BP plc · LSE:BP.
BP — Q3 2011 Earnings Presentation
37 slides from BP's earnings presentation, Oct 25, 2011
Slide 1: Investor Update
Investor Update 25 October 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 exploration and upstream drilling and production; anticipated improv
Slide 3: Bob Dudley, Group Chief Executive
Bob Dudley Group Chief Executive 3
Slide 4: Moving BP forward
Moving BP forward Introduction Bob Dudley 3Q 2011 results Byron Grote Moving BP forward Bob Dudley Q&A Bob Dudley Group Chief Executive Byron Grote Chief Financial Officer 4
Slide 5: Moving BP Forward: Safety, Trust, Value Growth
Moving BP Forward Safety : Trust : Value Growth Putting safety and operational risk management at the heart of the company • New Safety and Operational Risk organization • Investment in maintenance • Reorganized upstream Rebuilding trust • $20bn Trust Fund: now 50% funded • Settlements with Mitsui/W
Slide 6: Moving BP Forward: A 10 point plan
Moving BP Forward A 10 point plan What you can expect 1. Relentless focus on safety and managing risk 2. Play to our strengths • Exploration • Deepwater • Giant fields • Gas value chains • World class downstream business • Relationships and technology 3. Stronger and more focused 4. Simpler and more
Slide 7: Moving BP Forward: A 10 point plan
Moving BP Forward A 10 point plan What you can measure 6. Active portfolio management to continue • Increase overall divestment programme to $45bn versus current program of $30bn • Further $15bn over the next two years including two US refineries 7. New upstream projects onstream with higher margins
Slide 8: Byron Grote, Chief Financial Officer
Byron Grote Chief Financial Officer 8
Slide 9: 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 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2010 2011 2010 2011 Change vs 2010 Refining marker margin 14 Average realizations 3Q YTD 12 Liquids $/bbl 47% 41% 10 Natural gas $/mcf 26% 15% 8 $/bbl 6
Slide 10: 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 $bn 3Q10 3Q11 3Q11 vs 3Q10 ($bn) Exploration & Production 6.5 7.1 10 Refining &
Slide 11: Exploration & Production
Exploration & Production Replacement cost profit before interest and tax • Stronger environment Adjusted for non-operating items and fair value accounting effects • Production 12% lower 10 80 Average hydrocarbon realizations $/boe Adjusting for PSA entitlement 70 effects and acquisitions and 8 60 di
Slide 12: TNK-BP
TNK-BP BP share of TNK-BP net income and dividend 2.0 • Strong environment • Higher production 1.5 $bn 1.0 0.5 0 3Q10 4Q10 1Q11 2Q11 3Q11 Dividend Share of net income 12
Slide 13: Refining & Marketing
Refining & Marketing Replacement cost profit before interest and tax • Texas City refinery capacity Adjusted for non-operating items and fair value accounting effects restored 2.5 15.0 • Improved refining environment • Higher supply and trading Refining marker margin $/bbl 2.0 12.0 contribution 1.5
Slide 14: Other businesses & corporate
Other businesses & corporate Replacement cost profit before interest and tax Adjusted for non-operating items and fair value accounting effects 0.2 • Beneficial foreign exchange effects versus prior year 0 • Higher charge expected in 4Q (0.2) $bn (0.4) (0.6) (0.8) 3Q10 4Q10 1Q11 2Q11 3Q11 14
Slide 15: Gulf of Mexico oil spill costs and provisions
Gulf of Mexico oil spill costs and provisions $bn pre-tax(1) FY10 YTD11 • Income statement – Charge for the period 40.9 0.4 • Balance sheet(2) – Brought forward 23.3 – Charge to income statement 40.9 0.4 – Payments into Trust Fund (5.0) (4.9) – Cash settlements received from Mitsui and 1.1 Weatherfo
Slide 16: Sources & uses of cash
Sources & uses of cash YTD 2010 YTD 2011 • Year-to-date 2011 operating cash 25 flow is $17.1 billion • $2.2 billion of disposals 20 Disposals completed during 3Q ($6.4 billion Inorganic capex(2) year-to-date 2011) Inorganic Disposals capex 15 • Additional $4.5 billion of cash deposits held at the en
Slide 17: Net debt ratio
Net debt ratio 35 30 25 20 to 30% 20 % 15 10 to 20% 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 $4.5bn received as deposits for disposals completing
Slide 18: Moving BP Forward: Additional segment disclosure
Moving BP Forward Additional segment disclosure Focus on growing cash flow • Around 50% improvement in operating cash flow by 2014 versus 2011(1) • $15bn additional divestments by end 2013; $45bn in total • Increased investment to grow the firm Reduce gearing to lower half of 10–20% range Higher dis
Slide 19: Bob Dudley, Group Chief Executive
Bob Dudley Group Chief Executive 19
Slide 20: Putting safety and operational risk management at the heart of the company
Putting safety and operational risk management at the heart of the company Safety and Operational Risk organization • Growing deep capability Operating Management System • Driving continuous improvement Implementing lessons from the Gulf of Mexico oil spill • Sharing lessons globally • Continuing to
Slide 21: Rebuilding trust: Progress in the US
Rebuilding trust Progress in the US • Focus shifting from response to recovery • Funding economic and environmental restoration − $7bn in claims and government payments(1) − $1bn committed to early restoration projects − $10bn paid into Trust Fund • Co-owner disputes with Anadarko and Mitsui resolve
Slide 22: Value growth: Upstream Framework
Value growth: Upstream Framework • Risk reduction • Increased investment with a focus on exploration • Active portfolio management • Growing operating cash faster than production • Growth engines − Deepwater − Gas value chains − Giant fields 22
Slide 23: Increased investment with a focus on exploration: Continued Access Success
Increased investment with a focus on exploration Continued Access Success North Sea Caspian Central & Southern North Sea Shafag-Asiman 300km2 1,100km2 China US Gulf of Mexico South China Sea OCS lease sale 213 16,700km2 (1) 120km2 Indonesia North Arafura 5,100km2 Trinidad East Kalimantan 4,800km2 Ba
Slide 24: Increased investment with a focus on exploration: Building for the future
Increased investment with a focus on exploration Building for the future Planned exploration wells 15-25 12-17 6 2011 2012 2013 • On track to double exploration investment – Continue to access new acreage – Leveraging seismic acquisition and imaging – Increasing exploration to 15-25 wells/year • Inc
Slide 25: Active portfolio management
Active portfolio management Continuing active phase Production impact of divestments from 2010 • Balancing criteria of focus, risk and growth 2010 2011 2012 2013 2014 0 • Concentration in promising areas where we operate (100) • New additions: Brazil, India (200) Further upstream divestments over mb
Slide 26: Growing upstream operating cash faster than production
Growing upstream operating cash faster than production Operating cash Excluding TNK-BP 2011 operating Growth driven by Divested 2014 operating cash estimate Angola, operations and cash estimate at oil price of Gulf of Mexico, environment at oil price of $113/bbl North Sea $100/bbl 26
Slide 27: Momentum in operating cash flow: New projects drive growth
Momentum in operating cash flow New projects drive growth Production, mboed Major Project start-ups Excluding TNK-BP Excluding TNK-BP Location Project 2011 2012 2013 /2014 Angola Angola LNG • Block 31 PSVM • Clochas-Mavacola • CLOV • Pazflor • Asia Pacific North Rankin 2 • Azerbaijan Chirag Oil • Ca
Slide 28: Potential rig activity in the Gulf of Mexico
Momentum in operating cash flow Potential rig activity in the Gulf of Mexico • 3 rigs currently operating In year production from new wells mboed • Additional 2 by year end • Further 2 by end 2012 Potential Gulf of Mexico rig schedule 2011 2012 2013 Development Driller II Development Driller III Dis
Slide 29: TNK-BP dividends and growth
TNK-BP dividends and growth Dividends (BP net) World class integrated oil and gas 10 Initial Investment company 8 Dividends 6 • 4.2bn boe of proved reserves(1) 4 $bn • 1mmboed BP net production 2 0 Future growth potential (2) (4) • Offset mature field decline 2003 2004 2005 2006 2007 2008 2009 2010
Slide 30: Value growth: World class downstream business
Value growth World class downstream business The highest quality downstream business • Hydrocarbon value chains delivering leading returns and cash flow growth Incorporating three business models • Fuels (including optimization and trading) • Lubricants • Petrochemicals 30
Slide 31: World class downstream business
World class downstream business Safe and reliable operations • Becoming a leader in process safety • Industry leading reliability and availability Excellent execution • Compliance, rigour, discipline, efficient use of resources • Effective organization and capability Portfolio quality and integratio
Slide 32: Refining & Marketing: Earnings momentum
Refining & Marketing Earnings momentum Sources of earnings growth in a 2009 refining environment 14 10 9 12 Delta incremental earnings $bn WRMP 8 Actual pre-tax returns % 10 7 6 8 Growth market 5 positions and cash 6 margin capability 4 4 3 2 2 1 0 0 2007 2008 2009 2010 2011 2012 2013 2014 Growing g
Slide 33: Refining & Marketing: Operating cash flow momentum
Refining & Marketing Operating cash flow momentum Sustaining leading returns in the base Operating cash flow • Invest to maintain competitive position • Improve efficiency and margin capture capabilities Other • Working capital efficiency cash margins & growth markets Improving cash margin capabilit
Slide 34: Moving BP Forward: Momentum in operating cash flow
Moving BP Forward Momentum in operating cash flow Around 50% growth in operating cash flow by 2014 at $100/bbl(1) • Key enablers: − Restoration of high value production − Growth from new projects − Whiting refinery upgrade coming onstream − Completion of contributions to the US Trust Fund Operating
Slide 35: Moving BP Forward: Safety, Trust, Value Growth
Moving BP Forward Safety : Trust : Value Growth ) 17 major upstream projects (1 w onstream by end 2014(2) lf o ash c Whiting onstream 2013 g atin p er Payments to US Trust Fund end in 2012 o in th o w Reducing uncertainties on Gulf of Mexico liabilities gr 5 0% ~ 48 turnarounds complete in 2011 / ma
Slide 36: Moving BP Forward: A 10 point plan
Moving BP Forward A 10 point plan What you can expect 1. Relentless focus on safety and managing risk 2. Play to our strengths 3. Stronger and more focused 4. Simpler and more standardized 5. More visibility and transparency to value What you can measure 6. Active portfolio management to continue 7.
Slide 37: Q&A
Q&A Bob Dudley Group Chief Executive Byron Grote Chief Financial Officer 37