BP PLC is preparing to sell its US biogas business for $4 billion, as new CEO Meg O'Neill restructures the oil giant. The company reported its highest quarterly profit since 2022 on Tuesday.

The unit, Archaea, collects methane from landfills and is the largest renewable natural gas producer in the US. This investment was once one of the biggest moves in BP's ambition to transform into a green energy powerhouse. However, the business has underperformed. Late last year, BP took a $4.2 billion impairment on its biogas and solar divisions, with a significant write-down on the value of Archaea assets. The oil major recorded another $1.1 billion impairment loss on green energy assets in the latest quarter. When asked about the company's green energy plans, O'Neill said, "Reviewing some of our previous investments, the returns did not meet expectations."

BP also disclosed that second-quarter adjusted profit surged 144% to $5.7 billion, driven by higher crude oil, gas, and refined product prices amid the Iran conflict. This exceeded analysts' expectations of $5.1 billion and marked the highest quarterly profit for BP since 2022, when Russia's full-scale invasion of Ukraine triggered a European energy crisis, sending gas prices soaring fourfold. O'Neill, who joined BP as CEO in April from Australia's Woodside Energy, has quickly moved to reshape the company's portfolio. She stated in the earnings release, "We need to take a hard look at ourselves: assess where we need to change, shed businesses that are dragging us down, and build competitive advantages in our core areas."

RBC Capital Markets analyst Biraj Borkhataria noted that the company's performance has improved, but management needs to prove to investors it can "walk the talk." He added, "Acknowledging BP's past investment mistakes is a good start to improving investment value. We look forward to the company providing further clarity on its financial framework and execution plans during the earnings call."

Last week, the British oil giant announced the sale of its North Sea assets. BP has also shut down its venture capital arm, sold its Austrian petrol station business, and divested its stake in the Duvernay deepwater project in Canada. O'Neill said several companies have already approached BP expressing interest in acquiring the North Sea assets. She also met with UK Prime Minister Andy Burnham to voice support for oil and gas development in the country. "My message to the Prime Minister is that the UK gets 75% of its energy from fossil fuels, and the first oil and gas the country consumes should come from the North Sea," she said.

O'Neill has made reducing high debt and improving the balance sheet a top priority. She said the group's various fixed financial costs, including debt, hybrid bonds, and payments related to the Deepwater Horizon oil spill, have fallen significantly. "That's $7 billion less than the previous quarter." BP aims to lower net debt below $18 billion by the end of December, a year ahead of its original target. Earlier, Saudi Aramco, the world's top oil producer, reported a second-quarter net profit of $33.4 billion, up 33% year-on-year, benefiting from higher crude and refined product prices.