Bp Plc · LSE:BP.
Bp — Q4 2022 Earnings Presentation
60 slides from Bp's earnings presentation, Feb 7, 2023
Slide 1: FY & 4Q 2022 financial results & update on strategic progress
financial results & update on strategic progress FY & 4Q 2022 financial results & update on strategic progress
Slide 2: Craig Marshall, SVP investor relations
Craig Marshall SVP investor relations Good morning everyone and welcome to today’s presentation, this morning we are going to cover bp’s fourth quarter and full year 2022 results. We will also provide an update on strategic progress. Before we begin today, let me draw your attention to our cautionar
Slide 3: 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 4: Bernard Looney, Chief executive officer
Bernard Looney Chief executive officer Thanks Craig. Good morning everyone. It is great to have you join us on the call and to see those of you here in the room in London. Before we begin… After yesterday’s terrible earthquakes in Türkiye and Syria, our thoughts go out to colleagues and everyone wit
Slide 5: In the room today
In the room today Bernard Anja Gordon Emma Bernard Looney Chief executive officer Carol Murray Murray Auchincloss Chief financial officer Gordon Birrell EVP, production & operations Emma Delaney EVP, customers & products Anja Dotzenrath EVP, gas & low carbon energy Carol Howle EVP, trading & shippin
Slide 6: Performing while transforming, leaning further into our strategy
From IOC to IEC – three years of delivery Performing while Leaning further Delivering for transforming into our strategy shareholders Strong operational delivery Investing more into our Delivering a resilient and and cost control, transition growth engines growing dividend strengthening balance shee
Slide 7: Delivering for shareholders
– And third, crucially, we are delivering for shareholders. In 2022, we have grown distributions through an increase in our resilient dividend and delivery of a material share buyback programme. Let’s start off – if it’s ok – with a short video that shows some of the delivery by the bp team over the
Slide 8: Performing while transforming – full year 2022
Performing while transforming – full year 2022 $ 60.7 bn EBITDA* ~21 % Dividend growth since 4Q213 $ 40.9bn Operating cash flow* including $6.9bn working capital* build1 $11.25bn Share buyback4 $ 21.4 bn ~11 % Net debt* – lowest since 3Q13 Cumulative reduction in $9.2bn reduction2 issued share capit
Slide 9: 10% increase in dividend per ordinary share
– Today we have announced a 10% increase in our dividend per ordinary share for the fourth quarter – underpinned by our strong underlying performance and supported by our plans to lean into our strategy and deliver further growth in EBITDA. – Including this increase, our dividend per ordinary share
Slide 10: Murray Auchincloss, Chief financial officer
Murray Auchincloss Chief financial officer Thanks Bernard and good morning everyone. 8
Slide 11: Macro environment
Macro environment Brent oil price1 $/bbl Natural gas price1 $/mmbtu Refining marker margin1 $/bbl Brent TTF Henry Hub RMM* Source: Platts - all data 1 January 2022 to 1 February 2023 (1) Spot price FY & 4Q 2022 financial results & update on strategic progress 9 As usual, I’ll start with the macro en
Slide 12: Long-term price assumptions
Long-term price assumptions Brent oil price $/bbl Henry Hub gas price $/mmbtu Refining marker margin $/bbl New central assumptions (2021 real) Old central assumptions (2020 real) FY & 4Q 2022 financial results & update on strategic progress 10 Moving to our long-term price assumptions. Last week we
Slide 13: Underlying results
Underlying results $bn 4Q21 3Q22 4Q22 4Q 2022 vs 3Q 2022 Underlying RCPBIT * 7.0 13.8 9.3 Gas & low carbon energy 2.2 6.2 3.1 ▪ Below average gas marketing and Oil production & operations 4.0 5.2 4.4 Customers & products 0.6 2.7 1.9 trading after the exceptional result in Other businesses and corpor
Slide 14: Cash flow and balance sheet
Cash flow and balance sheet 4Q 2022 highlights FY 2022 cash inflows/outflows $bn ▪ $13.6bn operating cash flow* including; ▪ $4.2bn working capital*1 release ▪ $7.4bn capital expenditure* ▪ $5.1bn surplus cash flow* ▪ $3.2bn share buyback executed ▪ $2.5bn programme announced with 3Q22 results compl
Slide 15: Delivery against 2022 financial frame
Delivery against 2022 financial frame Resilient Strong investment Disciplined Share dividend grade credit rating investment allocation buybacks 10% $21.4bn $16.3bn $11.25bn Increase in dividend per ordinary 2022 year-end net debt* 2022 capital expenditure*1,2 Buybacks announced from 2022 share to 6.
Slide 16: Bernard Looney, Chief executive officer
Bernard Looney Chief executive officer 14
Slide 17: Leaning into our strategy
We are World needs We are delivering, to solve the and increasingly energy trilemma into our confident strategy Action is needed… 3 year track record… To accelerate the Investing in lower energy transition carbon solutions An orderly transition Investing in hydrocarbons from today’s hydrocarbon to k
Slide 18: Opportunity to lean further into our strategy
– continued investment in hydrocarbons to keep energy flowing, with energy security and affordability at a premium. At the same time – our track record of delivery over three years has given us increased confidence in the strategy we laid out. An Integrated Energy Company is – we believe – uniquely
Slide 19: Transforming to an integrated energy company
Transforming to an integrated energy company Resilient Convenience Low carbon hydrocarbons and mobility energy • Oil and gas • Retail fuels • Refining • Castrol, aviation, B2B/midstream • Bioenergy1 • Convenience • Hydrogen • EV Charging • Renewables & Power Sustainability (1) Bioenergy includes bio
Slide 20: Investing more into transition growth engines and oil and gas
Investing more into our Investing more into transition growth engines today’s oil and gas system up to $8 bn additional capital by 2030 up to $8 bn additional capital by 2030 Investing more into higher return Bioenergy, Investing more in high-quality oil and gas projects and Convenience & EV Chargin
Slide 21: Accelerating EBITDA growth to 2030
Accelerating EBITDA growth to 2030 Investing ~$1bn p.a. more into Uplift to 2030 Group EBITDA* aim $bn our transition growth engines1 Additional EBITDA ~$1bn in 20252 ~$2bn in 20302 Investing ~$1bn p.a. more into today’s oil and gas system1 Additional EBITDA ~$2bnin 20253 $3-4bn in 20303 (1) 2023-30
Slide 22: Investing more to accelerate our transition growth engines
Investing more to accelerate our transition growth engines 2023-30 cumulative capex* Returns and EBITDA* EBITDA $bn Returns1 2030 EBITDA*2 Bioenergy $10-12bn 2 Bioenergy >15% >$4 bn Increased from >$10bn $55-65bn Convenience >15% >$4bn EV Charging Hydrogen and Convenience and Hydrogen Double digit R
Slide 23: Bioenergy – deepening investment
Bioenergy – deepening investment 2025 target 2030 aim ~$ 2 bn EBITDA*1 >$4 bn >15% expected returns2 ~$15 bn cumulative capex 2023-30 Rapidly growing demand, attractive Biogas supply volumes mboed Biofuel production volumes mbd fiscal incentives ~70 Established, global biogas & biofuels businesses t
Slide 24: Biofuels production and projects
– We already produce more than seven thousand barrels per day of biofuels through co-processing – we aim to triple this by 2030. – We also plan to deliver five biofuel projects focused on SAF at our Kwinana, Rotterdam, Castellon, Lingen, and Cherry Point facilities. We expect these projects to produ
Slide 25: Convenience and EV Charging – deeper conviction
Convenience and EV Charging – deeper conviction 2025 target 2030 aim >$1.5 bn >$4 bn EBITDA*1 >15% expected returns2 ~$15bn cumulative capex 2023-30 Convenience Convenience gross margin* $bn EV charge points* and energy sales4 Global growth in sector continues Resiliency, with proven track record 00
Slide 26: Convenience and EV Charging progress
In Convenience: – We now have 2,400 strategic convenience sites, with 250 added in 2022. – We grew our highly profitable loyalty customer base by more than 5% versus 2021. – And we are particularly excited about our progress in the US – for example, Thorntons has integrated well and delivered a reco
Slide 27: Hydrogen and Renewables & Power – focusing investment
Hydrogen and Renewables & Power – focusing investment ~$ 30 bn 2030 aim Hydrogen Renewables $2-3 bn EBITDA* double digit unlevered expected returns1 6-8 % unlevered cumulative capex 2023-30 Hydrogen Hydrogen Renewables & Power Building a leading position globally Creating value through integration K
Slide 28: Hydrogen and Renewables & Power ambitions
By 2030, we aim to produce between 0.5 and 0.7 million tonnes per annum of primarily green hydrogen, while selectively pursuing blue hydrogen opportunities where there is regulatory support and CCS access. Turning to Renewables & Power. Here we are focusing our investment in Renewables on opportunit
Slide 29: Hydrogen and Renewables & Power – building scale
Hydrogen and Renewables & Power – building scale Hydrogen pipeline1 mtpa net Key projects 4Q 2022 US UK and Europe ― Midwest H2 and CCS hub (Whiting refinery) ― UK --- NZT Power, NEP, HyGreen, H2Teesside Global export ― Gulf Coast H2 and CCS hub (incl. ammonia) ― Irish Sea and Scotwind offshore wind
Slide 30: Investing more into today's oil and gas system
Investing more into today’s oil and gas system Focus on safe and reliable operations ▪ Target no major process safety incidents or life Oil and gas production mmboed Oil and gas EBITDA* $bn changing injuries ▪ Maintain plant reliability* at ~96% 38 Deep resource base provides optionality incl Russia
Slide 31: Resource base and production outlook
And our resource base has the potential to sustain underlying production broadly flat to 2030 relative to 2022. A great example is in the Gulf of Mexico where we expect production to increase to around 400 thousand barrels per day by mid-decade, and average 350 thousand barrels per day through the e
Slide 32: Leveraging our advantaged refining portfolio
Leveraging our advantaged refining portfolio Drive competitiveness through digitisation Biofuels strategy leverages Hydrogen strategy anchored and business improvement plans our refineries by our refinery demand Improving safety & operational emissions ~3X co-processing ~50 mbd production from 5 bio
Slide 33: Getting bp to net zero – our evolving pathway
Getting bp to net zero – our evolving pathway Scope 2025 target 2030 aim 2050 or sooner aims Aim 1 50% Scope Net zero operations *1 1+2 20% 30-35%3 100% Aim 2 10-15% 20-30% Scope Net zero production *1 3 20%3 35-40%3 100% Aim 3 Net zero sales *1 Carbon intensity4 5% 15-20% 100% >15%3 50%3 Aim 4 0.20
Slide 34: Momentum in our strategic delivery
Momentum in our strategic delivery 2019 2022 2025 target 2030 aim Resilient Oil and gas production ~200mboed major Deep resource base hydrocarbons (mmboed) 2.6 ~3.8 incl. Russia production 2.3 project production 2.0 ~2.3 provides optionality 1.5 ~2.0 Refining throughput (mmbd) 1.7 1.5 <1.5 1.2 Biofu
Slide 35: Murray Auchincloss, Chief financial officer
Murray Auchincloss Chief financial officer Thanks Bernard. 28
Slide 36: Disciplined investment allocation
Disciplined investment allocation Capital expenditure* (including inorganics) $bn 2021 2022 2025 target 2030 aim Resilient hydrocarbons 9.1 13.02 9-11 8-10 Convenience and mobility 1.6 1.8 2-3 3-4 Low carbon energy 1.6 1.0 3-5 3-5 Group capital expenditure*1 12.8 16.3 14-18 14-18 Of which: Of which:
Slide 37: Growing EBITDA as the business transitions
Growing EBITDA as the business transitions Uplift to 2030 Group EBITDA* aim $bn 2021 2022 2025 target 2030 aim 60 $71/bbl $103/bbl $70/bbl3 $70/bbl3 Resilient $3 6bn 30.64 56.94 40-42 39-42 hydrocarbons 0 Convenience 4.4 4.3 ~7 9-11 and mobility 20 Low carbon energy Growth phase 2-3 Group EBITDA5 34
Slide 38: Strong momentum to $46-49bn 2025 EBITDA
Strong momentum to 202 … in our transition in our oil and supported by our cost growth engines gas portfolio and efficiency agenda ~80% ~30mboed ~200mboed 30-40% ▪ Standardisation and simplification increase in increase in from 9 new increase in biofuels volumes biogas supply high-margin major bpx p
Slide 39: Cost savings delivered ahead of schedule
Having completed the largest reorganisation in our history, we have delivered on our target of $3-4 billion of pre-tax cash cost savings by 2023, relative to 2019, around a year ahead of schedule. Looking ahead, we are working hard to extend the progress we have made in deploying digital and standar
Slide 40: Continued discipline in executing our financial frame
Continued discipline in executing our financial frame Resilient Strong investment Disciplined Share dividend grade credit rating investment allocation buybacks 6.610 40% $16-18 bn 60% per ordinary share 2023 surplus 2023 capital 2023 surplus for 4Q22 cash flow* expenditure* cash flow*2,3 Resilient $
Slide 41: Delivering for shareholders
Delivering for shareholders Accelerating growth Higher returns Growing distributions EBIDA* per share CAGR*1 ROACE* Resilient $40/bbl cash >12% >18% balance point*3 2H19/1H20 – 2025 2025 and 2030 Capacity for annual increase $70/bbl2 $70/bbl2 of the dividend per ordinary share of ~4% at ~$60/bbl Exp
Slide 42: Bernard Looney, Chief executive officer
Bernard Looney Chief executive officer 34
Slide 43: A world-class team
Deepening our capability Attracting new talent A world-class team Improving our diversity Growing pride in bp FY & 4Q 2022 financial results & update on strategic progress 35 Thanks Murray. As we come to a close – what excites me maybe the most, and gives me confidence in our ability to deliver on o
Slide 44: Performing while transforming, leaning further, delivering
Performing while Leaning further Delivering for transforming into our strategy shareholders FY & 4Q 2022 financial results & update on strategic progress 36 So, let me wrap up. First, I hope you will agree that our results show that bp is performing while transforming. Second, we have the right stra
Slide 45: Our investor proposition
Our investor proposition Profitable growth Growing value and returns >12% adjusted EBIDA*1 per share CAGR* Growing ROACE* to >18%2 Committed Delivering long-term distributions shareholder value Compelling cash distributions Sustainable value Resilient dividend3, ~4% p.a. growth Investing in transiti
Slide 46: Appendix
Appendix FY & 4Q 2022 financial results & update on strategic progress 38
Slide 47: Guidance
Guidance Full year 2023 1Q23 vs 4Q22 Capital expenditure* $16-18bn Expect first-quarter 2023 reported upstream production to be broadly flat compared to fourth-quarter 2022. DD&A Slightly above 2022 In our customers business, we expect seasonally lower volumes and in Castrol Divestment and other
Slide 48: Reconciling strategic themes and reporting segments
Reconciling strategic themes and reporting segments Reporting segment Gas & low carbon Oil production Customers Other businesses energy & operations & products & corporate Resilient ― Gas regions ― Oil regions ― Refining and oil trading hydrocarbons ― Gas marketing ― Bioenergy and trading Convenienc
Slide 49: Milestones in resilient hydrocarbons
2022 Permian methane flaring intensity below 0.5% ~11% lower unit production costs Tangguh PSA extension Doubled renewable diesel 96% 2023 in resilient hydrocarbons capacity at Cherry Point 2022 plant First Nuseed reliability* cargo shipped Acquisition of Trinidad Cassia Archaea Energy compression s
Slide 50: Milestones in convenience and mobility
New EVs operating in Spain, Australia and New Zealand New Austrian fuels supply contract 2023 Hertz US EV collaboration in convenience and mobility Aviation expansion Rewe EV partnership in China M&S EV UK Green biofuels partnership ltd investment Castrol OEM BP Midstream US partnerships full owners
Slide 51: Milestones in low carbon energy
Construction of Arche Solar, bp US solar’s first farm Egypt MoU H2 Teesside and Net Zero Teesside 2023 Power phase 2 Mauritania in low carbon energy Australian Acquisition MoU Renewable of EDF Energy Energy Hub (AREH) Iberdrola partnership for hydrogen development Marubeni UAE ADNOC and Masdar Partn
Slide 52: Gas and low carbon energy
Gas and low carbon energy 4Q21 3Q22 4Q22 Underlying RCPBIT* $bn Production volume Liquids (mbd) 122 117 121 Natural gas (mmcfd) 4,941 5,011 4,844 Total hydrocarbons* (mboed) 974 981 956 Average realisations* Liquids ($/bbl) 71.63 88.03 80.50 Natural gas ($/mcf) 6.94 9.85 9.40 Total hydrocarbons* ($/
Slide 53: Oil production and operations
Oil production and operations 4Q21 3Q22 4Q22 Underlying RCPBIT* $bn Production volume Liquids (mbd) 1,004 959 966 Natural gas (mmcfd) 2,053 2,075 1,989 Total hydrocarbons* (mboed) 1,358 1,317 1,309 Average realisations* Liquids ($/bbl) 71.07 93.14 80.43 Natural gas1 ($/mcf) 8.73 12.12 10.20 Total hy
Slide 54: Customers and products
Customers and products 4Q21 3Q22 4Q22 Underlying RCPBIT* $bn Customers – convenience & mobility Customers – convenience & mobility 1.0 1.4 1.0 adjusted EBITDA* Castrol1 adjusted EBITDA 0.2 0.2 0.1 Capital expenditure* 0.7 0.4 0.7 bp retail sites* – total2 20,500 20,550 20,650 Strategic convenience s
Slide 55: Glossary - abbreviations
Glossary - abbreviations Barrel (bbl) 159 litres, 42 US gallons. mbd Thousand barrels per day. boe Barrels of oil equivalent. mboed Thousand barrels of oil equivalent per day. CAGR Compound annual growth rate. mmbd Million barrels per day. CCS Carbon, capture and storage. mmboed Million barrels of o
Slide 56: Glossary
Glossary Adjusting items Include gains and losses on the sale of businesses and fixed assets, Convenience Calculated as RC profit before interest and tax for the customers & products impairments, environmental and other provisions, restructuring, integration gross margin segment, excluding RC profit
Slide 57: Glossary
Glossary Fast charging Includes rapid* and ultra-fast* charging Net zero bp’s aim to reach net zero* operational greenhouse gas (CO2 and methane) operations emissions by 2050 or sooner, on a gross operational control basis, in Hydrogen / low Hydrogen fuel with reduced carbon attributes, including re
Slide 58: Glossary
Glossary Physically traded For the purposes of Aim 3, this includes trades in energy products which are Refining marker Average of regional indicator margins weighted for bp’s crude refining energy product physically settled in circumstances where bp considers their inclusion to be margin (RMM) capa
Slide 59: Glossary
Glossary Solomon See Refining availability definition Ultra fast/Ultra- Includes electric vehicle charging of ≥150kW availability fast charging Solomon net cash Net cash margin is defined by Solomon Associates as the net margin Underlying Calculated by dividing taxation on an underlying replacement
Slide 60: Glossary
Glossary Working capital Movements in inventories and other current and non-current assets and liabilities as reported in the condensed group cash flow statement. Change in working capital adjusted for inventory holding gains/losses, fair value accounting effects relating to subsidiaries and other a