BP, the London-based energy giant, announced it will offload its US biogas division just days after it exited the North Sea market. The business, purchased for $4.1bn in 2022, has struggled with underperformance and slower-than-expected growth. This move aligns with a broader strategy led by CEO Meg O’Neill, who has said the company must simplify its holdings and prioritize assets that deliver strong returns.
Strategic shift under new leadership
Meg O’Neill has been reorganizing BP’s operations into two distinct divisions: upstream and downstream. Under her leadership, the company is shedding non-core assets and refocusing its efforts on oil and gas projects with the best potential. O’Neill said the company has failed to meet expectations in recent years, adding that it must become more resilient in a low-price environment and stop draining value.
The company has already exited the North Sea, its first such withdrawal in decades, and sold its refinery in Gelsenkirchen as well as its retail business in Austria. O’Neill acknowledged that BP has not delivered consistently and that its costs are not yet optimized.
Strong profits amid geopolitical tensions
Despite the shakeup, BP’s financial performance in the second quarter came as a surprise. The company posted profits of $5.7bn, a $2.5bn increase from the previous quarter and beating forecasts of $5.1bn. Its gas and low carbon energy segment earned $1.6bn, up from $1.1bn the prior period. The oil production arm also saw profits double to $3.4bn.
However, the company revised its production outlook downward for the year, citing continued disruptions in the Middle East and potential weather events in the Gulf of America. Third-quarter production is expected to range between 2,100 and 2,250 thousand barrels of oil equivalent per day (mboe/d), compared to 2,201 mboe/d in the second quarter.
Looking ahead: fitness over sentiment
O’Neill emphasized the need for a fresh approach to the company’s operations, stating that BP must assess which areas need change, eliminate what’s holding it back, and build strength in key areas. She said the company must be 'fit to grow'. BP also reported that income taxes for the quarter are expected to rise by around $1bn due to timing effects in tax payments.