Bp Plc · LSE:BP.
Bp — Q3 2020 Earnings Presentation
31 slides from Bp's earnings presentation, Oct 27, 2020
Slide 1: bp third quarter 2020 financial results presentation
bp third quarter 2020 financial results presentation 1
Slide 2: Craig Marshall, SVP investor relations
Craig Marshall SVP investor relations Good morning and welcome to bp’s third quarter financial results. I’m Craig Marshall, SVP investor relations and I am joined here today by Bernard Looney, chief executive officer and Murray Auchincloss, chief financial officer. In a moment Murray will take you t
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: Murray Auchincloss, chief financial officer
Murray Auchincloss chief financial officer Thanks Craig, and welcome everyone. 4
Slide 5: Environment
Environment Commodity prices $/bbl / $/mmBtu 3Q 2020 vs 2Q 2020 Brent1 RMM2 Henry Hub1 RMM / Brent Henry Hub 80 21 ▪ Average Brent oil price 45% 18 higher 60 15 12 ▪ bp’s average RMM2 5% 40 higher 9 6 20 ▪ Henry Hub first of month 3 index gas price ~15% higher 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep
Slide 6: Refining margin outlook remains challenging
Finally, the refining margin outlook remains challenging, given the record high inventory levels and the levelling off in demand recovery for gasoline and jet fuel due to COVID-19. It is likely to remain so until we see a recovery in demand or further reductions in refinery runs. 5
Slide 7: 3Q 2020 underlying results summary
3Q 2020 underlying results summary $bn 3Q19 2Q20 3Q20 3Q 2020 vs 2Q 2020 Underlying replacement cost profit 2.3 (6.7) 0.1 1 Underlying operating cash flow 6.5 4.8 5.3 ▪ Absence of significant exploration write-offs Underlying RCPBIT2 Upstream 2.1 (8.5) 0.9 Downstream 1.9 1.4 0.6 ▪ Higher liquids rea
Slide 8: Cash flow and balance sheet
Cash flow and balance sheet 24 YTD cash inflows/outflows $bn 3Q 2020 highlights 20 Share buybacks ▪ Cash inflow5 of $0.6bn Lease payments3 Inorganic capex 16 Working capital build Disposals1 ▪ Net debt falls to $40.4bn 12 Organic capex 8 Underlying operating cash flow2 ▪ Cash balance point6 around 4
Slide 9: 2020 guidance
2020 guidance Fourth quarter Full year Upstream ▪ Production is expected to be slightly lower Upstream production Lower due to maintenance activity excluding Rosneft than 20191 Organic capital ~$12bn expenditure ~15% lower DD&A Downstream ▪ Continued pressure on industry than 2019 refining margins ▪
Slide 10: Reporting first quarter on new basis
results and well ahead of reporting our first quarter on this new basis. I will now handover to Bernard who is going to speak more about our operational and financial progress. 8
Slide 11: Bernard Looney, chief executive officer
Bernard Looney chief executive officer Thanks Murray, and hello to everyone on the call, it’s great to be joining you today. 9
Slide 12: Performing while transforming
Performing while transforming 3Q 2020 bp capital markets days 2Q 2020 Sustainability Petrochemicals framework divestment announced Energy outlook 1Q 2020 Long-term price bp strategy presentation: assumptions from IOC to IEC Trade Biodiversity Human Alaska upstream Purpose association position rights
Slide 13: Delivering divestments and reducing debt
And doing so while delivering divestments and reducing debt. Let me take each in turn. 10
Slide 14: Resilient & focused hydrocarbons
Resilient & focused hydrocarbons Driving productivity in our business to optimise value Ghazeer start-up ahead of schedule Major project delivery Atlantis Phase 3 start-up on time and on budget Cost and capital efficiency Wells reliability >96% YTD Driving value through investment decisions 10% decl
Slide 15: Major project start-ups: Ghazeer and Atlantis Phase 3
scheduled 2021 start-up. We are seeing continuous improvement in our drilling programme with wells being delivered in record time and at lower cost, and with lower emissions. Additionally, early indications show a richer condensate mix than anticipated. Start-up of Ghazeer is another important miles
Slide 16: Wells reliability and investment decisions
our Atlantis Phase 3 wells, where optimising casing design, enabled the removal of a string, saving time and money; and – We have maintained our wells reliability at over 96% year-to-date, in part due to our progress on mitigating deferrals from safety valve failures and well performance issues. Thi
Slide 17: Convenience & mobility
Convenience & mobility Driving growth through a focus on our customers Jio-bp joint venture operational in India… Expansion in growth markets …adding 1,400 retail sites, with plans to grow to Redefining convenience 5,500 sites Developing next-gen mobility 4% growth1 in convenience gross margin in 3Q
Slide 18: Castrol and redefining convenience
by more than 5% in China and India. As we look to 2021 and beyond, we will focus on making this business better through our improvement plan, integration with mobility and investing in the strong brand that helps make Castrol such a resilient business. We are redefining convenience: – In the third q
Slide 19: Low carbon electricity & energy
Low carbon electricity & energy Building scale with capital discipline and returns focus bp and Equinor announce strategic offshore Access to high growth markets wind partnership in the US Strong pipeline of identified projects Lightsource bp growing solar pipeline in the US and Europe Skills and ca
Slide 20: Strategy of value not volume
Microsoft’s cloud-based services. This is a strategy of value not volume. As we build and grow these businesses and transform our company, we will exercise rigour and discipline in our investment choices, pursuing only those opportunities that we believe can generate the returns we, and our sharehol
Slide 21: Delivering a disciplined approach to investment
Delivering a disciplined approach to investment Cash capex1 $bn ▪ On track for organic capex of ~$12bn in 2020 ~40% reduction ▪ Expect capex at lower end of $13-15bn range including inorganics in 2021 ▪ Focused on capital efficiency and returns (1) Organic and inorganic cash capital expenditure excl
Slide 22: Driving cash cost reductions as we reinvent bp
Driving cash cost reductions as we reinvent bp Total cash costs indexed Progress on cash cost reductions ▪ On track to deliver $2.5bn pre-tax cash cost 100 savings by end-20211 ~30% reduction 80 ▪ 11% lower YTD2 60 40 ▪ $3-4bn of pre-tax cash cost savings expected by 20231 20 0 ▪ Absolute cost base
Slide 23: Headcount reduction and organisation
– In total, bp’s headcount has reduced by around 2,800 so far during 2020. This includes around 300 people who have already left the organisation as part of our reinvent bp programme. – A further 2,100 have elected to leave under reinvent bp, and we continue to expect a total reduction of around 10,
Slide 24: Deleveraging our balance sheet
Deleveraging our balance sheet Net debt¹ $bn ▪ Expect $25bn divestment proceeds 2H20-2025 − $5bn petchems sale expected to complete 50 4Q20 40 ▪ 3Q20 cash balance point² around $42/bbl 30 20 ▪ Net debt reduced to $40.4bn at end-3Q20 10 ▪ Aiming to deleverage to $35bn net debt 0 4Q19 1Q20 2Q20 3Q20 (
Slide 25: 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 26: Q&A
Q&A Bernard Looney Murray Auchincloss Craig Marshall CEO CFO SVP IR 18 18
Slide 27: Appendix
Appendix
Slide 28: 3Q 2020 summary
3Q 2020 summary $bn 3Q19 2Q20 3Q20 % Y-o-Y % Q-o-Q Upstream 2.1 (8.5) 0.9 Downstream 1.9 1.4 0.6 Other businesses and corporate (0.3) (0.3) (0.1) 1 Underlying business RCPBIT 3.7 (7.3) 1.4 (63%) (119%) 2 Rosneft 0.8 (0.1) (0.2) Consolidation adjustment – unrealised profit in inventory 0.0 (0.0) 0.0
Slide 29: Upstream
Upstream Volume mboed Underlying RCPBIT3 $bn Non-US US Total 4000 Group production1 4.0 2.7 2.1 1.9 2.0 0.9 3500 0.0 3000 Upstream production excluding Rosneft (2.0) 2500 (4.0) (6.0) 2000 (8.5) (8.0) 1500 (10.0) 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 Realisations2 3Q19 2Q20 3Q20 3Q 2020 v
Slide 30: Downstream
Downstream 96% Underlying RCPBIT2 $bn Refining 3Q19 2Q20 3Q20 Fuels Lubricants Petrochemicals Total environment Refining availability1 2.0 1.9 RMM ($/bbl) 14.7 5.9 6.2 2Q20: 96% 1.4 1.4 1.5 3Q 2020 vs 2Q 2020 0.9 ▪ Stronger fuels marketing and lubricants 1.0 earnings 0.6 More than offset by 0.5 ▪ A
Slide 31: 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 3Q19 4Q19 1Q20 2Q20 3Q20 -0.2 -0.4 1.1mmboed bp share of Rosneft production3 (1) On a replacement cost basis and adjusted for non-operating it