London, July 14, 2026 – BP PLC (LON:BP) shares rose nearly 3% in early London trading on Tuesday after the company released a second-quarter update that pointed to a significant sequential earnings boost and a substantial reduction in net debt. The oil major's stock climbed to about 519.2 pence, outperforming both its main rival Shell and the broader FTSE 100 index.
The company guided for a $3.5 billion to $4.2 billion increase in underlying replacement-cost profit before interest and tax compared to the first quarter, driven by improved oil and gas realizations and stronger refining margins. This non-IFRS metric excludes inventory-value shifts and one-off charges. Specifically, oil production realizations added $1.8 billion to $2.1 billion, gas realizations contributed $500 million to $700 million, and realized refining margins boosted segment earnings by $1.2 billion to $1.4 billion. These gains offset a projected 5% to 7% decline in upstream production, which is expected to fall to between 2.170 million and 2.220 million barrels of oil equivalent per day from 2.339 million in the first quarter.
On the balance sheet, BP expects net debt to decrease by $2.3 billion to $3.3 billion, bringing it to $22 billion to $23 billion. A broader measure that includes net debt, hybrid bonds, and Gulf of Mexico settlement liabilities is set to fall by $6.3 billion to $7.3 billion. The company spent $2.9 billion to buy back perpetual hybrid bonds and $1.1 billion toward Gulf of Mexico settlement dues, contributing to a total cleanup of $4 billion beyond the headline net-debt shift.
Despite this progress, BP remains $4 billion to $5 billion above its $14 billion to $18 billion net-debt target for the end of 2027. The second-quarter reduction moves the company about 32% to 45% of the way from March's $25.3 billion down to that $18 billion mark. BP also noted about $500 million in exploration write-offs and $1 billion in post-tax impairments that are excluded from its underlying calculation.
The market context provided additional tailwinds. Brent crude rose 3.3% to $86.04 a barrel on fresh U.S.-Iran tensions that raised concerns about shipments through the Strait of Hormuz. However, Brent remained about 17% below BP's second-quarter marker average of $103.85 per barrel. ANZ analyst Soni Kumari said "the peak of the escalation is behind us," but ongoing disruption could keep prices elevated. Gabelli portfolio manager Simon Wong warned that more Houthi attacks would add "further uncertainties" to regional crude flows.
The debt reduction offers new CEO Meg O'Neill a quick win in her effort to tighten capital allocation. "We need to make fewer, better choices and hold ourselves to account," O'Neill said last week, emphasizing a focus on costs, cash, and discipline in operations.
Risks remain. If regional shipping routes remain open, crude prices could fall, hurting price swings and trimming trading gains. The U.S. Energy Information Administration forecasts Brent averaging $74 a barrel in the third quarter and dropping to $65 by 2027 as stockpiles climb. BP's already declining output could slow debt paydown and expose earnings to downside.
BP is set to report full second-quarter results on August 4. Investors will be watching operating cash flow, the net-debt figure, and whether balance-sheet gains hold up after a strong quarter for prices and refining.
