BP plc · LSE:BP.
BP — Q3 2002 Earnings Presentation
23 slides from BP's earnings presentation, Oct 29, 2002
Slide 1: Presentation to the financial community, 29 October 2002
presentation to the financial community tuesday 29th october 2002 01
Slide 2: Forward-looking statements notice
This presentation and the associated slides and discussion contain statements, particularly those regarding capital employed, capital expenditure, cash flows, costs, savings, debt, demand, depreciation, disposals, dividends, earnings, efficiency, gearing, growth, improvements, investments, margins,
Slide 3: Agenda
agenda ! performance in perspective ! trading environment ! 3Q 2002 and year-to-date highlights ! financial framework !q&a 03
Slide 4: John Browne
John Browne 04
Slide 5: Upstream 2001 to 2002 volume variance
upstream 01 to 02 volume variance around 3% growth now expected production mboed 2002 plan 2002 events* 3700 3650 235 -50 3600 40 -50 -30 3550 -20 -25 3500 3450 3400 3350 3300 2001 organic managed OPEC cuts inorganic performance extreme project 2002 actuals growth decline mild winter growth shortfal
Slide 6: Upstream issues
upstream issues ! headroom in forecasts !re-allocation of capital from base to growth !project delays !net seller of production in high oil price environment ! what is optimum growth rate to maximise value? 06
Slide 7: Reserves
reserves % organic reserve replacement ratio* 200 BP 170 140 110 ExxonMobil 80 Shell 50 1999 2000 2001 * includes extensions, discoveries, improved recovery and revisions - excluding associates source: SEC filings 07
Slide 8: Our business model
our business model ! organic investment ! high grade portfolio ! capital efficiency ! operating efficiency !increase mid-cycle returns !growing capital employed !growing dividend … within a disciplined financial framework 08
Slide 9: Performance potential
performance potential ! core goal: sustainable eps growth at double-digit average rate 2001 – 2003 !at mid-cycle assumptions ! dividend around 60% of mid-cycle earnings ! action underway to offset impact of upstream volume shortfall !portfolio !costs 09
Slide 10: To summarise...
to summarise... ! headroom eroded ! reserves in place ! lengthened growth pattern ! short-term capex ! optimising value ! core goal unchanged 10
Slide 11: John Buchanan
John Buchanan 11
Slide 12: Trading environment
trading environment ytd 3Q 01 2Q 02 3Q 02 2002 2001 average realisations 23.08 22.81 24.40 liquids $/bbl 21.99 24.22 2.49 2.45 2.25 natural gas $/mcf 2.32 3.66 indicator margins 3.83 2.06 1.98 refining $/bbl 1.90 4.62 114 109 115* chemicals $/te 101* 109 *provisional 12
Slide 13: Financial results
financial results % change ! results for the third quarter vs 3Q 01 !proforma $2.3bn (13)% !reported $0.8bn (61)% !net cash from operating activity $4.4bn (13)% !dividend 6¢/share 9% !ROACE (proforma) 14.3% % change ! results for the first nine months vs ytd 01 !proforma $6.1bn (38)% !reported $3.0b
Slide 14: Upstream 2Q to 3Q 2002 operating result variance
upstream 2Q to 3Q 2002 operating result variance proforma basis $m 3150 3100 3050 3000 2950 2900 2850 2800 2750 2Q RCOP oil price gas price volume exploration other 3Q RCOP realisations realisations expense 14
Slide 15: Downstream / chemicals 2Q to 3Q 2002 operating result variance
downstream / chemicals 2Q to 3Q 2002 operating result variance proforma basis downstream chemicals $m $m 750 290 700 280 650 270 600 260 550 250 500 240 450 230 400 220 350 210 300 200 2Q environment other 3Q 2Q environ- volume costs other 3Q RCOP RCOP RCOP ment income RCOP 15
Slide 16: The year so far: 9 months 2002 vs 9 months 2001 net result variance
the year so far: 9 months 2002 vs 9 months 2001 net result variance proforma basis $bn 12 10 $0.8 bn pre-tax $0.6 bn post-tax 8 6 4 2 0 ytd 01 oil & gas r&m chemicals underlying interest ytd 02 RCP prices margins margins improvement & msi RCP 16
Slide 17: 2002 performance potential
2002 performance potential mid cycle RCOP growth $bn oct 2002* feb 2002 upstream 3% volume growth 0.2 0.6 4% lower unit production costs gas, power as forecast 0 0 renewables downstream lower unit costs 0.4 0.4 Veba synergies chemicals volume growth and 0.6 0.6 unit cost reduction on track corporate
Slide 18: Special and exceptional items
special and exceptional items $bn pre-tax 2.0 1.0 0 (1.0) 3Q 02 special & (2.0) exceptional items Ruhrgas 1.6 impairments (0.9) (3.0) net other 0.0 total 0.7 (4.0) 96 97 98 99 00 01 ytd 02 18
Slide 19: Sources and uses of cash
sources and uses of cash $bn ytd 01 ytd 02 25 20 buybacks dividends disposals 15 16.9 acquisitions cash from 10 operations capex 13.1 5 tax, interest & msi 0 sources uses sources uses 19
Slide 20: 2002 investment
2002 investment 2002 ytd 2002 plan $bn actual $bn ! organic capex 12-13 9.3 ! acquisitions 5.7 * ! disposals (5.8) ! net investment 8-10 9.2 *includes Veba assumed debt of $1bn 20
Slide 21: Financial framework
financial framework gearing* end-3Q 29% (25-35% target band) dividend 6¢/UK share (36¢/ADR) +9% ytd 02 vs ytd 01 (target around 60% of mid-cycle proforma result) buybacks $750m in 3Q 02 *proforma gearing = net debt / (net debt + equity - acquisition adjustment) 21
Slide 22: Our core goals for 2001-2003: set in July 2000
our core goals for 2001 – 2003: set in july 2000 future delivery ! sustainable, double-digit earnings growth ! at mid cycle assumptions ! by demonstrating our capability ! developing the portfolio ! improving productivity ! managing a global company ! within a disciplined, dynamic financial framewor
Slide 23: Q&A session
q&a session John Browne group chief executive John Buchanan chief financial officer Mike Starkie chief accountant Fergus MacLeod investor relations 23