BP plc · LSE:BP.
BP — Q2 2011 Earnings Presentation
33 slides from BP's earnings presentation, Jul 26, 2011
Slide 1: 2Q 2011 Results Presentation
2Q 2011 Results Presentation 26 July 2011
Slide 2: Cautionary statement
Cautionary statement Forward-looking statements - cautionary statement This presentation and the associated slides and discussion contains forward-looking statements particularly those regarding: expected increases in investment in upstream production; anticipated improvements in operating cash flow
Slide 3: Bob Dudley, Group Chief Executive
Bob Dudley Group Chief Executive 3
Slide 4: Agenda
Agenda Moving BP forward Bob Dudley 2Q 2011 results Byron Grote Delivering shareholder value Bob Dudley Q&A Bob Dudley Group Chief Executive Byron Grote Chief Financial Officer Iain Conn Refining & Marketing Mark Bly Safety & Operational Risk Mike Daly Exploration Bernard Looney Developments Bob Fry
Slide 5: Moving BP forward: Rebuilding value
Moving BP forward Rebuilding value Putting safety & operational risk management at the heart of the company • New Safety & Operational Risk function • Long-term integrated approach • Aligning incentives: rebasing performance management and reward with long-term focus Rebuilding trust • Meeting our c
Slide 6: Moving BP Forward: Strategic progress 1H 2011
Moving BP Forward Strategic progress 1H 2011 Putting safety & operational risk management at the heart of the company • New Safety & Operational Risk organization in place: stronger checks and balances • Increased investment in integrity and capability • Implementing lessons from the Gulf of Mexico
Slide 7: Byron Grote, Chief Financial Officer
Byron Grote Chief Financial Officer 7
Slide 8: Trading environment
Trading environment Liquids realization Gas realization 120 20 100 16 80 12 $/mcf $/bbl 60 8 40 20 4 0 0 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2010 2011 2010 2011 Change vs 2010 Refining marker margin Average realizations 2Q YTD 14 12 Liquids $/bbl 47% 38% 10 Natural gas $/mcf 21% 9% 8 $/bbl Total hyd
Slide 9: Financial results
Financial results All earnings figures are adjusted for the costs associated with the Gulf of Mexico oil spill, other non-operating items and fair value accounting effects Replacement cost profit before interest and tax ($bn) 2Q10 2Q11 2Q11 vs 2Q10 ($bn) Exploration & Production 6.3 7.3 11 Refining
Slide 10: Exploration & Production
Exploration & Production Replacement cost profit before interest and tax Adjusted for non-operating items and fair value accounting effects • Stronger environment 10 • Production 11% lower 80 Average hydrocarbon realizations ($/boe) Adjusting for PSA entitlement 70 effects and A&D, production 7% 8 6
Slide 11: Refining & Marketing
Refining & Marketing Replacement cost profit before interest and tax Adjusted for non-operating items and fair value accounting effects • Improved refining environment 2.5 15.0 • Weak supply and trading contribution Refining marker margin ($/bbl) 2.0 12.0 • Texas City refinery power outage 1.5 9.0 •
Slide 12: Other businesses & corporate
Other businesses & corporate Replacement cost profit before interest and tax Adjusted for non-operating items and fair value accounting effects • Higher group level functional spend as a consequence of the Gulf of 0.2 Mexico oil spill 0 • Guidance remains at $400 million average underlying quarterly
Slide 13: Gulf of Mexico oil spill costs and provisions
Gulf of Mexico oil spill costs and provisions (pre-tax*) $bn FY10 1Q11 2Q11 • Income statement – Charge/ (credit) for the period 40.9 0.4 (0.6) • Balance sheet** – Brought forward 23.3 20.6 – Charge/ (credit) to income statement 40.9 0.4 (0.6) – Payments into Trust Fund (5.0) (1.3) (1.3) – Other rel
Slide 14: Sources & uses of cash
Sources & uses of cash 1H10 1H11 • $1.6 billion of disposals 24 completed during 2Q 22 ($4.2 billion in 1H11) 20 Trust fund Other GoM • Additional $4.6 billion of cash 18 Disposals oil spill deposits held at the end of the Disposals payments** 16 quarter for disposals expected 14 GoM oil spill to co
Slide 15: Net debt ratio
Net debt ratio 35 30 25 20 to 30% 20 % 10 to 20% 15 10 5 0 2008 2009 2010 2011 2012 Net debt ratio = net debt / (net debt + equity) Net debt includes the fair value of associated derivative financial instruments used to hedge finance debt Cash of $4.6bn received as deposits for disposals completing
Slide 16: 2011 acquisitions and disposals
2011 acquisitions and disposals Acquisitions Acquisitions Disposals Disposals Completed Completed • Brazil Devon assets • Colombia • Brazil CNAA ethanol • Gulf of Mexico Devon assets • Wattenburg gas plant Announced • Venezuela • India Reliance gas • Package of fuel storage and pipeline assets in US
Slide 17: Bob Dudley, Group Chief Executive
Bob Dudley Group Chief Executive 17
Slide 18: Putting safety and operational risk management at the heart of BP
Putting safety and operational risk management at the heart of BP Safety & Operational Risk (S&OR) organization in place and in action • S&OR professionals deployed into operating businesses • New authorities and accountabilities established • Expanded audit oversight and capacity • Building compete
Slide 19: Rebuilding trust
Rebuilding trust Meeting our commitments in the US • Completing the response − Majority of shoreline clean-up complete • Gulf Coast showing promising signs of recovery − Strong signs of improvement for tourism and seafood during 1H 2011 − All federal commercial fishing areas open • Funding economic
Slide 20: Gulf of Mexico liabilities: timeline and milestones
Gulf of Mexico liabilities: timeline and milestones Indicated dates* Key investigations • Presidential Commission final report 11 January 2011 • US Coast Guard preliminary report 22 April 2011 • Marine Board investigation final report To be determined • Chemical Safety Board report To be determined
Slide 21: Upstream value growth
Upstream value growth • Risk reduction • Active portfolio management • Growing operating cash faster than production • Increased investment with a focus on exploration • Growth engines − Deepwater − Gas value chains − Giant fields 21
Slide 22: Portfolio management
Portfolio management Ongoing active portfolio management • Balancing focus, risk and growth • Concentration in promising areas where we operate Divestments update • Reserves of 1.8bn boe and non-proved resources of 3.2bn boe • Production impact of 400 mboed on a full year basis Brazil: acquisition o
Slide 23: Operating cash growth
Operating cash growth Potential to grow operating cash flow • Unit operating cash margin growth • Production growth Near term milestones • Greater Plutonio now online following turnaround • Re-starting drilling operations in the Gulf of Mexico • Nine major projects online by end of 2013 • Cash flow
Slide 24: Growth 2012–2013
Growth 2012–2013 Angola Gulf of Mexico North Sea 2012/2013 Major Project start-ups BP working Location Project Type interest % Gross capacity Angola Angola LNG z 14 5 mtpa Block 31 PSVM* z 27 150 mboed Clochas-Mavacola z 27 100 mboed Asia Pacific North Rankin 2 z 17 1,800 mmscfd Gulf of Mexico Galap
Slide 25: Increased investment for growth
Increased investment for growth • Up to 1 mmboed of production by end 2016 from new projects • Increasing organic capital reinvestment for longer-term growth • Half of capital over the next five years focused on growth post 2016 • Capital efficiency is critical: competitive returns on capital invest
Slide 26: Increased focus on exploration
Increased focus on exploration • Plans to double exploration spend on track − 2006-11 exploration portfolio rebuild creates potential to double drilling investment − Adding new acreage in established areas: Gulf of Mexico, Egypt, Azerbaijan, UK, and Indonesia − Entered new basins: Trinidad, Australi
Slide 27: New access
New access Trinidad 100% interest in 2 blocks of ~3,500 km2 Brazil Adelaide 10 blocks of ~10,000km2 Australia 100% interest in 4 blocks of ~24,500km2 27
Slide 28: Future growth engines
Future growth engines Global deepwater • Managing complexity • Differentiated technology Gas value chains • Relationships • Global project management • Integrating value across long chains Giant fields and resource plays • Huge resource base • Understanding big reservoirs Oil Gas • Unconventionals u
Slide 29: Refining & Marketing value growth
Refining & Marketing value growth Safety and trust • Safe and reliable operations remain the number one priority • Focus on process safety risk management and Operating Management System Earnings momentum • On track to deliver in excess of $2bn p.a. underlying RC profit improvement by end 2012 versu
Slide 30: Whiting Refinery Modernization Project
Whiting Refinery Modernization Project Sources of value Historical light / heavy crude Margin capture capability differential 600 45 Indexed pre tax underlying RC profit 40 500 Mid West post project performance for a range of WTI – Lloydminster 35 differentials $/bbl of capacity 400 1H 2011 30 $/bbl
Slide 31: Moving BP Forward
Moving BP Forward Year of consolidation Building momentum 2011 2012 2013+ • New S&OR organisation • Planned divestment of Texas • Whiting on-stream 2013 • Investing in integrity/increased City refinery/Southern West • 9 major upstream projects turnarounds Coast fuels value chain onstream by end 2013
Slide 32: Delivering shareholder value
Delivering shareholder value Safe Safe and and reliable reliable operations operations Increased Increased focus focus on on exploration exploration Increasing Increasing investment investment for for upstream upstream growth growth Operating Operating cash cash growing growing faster faster than th
Slide 33: Q&A
Q&A Mike Daly Bob Dudley Executive Vice President, Group Chief Executive Exploration Bernard Looney Byron Grote Executive Vice President, Chief Financial Officer Developments Iain Conn Bob Fryar Chief Executive Executive Vice President, Refining & Marketing Production Mark Bly Lamar McKay Executive