BP to sell biogas unit Archaea as CEO steps up turnaround

(Christopher Pike/Bloomberg News)

BP Plc has put another key asset up for sale and said it will meet its debt target sooner than planned, as new CEO Meg O’Neill stepped up efforts to streamline the business and rebuild investor confidence after years of underperformance.

O’Neill, who took over as CEO in April, acknowledged the need for improvement: “We are not making the most of our potential.” In an earnings report Aug. 4, she laid out five key priorities, starting with strengthening the balance sheet and simplifying the company’s asset portfolio.

Her drive to turn BP around follows years of strategic pivots and leadership turmoil — most recently the surprise removal of chairman Albert Manifold after less than a year in the role. The overhaul is being helped by one of the strongest market backdrops in years, with a surge in profits largely due to refining and trading gains stemming from the Middle East upheaval. 

BP said it has started the process to sell U.S. biogas business Archaea Energy less than a week after announcing it’s marketing U.K. North Sea assets, and it now expects to bring down net debt to a range of $14 billion to $18 billion this year, ahead of a 2027 goal. That would position BP to potentially resume share buybacks that were suspended earlier this year in favor of paying down debt. 

“It’s all about getting fit to grow,” O’Neill said in an interview with Bloomberg TV. “We still have quite a bit of work to do.”

Chief Financial Officer Kate Thomson, speaking on a call with reporters, declined to say when share repurchases would restart, instead citing a 4% dividend increase announced Aug. 4.

BP has received approaches for its North Sea business just days into the sale process, CEO Meg O’Neill tells @annaedwardsnews https://t.co/UoCDE5AYiR https://t.co/1MFQhlybfe pic.twitter.com/DlYoFsHftf — Bloomberg TV (@BloombergTV) August 4, 2026

Investors are increasingly looking beyond BP’s windfall profits toward its longer-term strategy. Analysts are watching whether cost cuts, portfolio simplification and debt reduction can eventually translate into sustainable earnings growth, higher shareholder distributions and a more competitive valuation compared to peers. 

“The devil is in the detail,” RBC analyst Biraj Borkhataria said in a note. “BP will need to ‘walk the talk’ consistently over the coming quarters to re-build investor confidence.”

BP’s adjusted net income more than doubled from a year earlier to $5.73 billion in the second quarter, beating the $5.01 billion average analyst estimate compiled by Bloomberg. Peers from Shell Plc to ExxonMobil Holdings Corp. also reported big profits largely due to the recent market volatility. 

BP shares rose as much as 2% in London, outperforming European peers Shell and TotalEnergies SE. For the year, BP’s gain of nearly 30% is also ahead of Shell but trailing Total. 

The company last year came under pressure from activist shareholder Elliott Investment Management to focus on its legacy oil and gas business and pivot away from low-returning ventures. O’Neill, a fossil-fuel enthusiast, was brought in with a clear mandate to do just that. 

She’s the company’s first external CEO hire in its more than 100-year history and the first woman to head one of the world’s oil supermajors. Since she took the helm, much of BP’s senior leadership has changed, with deputy CEO and longtime trading boss Carol Howle retiring. She has also moved to simplify the company’s structure into the two traditional divisions of an oil and gas giant — upstream and downstream.

BP reduced its expectations for divestment proceeds this year as it announced the North Sea and Archaea sales, while continuing to reshape its portfolio around businesses that generate higher returns.

The company purchased Archaea for about $4.1 billion in 2022 during a push into low-carbon businesses that it’s now unwinding. When asked if BP could net anywhere near the purchase price, Thomson said it’s too early to say. Analysts see both the Archaea and North Sea sales as overdue.

Operational performance remains a work in progress. BP provided a full-year production outlook of 2.18 million to 2.27 million barrels of oil equivalent a day, below analysts’ expectations, after previously guiding only that reported production would be lower than 2025 because of Middle East disruption and portfolio changes.

“Operationally, our plants didn’t run as well as they did last quarter,” O’Neill said.