BP profits are cut in half to $2.6 billion as oil and natural gas prices fall

A logo of BP is seen at a gas station in London, on Nov. 1, 2022. Energy giant BP said Tuesday, Aug. 1, 2023 that it earned nearly $2.6 billion in the second quarter, almost half what it posted in the first three months of the year as oil and natural gas prices that surged after Russia's invasion of Ukraine have fallen. (AP Photo/Kin Cheung, File)

LONDON (AP) — Energy giant BP said Tuesday that it earned nearly $2.6 billion in the second quarter, almost half what it posted in the first three months of the year as oil and natural gas prices that surged after Russia's invasion of Ukraine have fallen.

The company's underlying replacement cost profit, which excludes one-time items and fluctuations in the value of inventories, was down nearly 70% from the April-to-June period a year ago, when London-based BP brought in $8.45 billion.

It's the latest oil and gas major to see profits fall from record highs last year, following British rival Shell, France's TotalEnergies and U.S.-based ExxonMobil. Energy prices spiked after Russia launched its war in Ukraine, raising fears about Moscow's supplies of oil and natural gas before it cut off most of its gas heading to Europe.

Energy costs were a major driver of inflation around the world, stirring outcry as households and businesses faced skyrocketing electricity and heating bills while energy companies' profits skyrocketed. The U.K. has passed taxes on such windfall profits.

Now, those outsized earnings are drawing back down.

“Another quarter of performing while transforming,” CEO Bernard Looney said in a statement. “Our underlying performance was resilient with good cash delivery — during a period of significant turnaround activity and weaker margins in our refining business.”

Despite the hurdles, BP said it's increasing its quarterly dividend by 10% and plans to buy back an additional $1.5 billion in stock from shareholders.

BP, which saw its earnings last year double to a record high $27.7 billion, said it was awarded rights to develop two offshore wind projects in Germany — its first in continental Europe. It also noted progress in hydrogen projects.

Energy companies are facing increasing pressure to do more to reduce such emissions that cause climate change. But fossil fuels have remained an important part of the mix. BP says two new oil and gas projects have launched in the second quarter.

Britain also said Monday that it will grant hundreds of new oil and gas licenses in the North Sea in a bid for energy independence despite pushback from climate activists.