BP plc · LSE:BP.
BP — Q2 2010 Earnings Presentation
26 slides from BP's earnings presentation, Jul 27, 2010
Slide 1: 2Q 2010 Results Presentation
2Q 2010 Results Presentation 27th July 2010
Slide 2: Fergus MacLeod, Head of Investor Relations
Fergus MacLeod Head of Investor Relations
Slide 3: Cautionary Statement
Cautionary Statement Forward-looking Statements - Cautionary Statement This presentation and the associated slides and discussion contain forward-looking statements, particularly those regarding production and income; third quarter E&P turn-around activities and the effect on volumes, costs and marg
Slide 4: Carl-Henric Svanberg, Chairman
Carl-Henric Svanberg Chairman
Slide 5: Tony Hayward, Group Chief Executive
Tony Hayward Group Chief Executive
Slide 6: Agenda
Agenda • 2Q 2010 results • Gulf of Mexico oil spill response update − Operations − Escrow account − Implications for industry • BP going forward − Portfolio high-grading − Asset disposals − Safety, People, Performance 6
Slide 7: Byron Grote, Chief Financial Officer
Byron Grote Chief Financial Officer
Slide 8: Financial results as reported
Financial results as reported RCP adj 2Q10 Replacement cost profit (loss) ($bn) NOI / NOI / 6 ($bn) RCP FVAE FVAE Exploration & Production 6.2 (0.1) 6.3 Refining & Marketing 2.1 0.4 1.7 Other businesses & corporate (0.1) 0.1 (0.1) 0 Gulf of Mexico oil spill (32.2) (32.2) - Consolidation adjustment 0
Slide 9: Gulf of Mexico oil spill costs and provisions
Gulf of Mexico oil spill costs and provisions (pre-tax, pre-partner recovery) $bn • Costs incurred through 30 June 2.9 • Charge for Future Costs 29.3 − Further response and clean up costs − Escrow account − Fines and penalties (Clean Water Act) − Legal expenses − Other announced commitments 32.2 The
Slide 10: Trading environment
Trading environment Liquids realization Gas realization 80 12 60 8 $/mcf $/bbl 40 4 20 0 0 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2009 2010 2009 2010 Change vs 2009 Refining indicator margin Average realizations 2Q YTD 8 Liquids $/bbl 39% 54% 6 Natural gas $/mcf 31% 23% $/bbl 4 Total hydrocarbons $/boe
Slide 11: Financial results
Financial results All earnings figures are adjusted for the Gulf of Mexico oil spill and other non-operating items and fair value accounting effects. ($bn) 2Q09 2Q10 Replacement cost profit before interest and tax 2Q10 vs 2Q09 ($bn) Exploration & Production 4.4 6.3 10 Refining & Marketing 1.0 1.7 Ot
Slide 12: Exploration & Production
Exploration & Production Pre-tax replacement cost profit Adjusted for non-operating items and fair value accounting effects 10 50 Average hydrocarbon realizations ($/boe) 45 8 40 • Stronger environment 35 • Reported production 4% lower – 6 30 adjusting for PSA entitlement effects 2% lower ($bn) 25 4
Slide 13: Refining & Marketing
Refining & Marketing Pre-tax replacement cost profit Adjusted for non-operating items and fair value accounting effects 2.0 12.0 Refining indicator margin ($/bbl) 10.0 1.5 8.0 • Good operational performance 1.0 6.0 • Strong performance in international businesses 4.0 ($bn) 0.5 2.0 • Improved Fuels V
Slide 14: Other businesses & corporate
Other businesses & corporate Pre-tax replacement cost profit Adjusted for non-operating items and fair value accounting effects 0.2 0 • Favourable foreign exchange effects (0.2) • Continued progress in managing ($bn) the corporate costs (0.4) • Good operational performance from Alternative Energy as
Slide 15: Sources & uses of cash
Sources & uses of cash 20 1H09 1H10 18 Disposals 16 14 Gulf of Mexico Disposals oil spill $bn post-tax 12 10 Capex 8 Operations Capex 6 Operations 4 Dividends 2 Dividends 0 Sources Uses Sources Uses 15
Slide 16: Financial strength
Financial strength • Significant financial liquidity and CASH CASH COMMITTED COMMITTED optionality to meet our obligations (end (end 2Q) 2Q) BANK BANK FACILITIES FACILITIES – Strong underlying cash flows $7bn $7bn $17bn $17bn – Additional $12bn of bank lines added since 1Q – ~$10bn interventions in
Slide 17: Net debt
Net debt 30 25 20 $bn 15 Range of $10 to $15bn 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Net debt includes the fair value of associated derivative financial instruments used to hedge finance debt 17
Slide 18: Tony Hayward, Group Chief Executive
Tony Hayward Group Chief Executive
Slide 19: Gulf of Mexico oil spill: Operational update
Gulf of Mexico oil spill Operational update • Source control • Relief wells • Containment and clean up − Offshore − Onshore • Claims • Investigations 19
Slide 20: Gulf of Mexico oil spill: Escrow account
Gulf of Mexico oil spill Escrow account • BP to provide funds over time − $5bn in 2010, during 3Q and 4Q − $1.25bn per quarter after 4Q 2010 until $20bn total − Commitments assured by US assets valued at $20bn − Account is neither ceiling nor floor on BP liability − BP has reversionary interest in a
Slide 21: Gulf of Mexico oil spill: Implications for industry
Gulf of Mexico oil spill Implications for industry • Surface response capability • Subsea response capability • Deepwater drilling systems and equipment • Operating model for deepwater • BP committed to: − Sharing lessons − Building capability − Funding $500m investment in scientific/environmental k
Slide 22: BP going forward: Portfolio high grading
BP going forward Portfolio high grading • $25-30bn in disposals planned over next 18 months − Sale of lower-quality E&P and R&M assets − Rebalanced portfolio • Continued success in access to new opportunities − Azerbaijan − Egypt − China − Indonesia − Devon asset transaction 22
Slide 23: BP going forward: Asset disposals
BP going forward Asset disposals Quality Materiality Not indicative of actual BP portfolio 23
Slide 24: BP going forward
BP going forward • Exploration and Production − Smaller: higher quality • Refining and Marketing − Focused: high quality − $2bn+ p.a. of pre tax performance opportunity over 2-3 years • 2010-11 capital spending ~$18bn/year • Expected net debt level range of $10–15bn 24
Slide 25: Safety, People & Performance
Safety, People & Performance Forward Agenda Safe and reliable operations • Continue journey in personal safety • Implement Operating Management System Safe, reliable and efficient operations • Compliance 1.5 Recordable Injury Frequency(1) Integrity Management Major Incidents(2) 35 Industry range - s
Slide 26: Q&A
Q&A Tony Hayward Byron Grote Group Chief Executive Chief Financial Officer Andy Inglis Iain Conn Chief Executive Chief Executive Exploration & Production Refining & Marketing Bob Dudley Fergus MacLeod President and CEO Head of Investor Relations Gulf Coast Restoration Organization 26