Rivals Chevron (CVX.N), Exxon Mobil (XOM.N), Shell (SHEL.L) and TotalEnergies (TTEF.PA) have also reported sharp drops in quarterly earnings, hurt by a drop in energy prices from highs hit following Russia's invasion of Ukraine a year and a half ago.
"Our underlying performance was resilient with good cash delivery - during a period of significant turnaround activity and weaker margins in our refining business," Chief Executive Officer Bernard Looney said in a statement.
BP's underlying replacement cost profit, its definition of net income, missed expectations of $3.5 billion in a company-provided survey of analysts.
It fell from $8.5 billion a year earlier and from $5 billion in the first quarter.
BP increased its dividend by 10% to 7.27 cents per share, the fourth hike since halving it in the wake of the coronavirus pandemic three years ago. It will repurchase $1.5 billion of its shares over the next three months.
Looney told Reuters that the buyback programme allowed BP to reduce its share count by 9% over the last 4 quarters.
"That means that we can raise the dividend by 10% and not increase the dividend burden on the company," he said.
BP's shares were up around 1.5% by 0935 GMT versus a broader index of European oil and gas companies (.SXEP) up 0.44%.
RISING DEBT
BP said the weaker results reflected a significant decline in refining margins, a higher level of maintenance activity and weaker trading results compared with the previous quarter.
It said gas trading results were "exceptional" but lower than in the first quarter.
BP's net cash flow was negative in the quarter at $269 million, meaning it had to borrow to meet its spending, compared with a surplus of $2.3 billion in the first quarter.
BP's gearing, or debt-to-capital ratio, stood at 21.7% in the second quarter, compared with 19.6% in the first quarter and 21.9% a year earlier.
RBC analyst Biraj Borkhataria said that "given BP has higher leverage than all of its Super-Major peers, more fundamentally, we would have preferred to see the company focus on net debt reduction, with a dividend increase deferred to later in the year."
For the third quarter, BP expects oil prices to be supported by OPEC supply cuts alongside above-historical-average refining margins helped by lower inventories and U.S. demand.
BP expects the European gas and Asian liquefied natural gas (LNG) markets to be "at risk" from a swift filling of European gas storage sites ahead of winter.
The company still aims to sharply expand its renewables and low-carbon business by the end of the decade.
Low-carbon businesses including biofuels, electric vehicle charging, hydrogen and renewables account for a fraction of BP's earnings.
Last month, BP won the rights to develop two large offshore wind projects in Germany, agreeing to pay 678 million euros upfront, equivalent to 10% of the bid amount.
