BP plc · LSE:BP.
BP — Q2 2008 Earnings Presentation
26 slides from BP's earnings presentation, Jul 29, 2008
Slide 1: First half 2008 update
First half 2008 update 29 July 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 oil and gas prices and impact of price changes; continuing operational momentum; underlying production gr
Slide 3: Tony Hayward, Group Chief Executive
Tony Hayward Group Chief Executive
Slide 4: Financial results for 1H 2008
Financial results for 1H 2008 Replacement cost profit • $13.4bn, up 23% vs. 1H07 • Per share 71.3¢, up 26% vs. 1H07 Post tax operating cashflow • $17.6bn, up 25% vs. 1H07 Quarterly dividend per share • 14.0¢, up 29% vs. 2Q07
Slide 5: Byron Grote, Chief Financial Officer
Byron Grote Chief Financial Officer
Slide 6: Trading environment
Trading environment $/bbl Liquids realization $/mcf Gas realization 120 20 100 16 80 12 60 40 8 20 4 0 0 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2007 2008 2007 2008 $/bbl Refining indicator margin 18 Change vs 2007 15 Average realizations 2Q 1H 12 Liquids $/bbl 76% 74% 9 Natural gas $/mcf 49% 34% 6 Tota
Slide 7: Financial results
Financial results Change vs. 2Q 2007 Results for the second quarter $bn % % per share • Replacement cost profit 6.9 6 8 • Profit including inventory gains/losses 9.5 28 31 • Net cash provided by operating activities 6.7 10 12 ¢/ share • Dividend to be paid next quarter 14.0 29% Change vs. 1H 2007 Re
Slide 8: Exploration & Production
Exploration & Production $bn pre-tax 12 • Higher realizations 10 • Strong underlying production 8 growth 6 • Greater TNK–BP contribution: prices and tax lag benefit 4 • Higher costs: sector-specific 2 inflation, DD&A, production 0 taxes 2Q 07 FVAE/NOI Underlying 2Q 08 • Non-operating items: 6,815 Un
Slide 9: Refining & Marketing
Refining & Marketing $bn pre-tax 3.0 • Lower US refining margins 2.5 • Increased refinery 2.0 throughputs 1.5 • Strong International Businesses contribution 1.0 0.5 0.0 2Q 07 FVAE/NOI Underlying 2Q 08 1,638 Underlying result $m 799 337 Fair value accounting effects (161) (FVAE) $m 767 Non-operating
Slide 10: Other businesses & corporate
Other businesses & corporate $bn pre-tax 0.2 Non-operating items: 0.1 • Restructuring costs 0.0 (0.1) (0.2) (0.3) (0.4) 2Q 07 FVAE/NOI Underlying 2Q 08 (165) Underlying result $m (191) (8) Non-operating items (NOIs) $m (123) (173) Total result $m (314)
Slide 11: Sources & uses of cash
Sources & uses of cash $bn post tax 1H 07 1H 08 20 Disposals Disposals Buybacks Buybacks Dividends Dividends 10 Operations Acquisitions Operations 17.6 Acquisitions 14.1 Organic Organic capex capex 0 Sources Uses Sources Uses
Slide 12: Net debt ratio
Net debt ratio % 40 35 30 25 20 15 10 1Q 2Q 3Q 4Q 1Q 2Q 2007 2008 Net debt ratio = net debt / (net debt + equity) Net debt includes the fair value of associated derivative financial instruments used to hedge finance debt
Slide 13: Outlook
Outlook Exploration & Production • Strong underlying growth in full-year production • Continued significant PSA effects • Seasonal turnarounds ongoing in 3Q: North Sea and US Refining & Marketing • Higher refining availability • Current quarter-to-date refining margins significantly below 2Q 2008 •
Slide 14: Tony Hayward, Group Chief Executive
Tony Hayward Group Chief Executive
Slide 15: 1H 2008 strategic progress: Restoring revenues
1H 2008 strategic progress Restoring revenues Upstream production • Underlying production growth excluding PSA effects of 6% vs. 1H 2007 • Four major project start-ups: Deep Water Gunashli (ACG), Mondo (Kizomba C), Saqqara, Egypt Gas Phase 1-Taurt • Commissioning of Thunder Horse underway US refinin
Slide 16: 1H 2008 strategic progress: Reducing complexity
1H 2008 strategic progress Reducing complexity Restructuring • Headcount reduction on track • $468 million 1H08 restructuring costs Delayering • Reduction in management layers • 20% senior positions removed Business simplification • Integrated fuel value chain organisation established • Focussing ma
Slide 17: 1H 2008 strategic progress: Securing the future
1H 2008 strategic progress Securing the future • Continued exploration success: Angola, Egypt, North Sea, Gulf of Mexico • New access to resources: − Integrated oil sands / refining JVs with Husky − Canadian Arctic – Beaufort Sea − Arkoma Basin Woodford shale gas deal • Block 31 Angola: Approval of
Slide 18: TNK-BP performance 2003-7: Production growth
TNK-BP performance 2003-7 Production growth % (Indexed) Liquids production growth* 160 150 TNK-BP 140 Rosneft 130 Gazprom Neft 120 Lukoil 110 100 2002 2003 2004 2005 2006 2007 * In Russia; Organic - excluding acquisitions & divestments Source: Central Dispatch Union – Russian Ministry of Energy
Slide 19: TNK-BP performance 2003-7: Reserves replacement
TNK-BP performance 2003-7 Reserves replacement % Average reserve replacement ratio* 150 100 50 0 TNK-BP Gazprom Lukoil Rosneft Neft * In Russia; Organic - excluding acquisitions & divestments Source: Company reports
Slide 20: TNK-BP performance 2003-7: Cash returns to shareholders
TNK-BP performance 2003-7 Cash returns to shareholders $bn Total cash distributions to shareholders* 20 15 10 5 0 TNK-BP Gazprom Neft Lukoil Rosneft * Excluding acquisitions & divestments Source: Company reports
Slide 21: TNK-BP performance 2003-7: #1 in Russia
TNK-BP performance 2003-7 #1 in Russia • Production #1 − Highest organic growth rate* of any major Russian oil company: 8%/year • Reserve replacement #1 − Highest reserve replacement* of any major Russian oil company: 138% • Dividends to shareholders #1 − Highest cash payments to shareholders of any
Slide 22: Changing business environment: Oil and gas prices
Changing business environment Oil and gas prices $/bbl Brent and Henry Hub Prices $/mmbtu 160 28 140 24 120 21 100 17 80 14 Brent 60 (left scale) 10 40 7 Futures Henry Hub 20 (right scale) 3 0 0 Sep-11 Sep-10 Sep-08 Jan-06 Jan-07 Jan-08 Sep-09 Jan-03 Jan-04 Jan-05 Source: Platts; Futures data NYMEX
Slide 23: Changing business environment: Refining margins
Changing business environment Refining margins $/bbl 35 30 25 20 15 10 5 0 -5 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Global GIM Europe / Asia GIM US GIM GIM = Global Indicator Margin Source: BP
Slide 24: Responding to the changing business environment
Responding to the changing business environment Increased activity in Exploration & Production • Capturing new growth opportunities • Pull through of resources in established basins Forward Agenda: continued focus on costs and efficiency • Capturing stronger business environment in the upstream • Mi
Slide 25: BP strategy: closing the competitive gap
BP strategy: closing the competitive gap • Upstream growth • Downstream turnaround • Corporate simplification • Alternative Energy growth and equity value
Slide 26: Q&A
Q&A Tony Hayward Byron Grote Group Chief Executive Chief Financial Officer Andy Inglis Iain Conn Chief Executive Chief Executive Exploration & Production Refining & Marketing Vivienne Cox Fergus MacLeod Chief Executive Head of Investor Relations Alternative Energy