BP will review assets and costs after profit exceeds expectations

BP said it will review its assets and look at further cost reductions as part of a push to improve shareholder value. The oil major announced this on Tuesday after reporting a second quarter profit that was well above expectations.

Murray Auchincloss, the CEO of Murray Auchincloss announced earlier this year that he would reduce costs, buy back shares, and sell assets worth $20 billion by 2027. This was in response to pressure from Elliott, an activist investor, to improve profitability.

He did not give any details, but he hinted that he might take further action on Tuesday.

"We will review our business portfolio to make sure we maximize shareholder value and allocate capital efficiently. Auchincloss added that they were also starting a new cost review.

"BP will and can do better for its shareholders."

BP said it had set a goal to reduce costs by 4-5 billion dollars from the levels of 2023 by the end 2027. It has already achieved $1.7 billion.

The company reported a second quarter underlying replacement costs profit or adjusted net income of $2.4 billion. This is down 14% compared to last year's figure of $2.8 billion. However, it easily beat the average of $1.8 billion according to a poll conducted by the company.

The quarterly dividend of 8.32 cents will be increased from the 8 cents it paid in the first quarter. It will also continue its share-buyback program, continuing to make $750 million worth of purchases before the third-quarter results.

Since the 2020 renewables initiative under former CEO Bernard Looney, BP's share price has lagged behind its peers.

Since Auchincloss restructured the strategy in February, BP shares are down around 3.5% compared to Shell and Exxon's gains of 2.4% as of Monday. Reporting by Shadia Naralla. (Editing by Louise Heavens, Mark Potter and Mark Potter.)

(source: Reuters)