BP has put its $4bn US biogas business, Archaea, up for sale as chief executive Meg O'Neill continues to reshape the company's portfolio, coinciding with a 144 per cent year-on-year rise in second-quarter adjusted profit to $5.7bn.
Archaea, which captures methane from landfill sites, is the largest renewable gas producer in the United States and was among BP's largest investments during a period when the company was pursuing a strategy centred on green energy. BP wrote down the value of the business significantly at the end of last year, as part of a $4.2bn impairment across its biogas and solar arms, and took a further $1.1bn impairment on green energy assets in the latest quarter.
O'Neill, who joined BP as chief executive from Woodside in April, said the company's past green energy investments had "not delivered the returns" expected, in comments made when the results were announced. The $5.7bn adjusted profit figure exceeded an analyst prediction of $5.1bn and represented BP's highest quarterly profit since 2022, when gas prices quadrupled amid an energy crisis in Europe following Russia's full-scale invasion of Ukraine. The latest quarter's higher oil, gas and refined fuel prices were linked to the Iran conflict.
The Archaea sale forms part of a broader divestment programme under O'Neill. In the past week BP has announced the sale of its UK North Sea business, and it has also closed its venture capital arm and sold its Austrian fuel station business and its stake in the Bay du Nord deepwater project in Canada. O'Neill said BP had received unsolicited approaches from other parties interested in the North Sea assets, and that she had raised her support for UK oil and gas development directly with prime minister Andy Burnham, noting that the UK draws 75 per cent of its energy from fossil fuels.
Biraj Borkhataria, an analyst at RBC, said BP's ownership of its "historical failings" marked a positive step for the investment case.
O'Neill has prioritised reducing BP's debt and strengthening its balance sheet. The company's combined financial obligations, including debt, hybrid bonds and Deepwater Horizon reparation payments, fell by $7bn from the previous quarter, and BP said it now expects to bring net debt below $18bn by the end of December, a year earlier than previously targeted.
Separately, Saudi Aramco reported $33.4bn of adjusted profit for the second quarter, a 33 per cent year-on-year rise, driven by higher prices for crude and refined fuels.
The scale of the impairments already absorbed on biogas and solar assets, set against a sale process for Archaea still to be completed, leaves BP's reported divestment proceeds and any residual write-down exposure dependent on the eventual sale price achieved. The accelerated net debt target of below $18bn by December, alongside the pending disposals of North Sea and biogas assets, ties BP's near-term balance sheet position to the timing and terms on which those transactions are finalised.
