Neill some momentum as she presses ahead with an overhaul of the UK energy giant, centred on cutting costs, selling assets and repairing the balance sheet after years of turbulence.
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But investors are increasingly looking beyond BP’s windfall profits toward the company’s longer-term strategy. Analysts are watching whether cost cuts, portfolio simplification and debt reduction can eventually translate into sustainable earnings growth, higher shareholder distributions and a more competitive valuation compared to peers. - Bloomberg
