Bp Plc · LSE:BP.
Bp — Q4 2020 Earnings Presentation
41 slides from Bp's earnings presentation, Feb 2, 2021
Slide 1: bp fourth quarter and full year 2020 financial results presentation
bp fourth quarter and full year 2020 financial results presentation 1
Slide 2: Craig Marshall, SVP investor relations
Craig Marshall svp investor relations Good morning everyone and welcome to bp’s fourth quarter and full year 2020 results presentation. I’m Craig Marshall, senior vice president, investor relations and I am joined today by bp’s chief executive officer Bernard Looney, and chief financial officer, Mur
Slide 3: Cautionary statement
Cautionary statement Forward-looking statements - 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 stat
Slide 4: Bernard Looney, chief executive officer
Bernard Looney chief executive officer Thanks Craig and hello. I hope everyone is managing to stay safe and well – and my best wishes go out to all of you and your families. I think it’s fair to say that we are reporting on a tough quarter at the end of a tough year for everyone – a year unlike any
Slide 5: From IOC to IEC – a year in review
From IOC to IEC – a year in review Purpose, ambition, aims Core beliefs Reimagining energy for people The world will electrify, and our planet renewables a clear winner Become a net zero company by Customers will redefine mobility 2050 or sooner and help the world and convenience get to net zero; su
Slide 6: Update on progress and questions since capital markets day
We’ll update you on that today and also address some of the big questions we’ve been asked since our capital markets day in September. In a minute, Murray will take you through our latest results and the financial frame. But first, let me recap on some of the key areas of progress. 5
Slide 7: 2020 – responding to a challenging environment
2020 – responding to a challenging environment underlying replacement Continued focus on cost loss safety and emissions reductions underlying operating cash flow1 lower capital cash cost divestment and net expenditure2 reduction3 other proceeds debt4 (1) Underlying operating cash flow is net cash pr
Slide 8: Hybrid bond, divestment proceeds and net debt reduction
– Later that month, we issued our first hybrid bond; – We received $6.6 billion of divestment and other proceeds during the year; and – As part of our new financial frame, we introduced a new distribution policy, including a reset dividend. As a result of these actions, at the end of the year our ne
Slide 9: 2020 – performing while transforming
2020 – performing while transforming strong operational and strategic delivery Alaska and Resilient and focused 4 Completion of Southern Gas ~20% ~7% petrochemicals 96 % 94% divestment refining plant major project reduction in unit production hydrocarbons start-ups Corridor Upstream capex cost reduc
Slide 10: Portfolio focus, convenience and low carbon progress
which did not compete for capital inside our portfolio; – Taking the decision to convert our Kwinana refinery in Australia to an import terminal as we focus our portfolio on top-quartile assets; and – Just yesterday we announced the divestment of a 20% stake in Oman’s Block 61 for a total considerat
Slide 11: Building strong and enduring relationships with partners
Building strong and enduring relationships with partners around the world is part of our heritage and integral to the success of our strategy. By working together with partners who bring complementary skills we can accelerate our low carbon transition. Let me now handover to Murray to take you throu
Slide 12: Murray Auchincloss, chief financial officer
Murray Auchincloss chief financial officer Thanks Bernard and good morning everyone. 8
Slide 13: Environment
Environment Commodity prices $/bbl / $/mmBtu 4Q 2020 vs 3Q 2020 Brent1 RMM2 Henry Hub1 RMM / Brent Henry Hub 80 21 ▪ Average Brent price $44/bbl 3% higher 18 60 15 12 ▪ bp’s average RMM2 $5.90/bbl 40 5% lower 9 6 20 ▪ Henry Hub price3 $2.70/mmBtu 3 ~35% higher 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep
Slide 14: 4Q 2020 underlying results summary
4Q 2020 underlying results summary $bn 4Q19 3Q20 4Q20 4Q 2020 vs 3Q 2020 Underlying replacement cost profit 2.6 0.1 0.1 1 ▪ Lower marketing Underlying operating cash flow 7.6 5.3 2.4 performance with volumes Underlying RCPBIT2 under pressure due to COVID-19 Upstream 2.7 0.9 0.7 Downstream 1.4 0.6 0.
Slide 15: Cash flow and balance sheet
Cash flow and balance sheet 2020 cash inflows/outflows $bn 4Q 2020 highlights 28 Share buybacks 24 Lease payments3 ▪ Cash inflow5 of $1.3bn Working capital build Inorganic capex 20 Disposals1 16 Organic capex ▪ $4.2bn disposal proceeds1 12 8 Underlying operating cash flow2 ▪ Net debt falls to $38.9b
Slide 16: A resilient financial frame and business plan
A resilient financial frame and business plan Firm principles and priorities A coherent approach to capital A resilient balance sheet with A disciplined approach to allocation with a clear set of a strong investment grade investment with clear criteria priorities for the uses of cash credit rating a
Slide 17: Delivering a disciplined approach to expenditure
Delivering a disciplined approach to expenditure Cash capex1 $bn 25 20 ~40% reduction ▪ Expect ~$13bn capex in 2021 including 15 inorganics 10 5 ▪ Investment in future growth in low carbon electricity & energy and convenience & mobility 0 2014 2015 2016 2017 2018 2019 2020 2021 100 Total cash costs
Slide 18: Cost reduction targets
reduction targets: – We now expect to achieve a pre-tax savings run-rate of $2.5 billion relative to 2019 during 2021, ahead of our prior guidance of end- 2021; – And we continue to expect $3 to 4 billion pre-tax cost savings from reinvent by 2023, relative to 2019. 13
Slide 19: Deleveraging supports committed distributions
Deleveraging supports committed distributions Net debt¹ $bn 50 40 ▪ Net debt reduced to $38.9bn at end-2020 30 ▪ Expect $4-6bn divestment and other proceeds in 2021 20 10 ▪ Expect to reach net debt target of $35bn around 4Q21– 0 1Q22 with oil price in the range of $45-50/bbl1 4Q19 1Q20 2Q20 3Q20 4Q2
Slide 20: Second half net debt reduction and buyback trigger
In the second half of the year net debt is then expected to fall, supported by: – The absence of first-half specific outflows already noted; – A further improvement in operating cash flow supported by Upstream delivery, easing of COVID-19 impacts on downstream performance and further cost savings fr
Slide 21: Medium term financial frame
Medium term financial frame Upstream reported production lower than 2020 2.6mboed 2.4mboed ~2.0 mboed (ex. Rosneft) slightly higher underlying basis $19.4bn $14.1bn Capital expenditure ~$13bn $14-16bn $15.2bn ex. inorganic $12bn ex. inorganic Cash cost saving $3-4bn in 2023 N/A 12% reduction $2.5bn
Slide 22: Translating strategic themes to our new reporting structure
Translating strategic themes to our new reporting structure Oil production & Customers & Gas & low carbon Other business operations products energy & corporate including innovation & engineering Resilient and focused • Oil production • Refining • Gas production hydrocarbons¹ • Fuels (developed marke
Slide 23: Bernard Looney, chief executive officer
Bernard Looney chief executive officer Thank you, Murray. I’m now going to spend a bit of time addressing some of the questions we’ve received following our Capital Markets Day in September last year. In doing so, I’m going to focus on each of our three strategic themes in turn: – Highlighting some
Slide 24: Resilient and focused hydrocarbons
Resilient and focused hydrocarbons growing EBITDA from a high-graded, higher margin portfolio Oil and gas production Oil, gas and refining unit EBITDA1,2% EBITDA1 $bn Completed divestments <$15/boe $15-30/boe >$30/boe 2.6mmboed ~2.0mmboed Planned divestments Oil and gas production 2H19-1H20 2025 2H1
Slide 25: Portfolio choices and major projects
– Portfolio choices. – Taking each in turn. We continue to deliver from high-margin major projects. – 28 major projects are currently online, with the 29th, Raven, in the live commissioning phase; – During 2021 we expect a further four start-ups and to ramp-up Ghazeer and Raven, underpinning confide
Slide 26: reinvent bp savings and refining
– We are on track to deliver $1.5 billion of savings from reinvent bp from our hydrocarbon business by 2023. Around half from our oil and gas operations, and the remainder from our refining portfolio. – And we are already close to our production cost target of $6 a barrel – a level we aim to maintai
Slide 27: Convenience and mobility
Convenience and mobility customer focused growth EBITDA1 growth $bn Customer touchpoints >10 11.5 >15 >20 per day (million) bp retail sites in 1,270 2,700 7,000 >8,000 growth markets2 Castrol revenues >6.5 5.4 ~7.5 >8.0 ($bn) COVID recovery Strategic >1,600 1,900 >2,300 >3,000 convenience sites2 EV
Slide 28: Redefine convenience and scale up next-gen mobility
– Redefine convenience in key focus markets; and – Scale-up next-gen mobility solutions, including electrification, sustainable fuels and hydrogen. We are confident about this, because we have businesses which are adaptable and can thrive in the energy transition and leverage our quality brands, par
Slide 29: Low carbon electricity and energy
Low carbon electricity and energy building scale and capability with capital discipline and a returns focus Developed1 and pipeline Pipeline2 Hopper3 GW bp net by technology bp net 0.1 Solar Offshore wind 3.7 20% > GW active 0.8 projects 14.1 11GW net 6.3 80% > GW declined 3.1 3.3 opportunities in 4
Slide 30: Returns hurdles and pipeline of projects
Question two: Are there projects available that meet our returns hurdles? Absolutely. At the end of 2020, we had developed a total of 3.3 gigawatts net. This includes projects in our strategic JV, Lightsource bp, which has developed around 30 projects to FID with weighted average expected returns in
Slide 31: Lightsource bp solar progress
participate in future developments in the US. Turning to solar. Dev Sanyal calls Lightsource bp an execution powerhouse and I agree. This partnership brings together the global reach of bp and the project development experience of Lightsource. – In the last three years Lightsource bp has expanded it
Slide 32: Adding value through partnerships and integration
Adding value through partnerships and integration Clean energy Strategic partnership Amplifying value Growing portfolio ▪ Zaragoza province, Spain ▪ Lightsource bp ▪ Structured financing − Sourcing ▪ Recent acquisition ▪ 247MW across 5 solar plants − Developing ▪ De-risked by PPA of 1GW pipeline − C
Slide 33: Our investor proposition
Our investor proposition Resilient dividend of 5.25 cents per Committed share per quarter¹ distributions ≥60% surplus cash as share buybacks² 7-9% EBIDA³ Profitable per share CAGR⁴ growth Growing ROACE to 12-14%⁵ >20% capital Sustainable employed in transition⁶ value (1) Dividend per ordinary share
Slide 34: Closing remarks and thank you
And we believe one that will deliver long-term shareholder value. Thank you everyone – and over to you for questions. 22
Slide 35: Q&A
Q&A Bernard Looney Murray Auchincloss Craig Marshall CEO CFO SVP IR Secret 23 23
Slide 36: Appendix
Appendix
Slide 37: Guidance
Guidance Full year 2021 1Q21 vs 4Q 2020 Upstream reported Lower than 2020 due to the impact of the ongoing Oil and gas production production (ex. Rosneft) divestment programme ▪ Slightly higher reported production Slightly higher than 2020 due to the ramp-up of major Upstream underlying1 projects, p
Slide 38: 4Q 2020 summary
4Q 2020 summary $bn 4Q19 3Q20 4Q20 % Y-o-Y % Q-o-Q Upstream 2.7 0.9 0.7 Downstream 1.4 0.6 0.1 Other businesses and corporate (0.3) (0.1) (0.1) 1 Underlying business RCPBIT 3.9 1.4 0.7 (81%) (47%) 2 Rosneft 0.4 (0.2) 0.3 Consolidation adjustment – unrealised profit in inventory 0.0 0.0 (0.1) 1 Under
Slide 39: Upstream
Upstream Volume mboed Underlying RCPBIT3 $bn Non-US US Total 4000 Group production1 4 2.7 1.9 2 0.9 0.7 3500 0 3000 Upstream production excluding Rosneft (2) 2500 (4) (6) 2000 (8.5) (8) 1500 (10) 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 Realisations2 4Q19 3Q20 4Q20 4Q 2020 vs 3Q 2020 Liquid
Slide 40: Downstream
Downstream 96% Underlying RCPBIT2 $bn Refining 4Q19 3Q20 4Q20 Fuels Lubricants Petrochemicals Total environment Refining availability1 1.6 1.4 1.4 RMM ($/bbl) 12.4 6.2 5.9 3Q20: 96% 1.4 1.2 0.9 4Q 2020 vs 3Q 2020 1.0 0.8 0.6 ▪ Lower marketing performance, with volumes 0.6 remaining under pressure du
Slide 41: Rosneft
Rosneft bp share of underlying net income1 $bn bp share of Rosneft dividend2 $bn Dividend paid 1.0 1.0 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0.0 0.0 2018 2019 2020 (0.2) (0.4) 4Q19 1Q20 2Q20 3Q20 4Q20 1.1mmboed bp share of Rosneft production3 (1) On a replacement cost basis and adjusted for non-operating