BP plc · LSE:BP.
BP — FY2021 Earnings Presentation
77 slides from BP's earnings presentation, Feb 8, 2022
Slide 1: bp full year & fourth quarter 2021 financial results & update on strategic progress
bp full year & fourth quarter 2021 financial results & update on strategic progress 8 February 2022
Slide 2: Craig Marshall, SVP investor relations
Craig Marshall svp investor relations
Slide 3: Agenda
Agenda Full year and fourth quarter 2021 results Strategic progress Financial frame Investor proposition Q&A 3
Slide 4: Cautionary statement
Cautionary statement In order to utilize the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995 (the ‘PSLRA’) and the general doctrine of cautionary statements, bp is providing the following cautionary statement: The discussion in this results announcement
Slide 5: Bernard Looney, Chief executive officer
Bernard Looney Chief executive officer
Slide 6: The leadership team
The leadership team Murray Auchincloss Gordon Birrell Giulia Chierchia Emma Delaney Anja-Isabel Dotzenrath1 Kerry Dryburgh Chief financial EVP, production EVP, strategy EVP, customers EVP, gas & low EVP, people and officer and operations and sustainability and products carbon energy culture Emeka Em
Slide 7: Bernard Looney, Chief executive officer
Bernard Looney Chief executive officer
Slide 8: Performing – building a strong track record in 2021
Full year and fourth quarter 2021 results Performing – building a strong track record in 2021 underlying replacement cash cost savings2 target cost profit* delivered ahead of schedule operating cash flow* including net debt* reduction $5.3bn working capital* build1 per ordinary ROACE* share dividend
Slide 9: Transforming – strategic progress
Full year and fourth quarter 2021 results Transforming – strategic progress 2019 2021 2019 2021 2019 2021 Renewables pipeline* UK and US offshore 1.45GW ScotWind Low carbon hydrogen* hopper* wind pipeline lease option award Renewables pipeline* and hydrogen* hopper* are net to bp FY & 4Q 2021 financ
Slide 10: Murray Auchincloss, Chief financial officer
Murray Huchincloss Chief financial officer
Slide 11: An improving but volatile macro environment
Full year and fourth quarter 2021 results An improving but volatile macro environment Oil price1 $/bbl Natural gas price1 $/mmbtu Refining marker margin* 1 $/bbl Brent Henry Hub JKM NBP RMM* Source: Platts - all data 1 January 2021 to 2 February 2022 (1) Spot price FY & 4Q 2021 financial results & u
Slide 12: Underlying results
Full year and fourth quarter 2021 results Underlying results $bn 4Q20 3Q21 4Q21 Underlying RCPBIT * 1.0 5.9 7.0 4Q 2021 vs 3Q 2021 Gas & low carbon energy 0.2 1.8 2.2 Oil production & operations 0.6 2.5 4.0 Higher oil and gas realisations* Customers & products 0.1 1.2 0.6 Rosneft* 0.3 0.9 0.7 Hi
Slide 13: Cash flow and balance sheet
Full year and fourth quarter 2021 results Cash flow and balance sheet FY21 and 4Q highlights 2021 cash inflows/outflows $bn $6.1bn 4Q21 operating cash flow* including $2.2bn working capital*1 build $7.6bn FY21 disposal proceeds* with $2.3bn in 4Q21 $6.3bn FY21 surplus cash flow* with $3.0bn
Slide 14: Delivered against the 2021 financial frame
Full year and fourth quarter 2021 results Delivered against the 2021 financial frame (1) Includes OB&C* (2) In addition, $500m share buyback completed during 2Q21 to offset dilution from vesting of awards under employee share schemes FY & 4Q 2021 financial results & update on strategic progress 14
Slide 15: Bernard Looney, Chief executive officer
Bernard Looney Chief executive officer
Slide 16: Our strategy to transform into an IEC remains unchanged
Strategic progress Our strategy to transform into an IEC remains unchanged FY & 4Q 2021 financial results & update on strategic progress 16
Slide 17: Our progress so far
Strategic progress Our progress so far New purpose Restructuring completed New ambition Disclosures enhanced New strategy Capability expanded New financial frame Shareholder distributions increased New sustainability frame Balance sheet New leadership strengthened team FY & 4Q
Slide 18: From IOC to IEC
Strategic progress From IOC to IEC Confidence in 2025 EBITDA from delivery, EBITDA* resilient hydrocarbons growth to 20301 sustained through 20301 Capital discipline, $9-10bn EBITDA* from Greening accelerated – balance sheet transition growth net zero operations, deleverage, focus on businesses by 2
Slide 19: Confidence in 2025 delivery
Strategic progress Confidence in 2025 delivery Two year track record of strategic delivery Growing EBITDA* to ~$40bn in 2025 Sustaining from resilient hydrocarbons at ~$33bn Rateable growth from convenience and mobility to ~$7bn Disciplined application of our financial frame $14-16bn capital e
Slide 20: Aiming for EBITDA growth to 2030
Strategic progress Aiming for EBITDA growth to 2030 All numbers represent 2030 aims, at $60/bbl Brent (2020, real) and bp planning assumptions FY & 4Q 2021 financial results & update on strategic progress 20
Slide 21: Transition growth businesses
Strategic progress Transition growth businesses (1) Expected returns (IRR) (2) Excludes goodwill and cash and cash equivalent (3) 2030 EBITDA* aim, at $60/bbl Brent (2020, real) and bp planning assumptions FY & 4Q 2021 financial results & update on strategic progress 21
Slide 22: From IOC to IEC
Strategic progress From IOC to IEC Confidence in 2025 EBITDA* from delivery, EBITDA* resilient hydrocarbons growth to 20301 sustained through 20301 Capital discipline, $9-10bn EBITDA* from Greening accelerated – balance sheet transition growth net zero operations, deleverage, focus on businesses by
Slide 23: Strategic progress ‒ resilient hydrocarbons
Strategic progress ‒ resilient hydrocarbons FY & 4Q 2021 financial results & update on strategic progress 23
Slide 24: Resilient hydrocarbons: high-grading our portfolio
Strategic progress ‒ resilient hydrocarbons Resilient hydrocarbons “High-grading our portfolio, Maximise returns and cash flow Continue to improve availability Transition refineries to produce lowering our Maintain production base decline at 3-5% Move portfolio to first quartile Solomon ne
Slide 25: Progressing our strategy
Strategic progress ‒ resilient hydrocarbons Progressing our strategy new major projects* Under budget on average reduction in drilling & production since 2016 for the 35 major projects* completions non-productive delivered since 2016 time vs 2020 Driving portfolio , competitiveness Angola and Iraq
Slide 26: Aim to sustain EBITDA to 2030
Strategic progress ‒ resilient hydrocarbons Aim to sustain EBITDA to 2030 2019 2021 2025 2030 aims EBITDA*1 ($bn) 32.0 33.5 ~33 30-35 Capital expenditure*2 ($bn) 17.3 9.3 9-10 ~8 Oil and gas production3 2.6 2.2 ~2 ~1.5 (mmboed) Unit production costs* ($/boe) ~7 ~7 ~6 ~6 Refining throughput (mmbd) 1.
Slide 27: Deep oil and gas resource base driving quality through choice
Strategic progress ‒ resilient hydrocarbons Deep oil and gas resource base driving quality through choice ~19bn boe of resource selected for development3 ~$7.5bn capital frame through 2025 $9/boe average point-forward development cost4 ~$15/boe DD&A in 2021 80% of 2022-2030 capital expenditure* in 6
Slide 28: Higher quality more focused oil and gas portfolio
Strategic progress ‒ resilient hydrocarbons Higher quality more focused oil and gas portfolio Broadly flat underlying production* Base decline held at 3-5% through 2025 and beyond Invest in best barrels High-grade ~700mboed by 2030 EBITDA* margin <$20/boe Realise value through proceeds Drive
Slide 29: Growing contribution from our advantaged refining portfolio
Strategic progress ‒ resilient hydrocarbons Growing contribution from our advantaged refining portfolio EBITDA* $bn Improving market conditions Recovery in product demand Availability improvement >96% Solomon availability* Cost efficiencies Solomon 2nd quartile non-energy cash costs Enhance fl
Slide 30: Growing bioenergy production
Strategic progress ‒ resilient hydrocarbons growth engine Growing bioenergy production Biofuels Maximise co-processing Bioenergy production1 mbd Biofuels production to triple Biodiesel/SAF production from 5 projects Investment in 3 standalone bio-plants Conversion of up to 2 refineries to bio-
Slide 31: Strategic progress ‒ convenience and mobility
Strategic progress ‒ convenience and mobility FY & 4Q 2021 financial results & update on strategic progress 31
Slide 32: Convenience and mobility: doubling EBITDA, focused on customers
Strategic progress ‒ convenience and mobility Convenience and mobility “Doubling EBITDA*, sustaining returns, focused on Market leading convenience offers Acceleration of EV charging – ‘on-the-go’ fast-charging¹ and Castrol customers” Focus on growing revenue and Differentiated fuels and str
Slide 33: Convenience and mobility: progressing our strategy
Strategic progress ‒ convenience and mobility Progressing our strategy record convenience bn convenience partnership extended to at least 2030 Castrol earnings from growth markets gross margin* vs $1.2bn in 2019 in bpme customers supported by leading digital offers Strategic investments Growing biof
Slide 34: Aim to double EBITDA to $9-10bn by 2030
Strategic progress ‒ convenience and mobility Aim to double EBITDA to $9-10bn by 2030 2019 2021 2025 2030 aims EBITDA* ($bn) 4.9 4.4 ~7 9-10 Convenience and mobility EBITDA* $bn Capital expenditure*¹ ($bn) 1.5 1.6 2-3 Customer touchpoints per >10 >12 >15 >20 day (million) bp retail sites in growth m
Slide 35: Convenience and fuels retail – global presence and track record of growth
Strategic progress ‒ convenience and mobility Convenience and fuels retail – global presence and proven track record of growth Convenience gross margin* $bn Record convenience gross margin* and increase in basket size in key markets $1.5bn, growth of >20% Increased strategic convenience sites* by
Slide 36: EV charging – accelerating our ambition
Strategic progress ‒ convenience and mobility growth engine EV charging – accelerating our ambition through a focus on ‘on-the-go’ charging and fleets in material markets Operated ‘on-the-go’ EV charge points* and energy sales Established a leading presence in UK and Germany, entered fleet segment i
Slide 37: Castrol, aviation, B2B/midstream – growth in volume and margin
Strategic progress ‒ convenience and mobility Castrol, aviation, B2B/midstream – growth in volume and margin Castrol revenues $bn 2030 aims underpinned by Top line increase from Castrol, aviation, B2B/midstream Bottom line improvement through efficiency, optimisation and footprint ~55% of Cast
Slide 38: Strategic progress ‒ low carbon energy
Strategic progress ‒ low carbon energy FY & 4Q 2021 financial results & update on strategic progress 38
Slide 39: Low carbon energy: building scale with capital discipline
Strategic progress ‒ low carbon energy Low carbon energy “Building scale with capital Build a leadership position in offshore wind Leverage bp’s existing refinery demand discipline and Focus on integrated core markets and to build regional supply positions returns focus” early stage project de
Slide 40: Low carbon energy: progressing our strategy
Strategic progress ‒ low carbon energy Progressing our strategy Creating integrated hydrogen* and UK offshore wind renewables hubs renewables pipeline*1 Oman, Abu Dhabi, 1.45GW bp net increased 4x since 2019 UK and Europe ScotWind lease option awarded in 2022 US offshore wind JVs progress 3.3G
Slide 41: Aim to grow EBITDA to $2-3bn by 2030
Strategic progress ‒ low carbon energy Aim to grow EBITDA to $2-3bn by 2030 2019 2021 2025 2030 aims EBITDA* ($bn) Growth phase 2-3 Capital expenditure* ($bn) 0 1.6 3-5 4-6 Developed renewables to FID* 2.6 4.4 20 50 (GW) Low carbon hydrogen* in core Growth phase 10 markets (%) In addition we have
Slide 42: Establishing our new wave of projects in low carbon energy
Strategic progress ‒ low carbon energy growth engine Establishing our new wave of projects in low carbon energy UK and Europe USA and rest of the world UK USA Offshore wind Norway NZT Morgan Lightsource bp Empire Wind 2 Ireland Hydrogen* / CCS NEP Mona bp US solar1 Beacon Wind 1 UK HyGreen Morven Em
Slide 43: Low carbon hydrogen – ambition to reach 10% share in core markets
Strategic progress ‒ low carbon energy growth engine Low carbon hydrogen – ambition to reach 10% share in core markets Hydrogen* hopper* bp net, mtpa Leveraging ~450ktpa existing refining hydrogen* demand First projects on schedule for production from 2024 onwards E.g. Lingen gH2, H2-Fifty, Castel
Slide 44: Strategic progress ‒ integration
Strategic progress ‒ integration FY & 4Q 2021 financial results & update on strategic progress 44
Slide 45: Business integration – our trading organisation at the heart of IEC
Strategic progress ‒ integration Business integration – our trading organisation is at the heart of our IEC model Established positions “Leading energy Trade in >15 European gas trader present in and power hubs 140 countries with Largest natural gas and biogas marketer in North America >2,000 employ
Slide 46: Country integration – creating multi-energy customer solutions
Strategic progress ‒ integration Country integration – creating multi-energy customer solutions along and across value chain (1) 2021 (2) Shared with partner FY & 4Q 2021 financial results & update on strategic progress 46
Slide 47: Our capability
Strategic progress ‒ integration Our capability We have great incumbent capability… …and are attracting high-calibre specialised talent Anja-Isabel Matthias Tracey Clements, Dotzenrath, Bausenwein, SVP Mobility & EVP G&LCE SVP Offshore wind Convenience, ESA From RWE, 1 March From Orsted in 2H22 Prev
Slide 48: Strategic progress ‒ sustainability
Strategic progress ‒ sustainability FY & 4Q 2021 financial results & update on strategic progress 48
Slide 49: Sustainability – accelerating our net zero ambition
Strategic progress ‒ sustainability Sustainability – we are accelerating our net zero ambition in line with the progression of our strategy (1) 2025 targets and 2030 aims for Aims 1-3 are against our 2019 baseline. 100% means to net zero* by 2050 or sooner. FY & 4Q 2021 financial results & update on
Slide 50: Rosneft – committed to sustainably developing resources and driving down emissions
Strategic progress ‒ sustainability Rosneft – committed to sustainably developing resources and driving down emissions Upstream GHG intensity Scope 1 and 2 operational competitive with global emissions targets leading in peers1 Russia In action on New net zero emissions Co-leading Methane 2050
Slide 51: Murray Auchincloss, Chief financial officer
Murray Huchincloss Chief financial officer
Slide 52: Growing cash flow as the business transitions
Strategic progress ‒ financial frame Growing cash flow as the business transitions 2H19/1H20 2021 2025 2030 aims $51/bbl $71/bbl $66/bbl¹ $73/bbl¹ Resilient hydrocarbons 25.0 33.5 ~33 30-35 Convenience and mobility 4.0 4.4 ~7 9-10 Low carbon energy Growth phase 2-3 Group EBITDA*2 ($bn) 28.5 37.2 ~40
Slide 53: Increasing exposure to transition growth businesses
Strategic progress ‒ financial frame Increasing exposure to transition growth businesses Capital expenditure* % Capital employed1 % EBITDA* $bn aims Bioenergy Convenience EV charging Renewables Hydrogen* (1) Excludes goodwill and cash and cash equivalent FY & 4Q 2021 financial results & up
Slide 54: Transition growth engines – operational milestones
Strategic progress ‒ financial frame Transition growth engines – operational milestones Operational bio-refineries* 2 2 Global biogas offtakes 35 >125 >225 Bioenergy production >26mbd >50mbd >100mbd Standalone bio-plants 3 3 Strategic convenience sites* 2,150 ~3,000 ~3,500 Margin share from convenie
Slide 55: Disciplined investment allocation
Strategic progress ‒ financial frame Disciplined investment allocation Capital expenditure* (including inorganics) $bn 2021 2022 2023-25 2026-30 Resilient hydrocarbons 9.3 ~9 9-10 ~8 Convenience and mobility 1.6 2-3 2-3 2-3 Low carbon energy 1.6 ~2.5 3-5 4-6 Group capital expenditure*1 12.8 14-15 14
Slide 56: Continued strengthening of the balance sheet
Strategic progress ‒ financial frame Continued strengthening of the balance sheet Continued net debt* reduction $bn Doubling duration of debt book to >9 years % Gross debt 2021-5 average cash balance point* Intend to allocate 40% of 2022 surplus ~$40/bbl cash to further strengthen balance sheet FY &
Slide 57: Resilient dividend with clear priorities for surplus cash flow
Strategic progress ‒ financial frame Resilient dividend with clear priorities for surplus cash flow 2022-25 average annual dividend and uses of surplus cash flow*¹ $bn Resilient dividend is our first priority Capacity for ~4% annual dividend per share increase at ~$60/bbl² Committed to return ≥60% s
Slide 58: Continued discipline in executing the financial frame
Strategic progress ‒ financial frame Continued discipline in executing the financial frame (1) Subject to maintaining a strong investment grade credit rating. (2) In addition, executed $500m buyback programme during 1Q22 to offset expected dilution from vesting of awards under employee schemes durin
Slide 59: Bernard Looney, Chief executive officer
Bernard Looney Chief executive officer
Slide 60: Our investor proposition
Investor proposition Our investor proposition Growing value and returns 7-9% adjusted EBIDA*1 per share CAGR* Growing ROACE* to 12-14%2 Compelling cash distributions Resilient dividend3, ~4% p.a. growth Investing in transition; ≥60% surplus cash as share driving down emissions buybacks3 >2
Slide 61: FY & 4Q 2021 financial results & update on strategic progress
FY & 4Q 2021 financial results & update on strategic progress 61
Slide 62: FY & 4Q 2021 financial results & update on strategic progress
FY & 4Q 2021 financial results & update on strategic progress 62
Slide 63: Guidance
Guidance Capital expenditure* $14-15bn Expect first-quarter 2022 reported upstream* production to be lower than DD&A Similar level to 2021 fourth-quarter 2021 reflecting base decline and higher maintenance. Within this, we expect production from both oil production & operations and gas & low Dives
Slide 64: Reconciling strategic themes and reporting segments
Reconciling strategic themes and reporting segments Reporting segment Oil production & Customers & Gas & low carbon Rosneft Other businesses operations products energy & corporate Resilient • Oil production Refining and products Gas production • Rosneft hydrocarbons Bioenergy Gas marketing a
Slide 65: Gas and low carbon energy
Gas and low carbon energy 4Q20 3Q21 4Q21 Underlying RCPBIT* $bn Production volume Liquids (mbd) 98 109 122 Natural gas (mmcfd) 4,049 4,520 4,941 Total hydrocarbons (mboed) 796 889 974 Average realisations* Liquids ($/bbl) 36.51 66.39 71.63 Natural gas ($/mcf) 3.37 5.26 6.94 Total hydrocarbons ($/boe
Slide 66: Gas and low carbon energy
Gas and low carbon energy Developed renewables to FID* and Renewables hopper* renewables pipeline* bp net, GW bp net active projects Developed and pipeline 0.6GW higher than 3Q21, driven by increase in Lightsource bp developed assets 53 projects developed to FID* by Lightsource bp with weighted
Slide 67: Oil production and operations
Oil production and operations 4Q20 3Q21 4Q21 Underlying RCPBIT* $bn Production volume1 Liquids (mbd) 1,021 975 1,004 Natural gas (mmcfd) 1,962 1,961 2,053 Total hydrocarbons (mboed) 1,359 1,313 1,358 Average realisations* Liquids ($/bbl) 38.58 65.53 71.07 Natural gas ($/mcf) 2.38 5.61 9.27 Total hyd
Slide 68: Customers and products
Customers and products 4Q20 3Q21 4Q21 Underlying RCPBIT* $bn Customers – convenience & mobility Customers – convenience & mobility 1.0 1.1 1.0 adjusted EBITDA* Castrol1 adjusted EBITDA* 0.3 0.3 0.2 Capital expenditure* 0.4 0.3 0.7 bp retail sites* – total2 20,300 20,350 20,500 bp retail sites in gro
Slide 69: Rosneft
Rosneft bp share of underlying net income* $bn bp share of Rosneft dividend* $bn 4Q20 3Q21 4Q21 bp share of production volume Liquids (mbd) 876 876 879 Natural gas (mmcfd) 1,360 1,418 1,432 Total hydrocarbons (mboed) 1,111 1,120 1,126 FY & 4Q 2021 financial results & update on strategic progress 69
Slide 70: Oil investment options
Oil investment options Existing hub New hub US Gulf of Mexico UK and Norway Atlantis Murlach Johan Sverdrup Phase 2 Major facility Drill center 1,2 and 3 expansion expansions Alligin Phase 2 NOAKA Mad Dog Clair Phase 3 and NCP follow-on North West water South West injection expansion UK infill drill
Slide 71: Gas investment options
Gas investment options Existing hub New hub UK and Norway Angola New Gas Consortium Infill drilling Exploration drilling Azerbaijan bpx energy Shah Deniz Infill drilling Eagle Ford infill compression Haynesville infill drilling and expansion Exploration drilling drilling Russia Trinidad & Tobago Kha
Slide 72: FY & 4Q 2021 financial results & update on strategic progress
FY & 4Q 2021 financial results & update on strategic progress 72
Slide 73: Glossary
Glossary Adjusting items Include gains and losses on the sale of businesses and fixed assets, Cash balance Implied Brent oil price for the quarter that would cause the sum of operating impairments, environmental and other provisions, restructuring, integration point cash flow excluding Gulf of Mexic
Slide 74: Glossary
Glossary EBIDA / adjusted Underlying replacement cost profit before interest and tax*, add back Net debt Calculated as finance debt, as shown in the balance sheet, plus the fair value EBIDA depreciation, depletion and amortisation and exploration expenditure written- of associated derivative financi
Slide 75: Glossary
Glossary Net zero sales bp’s aim to reach net zero* for the greenhouse gas emissions associated Refining Represents Solomon Associates’ operational availability for bp-operated with the lifecycle (including end use) of its marketed and physically traded* availability refineries, which is defined as
Slide 76: Glossary
Glossary ROACE Defined as underlying replacement cost profit, which is defined as profit or Surplus cash flow Refers to the net surplus of sources of cash over uses of cash, after loss attributable to bp shareholders adjusted for inventory holding gains and reaching the $35 billion net debt target.
Slide 77: Glossary
Glossary Unit production Calculated as production cost divided by units of production. Production cost Working capital Movements in inventories and other current and non-current assets and costs does not include ad valorem and severance taxes. Units of production are liabilities as reported in the c