LONDON BP increased its dividend and extended its share repurchasing programme on Tuesday as it reported a forecast beating second-quarter profit of US$2.76 billion , with weak refining offset by stronger oil prices and retail.

The result will ease pressure on chief executive officer Murray Auchincloss after BP fell short of profit expectations in the previous two quarters.

BP shares jumped 9% shortly after trading started at 0716 GMT, compared with a 0.5% gain on the broader European energy index.

The 53-year-old Canadian, who took office in January, has vowed to revamp BP's operations and focus on the most profitable ones, mostly in oil and gas.

In a sign of change from his predecessor Bernard Looney's strategy to grow renewables and reduce fossil fuel output, BP said it had given a green light to the development of the Kaskida oilfield in the US Gulf of Mexico, a highly complex project in deep geological formations.

The field is expected to start production in 2029 and have a capacity of 80,000 barrels of oil per day (bpd).

BP is working to exceed its target to reduce annual costs by US$2 billion by the end of 2026, Auchincloss said in an analyst presentation posted online.

"We are driving focus across the business and reducing costs, all while building momentum in our drive to 2025," Auchincloss said in a statement.

BP lifted its dividend by 10% to eight cents per share from 7.27 cents, in line with analysts' expectations, based on LSEG data.

It also maintained the rate of its share buyback programme at US$1.75 billion over the next three months and said it remains committed to buying a total of US$14 billion of shares this year and next.

Underlying replacement cost profit, the company's definition of net income, reached US$2.76 billion in the three months to June, exceeding a forecast of US$2.54 billion in a company-provided survey of analysts.

That compared with a US$2.7 billion profit in the previous quarter and US$2.6 billion a year earlier.

Weaker refining margins due to lower diesel demand and a higher level of refinery maintenance weighed on the result, but were offset by higher oil and gas prices in the quarter and a lower than expected tax rate. BP's oil trading contribution was weak following a strong showing in the previous quarter, it said.

Last week, France's TotalEnergies reported a 6% drop in second quarter profits, also hurt by a tumble in European refining margins.

BP will maintain capital expenditure at US$16 billion per year in 2024 and 2025.

  - Reuters