LONDON, Aug 2 (Reuters) – BP’s (BP.L) second quarter profit soared to $8.45 billion, its highest in 14 years, as strong refining margins and trading prompted it to boost its dividend and spending on new oil and gas production.

The strong performance caps a blowout quarter for the top Western oil and gas companies on the back of soaring energy prices that have increased pressure on governments to impose new taxes on the sector to help consumers.

“The company is running well and it continues to strengthen. We have real strategic momentum,” Chief Executive Officer Bernard Looney told Reuters.

BP shares were up 3.5% by 0925 GMT, their highest since June, strongly outperforming the broader European energy index (.SXEP) which was up 0.5%.

Looney, who took office in 2020 with a vow to rapidly shift BP away from fossil fuels to renewables, said that the company will increase its spending on new oil and gas by $500 million in response to the global supply crunch. read more

“We will direct more investment towards hydrocarbons to help with energy security in the near term,” – Looney said. “We’ll probably direct about a half a billion dollars for hydrocarbons.”

BP plans to maintain its overall capital expenditure this year in a range of $14 billion to $15 billion.

BP increased its dividend by 10% to 6.006 cents per share, more than its previous guidance of a 4% annual increase. It halved its dividend to 5.25 cents in July 2020 for the first time in a decade in the wake of the pandemic.

The company also increased its share repurchases plan for the current quarter to $3.5 billion after it bought $4.1 billion in the first half of the year.

“The fact it produced its highest quarterly profit in 14 years, even though oil prices were higher during that period than they are now, suggests BP is a more efficient machine than it was previously,” AJ Bell investment director Russ Mould said.

The company said it expected crude oil and gas prices as well as refining margins to remain “elevated” in the third quarter and said it would stick to its target of using 60% of its surplus cash on share buybacks.

Big Oil Bonanza

BP brings the second quarter profit tally for the top Western oil and gas companies to $59 billion after rivals including Exxon Mobil (XOM.N) and Shell (SHEL.L) reported record earnings last week. read more