BP plc · LSE:BP.
BP — Q4 2003 Earnings Presentation
28 slides from BP's earnings presentation, Feb 10, 2004
Slide 1: Presentation to the financial community
presentation to the financial community tuesday 10th february 2004
Slide 2: Forward Looking Statements Cautionary Statement
Forward Looking Statements Cautionary Statement This presentation and the associated slides and discussion contain forward looking statements particularly those regarding BP’s asset portfolio and changes in it, capital expenditure, cash flow, costs, divestments, dividends, earnings, environmental re
Slide 3: John Browne, group chief executive
John Browne group chief executive
Slide 4: Agenda
agenda ! 2003 in perspective ! current issues ! segment performance ! strategic implementation ! 4Q & 2003 results ! q&a
Slide 5: 2003 in perspective
2003 in perspective ! maintaining momentum today ! building capability for the future ! record proforma result of $12.4bn ! stronger oil and gas prices than expected !growing demand !OPEC discipline maintained !low inventories
Slide 6: Highlights of 2003
highlights of 2003 ! TNK-BP complete ! reserve replacement !122% organic !158% post acquisitions/divestments and including JV’s/associates ! five new profit centres on track ! production of over 3.6mmboed ! LNG equity production up 42% ! Veba integration complete ! oil product sales growth ! leading
Slide 7: Sources and uses of cash
sources and uses of cash $bn 35 2002 2003 30 pensions buybacks 25 disposals dividends disposals 20 acquisitions 15 10 operations operations organic capex 19.4* 24.2* 5 tax, interest & msi 0 sources uses sources uses *before discretionary pension contributions of $0.1bn in 2002 and $2.5bn in 2003
Slide 8: Reserves: performance & process
reserves: performance & process BP subsidiaries including JV’s and associates reserve replacement 2003 99-03 2003 99-03 excl. acquisitions & divestments 122% 153% 109% 149% incl. acquisitions & divestments 41% 140% 158% 169% ! reserves booked at or within one year of sanction ! central internal revi
Slide 9: Russia
Russia ! long term strategy unchanged: short term plans improving ! around 4% of BP end 2003 capital employed (on UK GAAP basis) ! around 9% of BP end 2003 capital employed (including deferred share payments and Slavneft) ! around 18% of BP 4Q 2003 oil & gas production ! around 10% of BP end 2003 oi
Slide 10: Oil prices: the last years
oil prices: the last 20 years Brent 60 month moving average oil prices 1984-2003 60 50 40 frequency 30 20 10 0 <16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 >25 oil price
Slide 11: Oil majors: finding & development costs
oil majors: finding & development costs nominal major companies*: consolidated F&D costs $/boe 5yr moving average 7 6 5 4 3 2 1 0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 *data set includes BP, ExxonMobil, Shell, ChevronTexaco, ConocoPhillips
Slide 12: Production growth
production growth boe production year 2000=100 boe production growth 120 * 115 110 105 100 95 90 2000 2001 2002 2003 *TOTAL: 9 months 2003
Slide 13: Exploration and production
exploration and production ! expected 2004 production capacity of over 4mmboed ! in line with previous guidance after adjusting for portfolio changes; expected outcome at lower end of range ! capital expenditure 2003-04 below previously expected range ! 2003 lifting costs on track
Slide 14: Customer facing businesses
customer facing businesses ! gas,power & renewables !equity gas to LNG plants up 42% year on year !capacity rights for supply into the UK !progressed North America LNG regas ! refining & marketing !improved cost efficiency !like-for-like volume growth !refining availability remains high ! petrochemi
Slide 15: Patterns of investment
patterns of investment 2002 Feb. 2003 2003 2004 $billions actual estimate actual estimate capital expenditure 13.3 14.0 - 14.5 14.0 13.5 exploration and production 9.3 9.8 - 10.2 9.7 9.0 gas, power and renewables 0.3 0.4 - 0.5 0.3 0.6 refining and marketing 2.7 2.7 - 3.0 3.0 2.8 petrochemicals 0.8 0
Slide 16: Dividends
dividends 5 year 20 year 5 year 20 year dollar dps 5% 7% sterling dps 5% 7% inflation 2% 3% inflation 2% 4% CAGR % CAGR % 10.00 10.00 8.00 8.00 6.00 6.00 4.00 4.00 2.00 2.00 0 0 dollar inflation sterling inflation dollar inflation sterling inflation dps dps dps dps 5 year average 20 year average
Slide 17: Distributions
distributions a balanced framework ! dividend policy - building on track record ! stock buybacks !$6bn since 2000 !continuing in 2004
Slide 18: Byron Grote, chief financial officer
Byron Grote chief financial officer
Slide 19: Trading environment
trading environment full year 4Q 02 3Q 03 4Q 03 2003 2002 average realisations 24.78 26.79 27.30 liquids $/bbl 27.25 22.69 2.87 3.08 3.18 natural gas $/mcf 3.39 2.46 21.03 22.58 23.15 total hydrocarbons $/boe 23.69 18.88 indicator margins 2.76 4.59 3.14 refining $/bbl 3.88 2.11 108 109 114* petroche
Slide 20: Financial results
financial results % change ! results for the fourth quarter vs. 4Q 02 !proforma $2.7bn 1 !replacement cost $1.8bn 7 !historical cost $2.0bn 203 !net cash from operating activity* $3.5bn (44) !dividend 6.75¢/share 8 !ROACE (proforma) 13.4% % change ! results for the year vs. 2002 !proforma $12.4bn 42
Slide 21: Return on average capital employed
return on average capital employed % 30 competitor range* 25 20 15 10 5 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2000 2001 2002 2003 *BP, ExxonMobil, Shell, ChevronTexaco, Total ROACE = (proforma result + after tax finance interest + MSI) / proforma ACE
Slide 22: 2003 vs 2002 result
2003 vs 2002 result proforma basis* Inflation $bn post-tax pensions & medical one-offs 14 r&m 12 gas 10 performance oil tax rate int. expense 8 6 4 2 0 2002 environment forex a&d dd&a other 2003 *a reconciliation to the nearest equivalent UK GAAP numbers is available on www.bp.com
Slide 23: 4Q03 vs 4Q02 E&P result
4Q03 vs 4Q02 e&p result proforma basis* $bn pre-tax 4.5 4.0 3.5 3.0 2.5 2.0 1.5 4Q02 price UPIS forex one volume 4Q03 time dd&a & items pensions *a reconciliation to the nearest equivalent UK GAAP numbers is available on www.bp.com
Slide 24: TNK-BP
TNK-BP $m impact on BP 2003 results 3Q 3Q - 92 day 4Q 33 days equivalent BP share of TNK-BP net income 114 318 278 deferred shares consideration (9) (25) (25) accretion impact on BP net income 105 293 253 production (mboed) 249 695 720 ! $297m dividend received in 4Q ! Slavneft purchase completed Ja
Slide 25: Special and exceptional items
special and exceptional items $bn pre-tax 1 0 (1) (2) (3) (4) 96 97 98 99 00 01 02 03
Slide 26: Accounting and policy changes
accounting and policy changes 2004: !specials & exceptionals !FRS17 accounting for pensions !ESOP share accounting 2005: !IFRS (international financial reporting standards) ! BP focus remains on cash flow and actual performance
Slide 27: Gearing
gearing % 40 35 30 25 20 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1999 2000 2001 2002 2003 proforma gearing = net debt/(net debt + equity – acquisition adjustment)
Slide 28: Q&A session
q&a session John Browne group chief executive Byron Grote chief financial officer Fergus MacLeod investor relations