BP's underlying replacement-cost profit jumped to $5.73 billion in the second quarter from $3.2 billion in the first, as oil prices strengthened and refining margins widened. The company is now accelerating asset sales under new CEO Meg O'Neill, including a divestment of its U.S. biogas unit Archaea less than four years after paying $4.1 billion for it.
O'Neill has reversed the previous strategy of heavy renewable-energy investment, refocusing capital allocation toward oil and gas operations. BP is targeting $20 billion in total divestments by the end of 2027 to reduce debt. The company launched a sale process for its North Sea oil and gas business, which has already drawn interest from multiple potential buyers, and began selling Archaea as part of the broader rebalancing.
The Q2 earnings announcement confirmed the profit surge was driven by higher crude prices and stronger refining margins, alongside continued strength in BP's oil-trading operation. O'Neill attributed the North Sea exit decision to repeated shifts in UK energy policy alongside capital-allocation priorities. European energy companies face volatile regulatory environments and pressure to balance fossil-fuel returns against energy-transition mandates.
Archaea, acquired in 2022, operates biogas facilities that convert waste into renewable natural gas. Its sale at a loss from purchase price marks a departure from BP's previous strategy under former CEO Bernard Looney, who had committed to ramping renewable generation and cutting oil and gas production. O'Neill's pivot has accelerated since her appointment, with the divestment target and North Sea sale process announced within months.
The $20 billion divestment goal represents roughly 15 percent of BP's current asset base by historical valuation. The North Sea business comprises mature oil and gas fields that have generated substantial cash but face rising decommissioning costs and regulatory pressure to phase out new fossil-fuel licensing. Several buyers including private-equity firms and smaller E&P operators have expressed interest in acquiring the portfolio, according to sources familiar with the process.
O'Neill's strategic reversal comes as commodity prices remain high and capital discipline tightens across the sector. BP's Q2 profit of $5.73 billion remains substantially below the $28 billion peak the company reached during the 2022 energy crisis, when windfall margins were in place.
The completion of the Archaea and North Sea sales, along with progress toward the $20 billion divestment target, will determine whether O'Neill can stabilize BP's balance sheet while maintaining production volumes in core regions.
