On Tuesday, BP reported a 70% annual decline in second-quarter profit, citing lower oil and gas prices and weaker refining margins and trading business as contributing factors. The underlying replacement cost profit, the key metric used by analysts, plummeted to $2.6 billion for the second quarter, down from $5.0 billion in the first quarter and $8.45 billion in the second quarter of 2022. The earnings missed analyst estimates of $3.5 billion.

Despite the disappointing earnings, BP announced a 10% increase in its quarterly dividend and revealed plans for a $1.5 billion share buyback, expected to be completed before the end of the third quarter. Following the announcement of these additional returns to shareholders, BP's shares rose by 2% on the London Stock Exchange at the opening on Tuesday.

The decline in second-quarter earnings was primarily due to lower realized refining margins, increased turnaround and maintenance activity, a weak oil trading result, and lower oil and gas realizations compared to the first quarter of 2023. However, the gas marketing and trading result was "exceptional," although slightly lower than in the previous quarter, according to BP.

Bernard Looney, BP's CEO, highlighted the company's resilient underlying performance and strong cash delivery during a period of significant turnaround activity and weaker margins in the refining business. He expressed confidence in the company's performance and cash flow outlook, leading to the decision to raise the dividend and announce the share buyback.

Murray Auchincloss, BP's CFO, emphasized the company's commitment to returning 60% of 2023 surplus cash flow through share buybacks.

BP's second-quarter earnings reflect the broader challenges faced by international oil majors, such as lower oil and gas prices and weaker refining and trading conditions. Similar trends were observed in the earnings reports of other major companies, including Shell, TotalEnergies, and ExxonMobil. Despite these headwinds, BP's management remains optimistic about the future outlook and is taking steps to reward shareholders while focusing on reducing the company's share count.