Aker BP Q2 2025 slides: Production dips as costs rise, company swings to loss

Introduction & Market Context

Aker BP (NYSE:BP) ASA (OSE:AKRBP) presented its second quarter 2025 results on July 15, revealing a challenging period marked by lower production, higher costs, and a swing to a net loss. The Norwegian oil and gas producer, whose stock closed at 266 NOK on July 14, emphasized its long-term growth strategy despite the quarterly setbacks. The company maintained its dividend at $0.63 per share, underscoring its commitment to shareholder returns even during periods of financial pressure.

Quarterly Performance Highlights

Aker BP reported production of 415,000 barrels of oil equivalent per day (mboepd) in Q2 2025, down from 441,000 mboepd in the previous quarter. The company achieved 95% production efficiency, slightly below the 97% recorded in Q1. Despite the quarterly decline, Aker BP raised its full-year production guidance to 400-420 mboepd from the previous range of 390-420 mboepd, reflecting confidence in its operational capabilities.

As shown in the following chart of quarterly production by field, the company has maintained relatively stable output over the past year, with Johan Sverdrup continuing to be the largest contributor:

Production costs increased to $7.3 per barrel of oil equivalent (boe) in Q2 from $6.5 in Q1, though the company continues to position itself as a cost leader among industry peers. This competitive advantage is illustrated in the following comparison chart:

Aker BP also highlighted its environmental performance, maintaining its position as a global leader in low-emission oil and gas production with an emission intensity of 2.8 kg CO2e per boe in Q1 2025.

Detailed Financial Analysis

The second quarter brought significant financial challenges for Aker BP. The company swung to a net loss of $324 million from a profit of $316 million in Q1, resulting in earnings per share of -$0.51 compared to $0.50 in the previous quarter. Total (EPA:TTEF) income decreased to $2.58 billion from $3.20 billion in Q1, primarily due to lower production volumes and realized prices.

The following income statement details the financial performance for Q2 2025:

Cash flow from operations declined to $1.24 billion from $2.11 billion in Q1, while free cash flow turned negative at -$658 million compared to $685 million in the previous quarter. This deterioration is reflected in the cash flow statement:

Despite these challenges, Aker BP maintained its quarterly dividend at $0.63 per share, consistent with its strategy of providing resilient shareholder returns. The company’s balance sheet showed total available liquidity of $6.0 billion, down from $7.7 billion in Q1, and its leverage ratio increased to 0.43 from 0.29.

Strategic Initiatives & Field Developments

Aker BP continues to advance its field development projects, which are central to its long-term growth strategy. The company sanctioned the East Frigg development in Q2 and reported a new oil discovery in the ongoing Omega Alfa well at Yggdrasil, with estimated resources of 20-40 million barrels of oil equivalent (mmboe).

Additionally, Johan Sverdrup Phase 3 was sanctioned in Q2, with start-up planned for Q4 2027. This phase includes two new subsea templates and eight additional wells, supporting continued high production from this flagship field.

The following slide illustrates the company’s major field developments that are driving growth and value creation:

However, Aker BP revised its investment estimates upward by approximately 6% ($1.2 billion) compared to original guidance, though it noted that projects are progressing on schedule. The company emphasized that these projects are eligible for the 2020 tax system with 86.9% tax deduction, limiting the after-tax free cash flow impact to $150-200 million.

As shown in the following chart of capital expenditure plans, Aker BP is investing significantly in high-return projects:

Forward-Looking Statements

Looking ahead, Aker BP reaffirmed its strategy to maintain production above 500 mboepd into the 2030s through a combination of base production optimization, ongoing and planned projects, and exploration. The company continues to target dividend growth of at least 5% annually, as illustrated in its dividend history and projections:

For full-year 2025, Aker BP updated its guidance to reflect recent operational performance and project reviews. Production is now expected to range from 400-420 mboepd, with production costs of $7-8 per boe. Capital expenditure is projected at $5.5-6.0 billion, with exploration spending of approximately $450 million.

Despite the quarterly setbacks, Aker BP’s management expressed confidence in the company’s long-term value creation plan, emphasizing its low-cost production base, strong project portfolio, and commitment to shareholder returns through sustainable dividend growth.

Full presentation:

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