BP plc · LSE:BP.
BP — FY2007 Earnings Presentation
25 slides from BP's earnings presentation, Feb 5, 2008
Slide 1: BP 4Q 2007 and Full-Year Results
BP 4Q 2007 and Full-Year Results 5 February 2008
Slide 2: Cautionary Statement
Cautionary Statement Forward-Looking Statements Cautionary Statement This presentation and the associated slides and discussion contain forward-looking statements, particularly those regarding operational and financial momentum, expected return to capacity of refineries, production and expected star
Slide 3: Tony Hayward, Group Chief Executive
Tony Hayward Group Chief Executive
Slide 4: Agenda
Agenda • 2007 performance in context • Safety • Forward agenda − Restoring momentum − Reducing complexity − Exploration & Production: 2007 strategic progress − Refining & Marketing: closing the performance gap • 4Q07 financial results • 2008 guidance • Financial framework • Q&A
Slide 5: Safety: our progress
Safety: our progress • 2007 performance • Baker Panel response • Operating Management System
Slide 6: Forward Agenda: restoring momentum
Closing the competitive gap Forward Agenda: restoring momentum 4Q07 • Start-up of six upstream projects: Atlantis, King Subsea Pump, Greater Plutonio, Mango, Cashima, Denise • Whiting: available distillation capacity of 300mb/d • Texas City: recommissioned three units • US settlements 2008 • Whiting
Slide 7: Forward agenda: reducing complexity
Closing the competitive gap Forward agenda: reducing complexity Reducing complexity • Fewer business segments • Fewer layers of management: greater spans of control • Smaller corporate infrastructure • Centralised corporate functions Outcomes • Overall workforce reduction of 5,000 by mid-2009 + 9,50
Slide 8: Exploration & Production 2007 strategic milestones
Exploration & Production 2007 strategic milestones • Exploration success continues: − Azerbaijan, Egypt and Angola • Nine new project start-ups • New access secured: − Oman, Libya, Canadian Heavy Oil • Reserve replacement ratio more than 100% at year end prices − More than 120% excluding year- end p
Slide 9: Refining & Marketing: Closing the performance gap
Refining & Marketing Closing the performance gap • Safe and reliable refining operations • Integrated fuel value chains • Focus marketing footprint − US retail − Lubricants and aviation • Reduction in overhead
Slide 10: Byron Grote, Chief Financial Officer
Byron Grote Chief Financial Officer
Slide 11: Trading environment
Trading environment $/bbl Liquids realization $/mcf Gas realization 90 16 80 14 70 12 60 10 50 40 8 30 6 20 4 10 2 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2007 2006 2007 $/bbl Refining indicator margin 18 Change vs. 2006 16 4Q Year 14 12 Average realizations 10 Liquids $/bbl 53% 14%
Slide 12: Financial results
Financial results Change vs. 4Q 2006 Results for the fourth quarter $bn % % per share • Replacement cost profit 3.0 (24) (22) • Profit including inventory gains/losses 4.4 53 54 • Net cash provided by operating activities 4.3 (14) (12) ¢/ share • Dividend to be paid next quarter 13.525 31 % Change v
Slide 13: Exploration & Production
Exploration & Production $bn pre-tax • Higher realizations 9 8 • Higher production 7 • Sector-specific inflation 6 5 • Greater start-up costs 4 • Higher DD&A 3 • TNK-BP tax lag benefit 2 (approx 4Q’07 $250m, 1 FY 2007 $600m) 0 4Q 06 NOI Underlying 4Q 07 • Non-operating items (NOI) − Embedded derivat
Slide 14: Refining & Marketing
Refining & Marketing $bn pre-tax • Lower US refining margins 0.4 0.2 • Lower supply optimization 0.0 (0.2) • US refining operations (0.4) − Greater integrity and (0.6) repair spend (0.8) − Turnarounds (1.0) (1.2) • Fair value accounting effect (1.4) (1.6) • Non-operating items (NOI) 4Q 06 NOI Underl
Slide 15: Gas, Power & Renewables
Gas, Power & Renewables $bn pre-tax • Strong NGL operating 0.5 performance 0.4 • Lower marketing and 0.3 trading contribution 0.2 • Fair value accounting effect 0.1 0.0 4Q 06 NOI Underlying 4Q 07 255 Underlying result $m 281 215 Non-operating items $m (62) 470 Total result $m 219
Slide 16: Other businesses & corporate
Other businesses & corporate $bn pre-tax • 2007 annual charge 0.00 consistent with prior guidance (0.10) (0.20) (0.30) (0.40) 4Q 06 NOI Underlying 4Q 07 (88) Underlying result $m (310) (188) Non-operating items $m (63) (276) Total result $m (373)
Slide 17: Sources and uses of cash
Sources and uses of cash $bn post tax 2006 2007 45 40 35 30 Disposals Buybacks Buybacks Disposals 25 Dividends 20 Dividends Acquisitions 15 Operations Acquisitions Operations 28.2 24.7 10 Organic Organic capex 5 capex 0 Sources Uses Sources Uses
Slide 18: Net debt ratio
Net debt ratio % 40 35 30 25 20 15 10 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2006 2007 Net debt ratio = net debt / (net debt + equity)
Slide 19: Re-segmentation & 2008 reporting changes
Re-segmentation & 2008 reporting changes • Two operating businesses: E&P, R&M • GP&R segment eliminated: − NGLs, LNG, gas and power marketing and trading businesses incorporated into E&P − Alternative Energy established as a separate unit • Other businesses & corporate redefined as: − Alternative En
Slide 20: 2008 guidance: Tax and rules of thumb
2008 guidance Tax and rules of thumb • Full year effective tax rate: 36-38% • Rules of thumb: Full year (pre-tax) $m Oil price Brent ±$1/bbl 400 Gas price Henry Hub ±$0.1/mmbtu 80 Refining margin GIM ±$1/bbl 950 Rules of thumb provided are approximate. Actual impacts will depend on: − Volumes / port
Slide 21: 2008 guidance: Production, capital spending, DD&A and costs
2008 guidance Production, capital spending, DD&A and costs • Production: growth vs. 2007 • Capital expenditure − Organic capex: $21-$22bn − JVs with Husky Energy (Sunrise/Toledo) − Lower divestments • Higher DD&A of around $1.5bn • Cash costs − Total group costs expected to grow below sector inflati
Slide 22: Shareholder distributions
Shareholder distributions $bn 24 21 18 15 12 9 6 3 0 (3) 2002 2003 2004 2005 2006 2007 Buybacks Dividends Share issues
Slide 23: Financial framework update: context
Financial framework update: context • Confidence in stronger upstream environment • Revenue restoration on track • Buybacks have reduced shares outstanding by 16% since 2000
Slide 24: Financial framework: response
Financial framework: response • Increased capex to support growth • Target gearing band unchanged at 20-30% • Rebalance proportion of free cash flow distributed via dividends and buybacks − Step up in per share dividend − Continued, but lower level of buybacks
Slide 25: Q&A
Q&A Tony Hayward Group Chief Executive Byron Grote Chief Financial Officer