BP plc · LSE:BP.
BP — Investor Day (March 2004)
126 slides from BP's investor day presentation, March 2004
Slide 1: Welcome and agenda
John Browne welcome and agenda
Slide 2: Agenda
agenda z strategy and prospects John Browne z plans, targets and indicators z dividends and share repurchases z implementing the strategy upstream Tony Hayward TNK-BP Bob Dudley gas, power & renewables Ralph Alexander petrochemicals Iain Conn refining & marketing John Manzoni z corporate items Byron
Slide 3: Introductory remarks
Byron Grote introductory remarks
Slide 4: Forward Looking Statements Cautionary Statement
Forward Looking Statements Cautionary Statement March 2004 This presentation and the associated slides and discussion contain forward-looking statements particularly those regarding BP’s asset portfolio and changes in it, capital expenditure, capital efficiency, capital employed, cash flow, costs, d
Slide 5: Methodology
methodology z cash returns segments pre-tax z capital in service z production z growth rates z historical data at financial planning case Brent $20/bbl HH $3.5/mcf refining $2.70/bbl
Slide 6: 2004 estimated rules of thumb
2004 estimated rules of thumb 45% full year Oil & NGL pre-tax 15% oil price Brent +/- $1/bbl $570m N.American 18% gas 22% TNK-BP gas price HH +/- $0.1/mcf $110m Non- refining margin +/- $1/bbl $1120m N.American gas 4Q03 production mix
Slide 7: 2004 reporting changes
2004 reporting changes z FRS 17*, ESOP accounting, earnings format, NGL transfer z no cash flow impact proforma average capital result $bn employed $bn 14 90 80 12 70 10 60 8 50 6 40 30 4 20 2 10 0 0 00 01 02 03 00 01 02 03 pre-2004 changes post-2004 changes * FRS 17 restatements for 2002 and 2003 o
Slide 8: Reserves
reserves z governance process reserve bookings aligned with financial commitment central internal review in place for 15 years changes > 25m barrels require authorisation quarterly due diligence z reporting standards UK listed company reporting under principles of UK Statement of Recommended Practic
Slide 9: BP's strategy: progress and prospects
John Browne BP’s strategy: progress and prospects
Slide 10: The purpose of consolidation
the purpose of consolidation z scale z scope z capability z capacity
Slide 11: Reserves and enterprise value: 1997
reserves and enterprise value: 1997 EV $bn 300 250 200 Shell Exxon 150 100 Texaco ENI Mobil BP 50 ARCOElf REP Chevron Fina Amoco TOT 0 0.0 Philips 5.0 10.0 15.0 20.0 25.0 reserves billion boe end of year 1997, based on published data.
Slide 12: Reserves and enterprise value: current
reserves and enterprise value: current EV $bn 300 XOM 250 200 BP Shell 150 TOT 100 ENI CVX COP 50 REP 0 0.0 5.0 10.0 15.0 20.0 25.0 reserves billion boe end of year 2003 reserves. 19/03/04 enterprise value. based on published data. BP includes share of TNK-BP reserves. Shell (post reserves restateme
Slide 13: Sources and uses of cash 2000-2003
sources and uses of cash 2000-2003 sources uses $bn $bn cash from operations 69 capex 52 divestments 25 acquisitions 14 stock buy backs 6 dividends 20 pensions 2
Slide 14: Resources and customer facing businesses
resources and customer facing businesses 00-03 $bn resources customer facing divestments 10 6 capex (33) (16) acquisitions (7) (10) z all cash flow from customer facing businesses reinvested 2000-03 note: excludes corporate items
Slide 15: Customer facing businesses
customer facing businesses z quality and scale z lower volatility z balance risk and return
Slide 16: Selection of assets and markets
selection of assets and markets maximise long run shareholder value z expand capital base z maintain cash returns z grow cash flow
Slide 17: Strategy
strategy resources z build production with steadily improving cash returns z invest in the largest, lowest cost basins z manage decline of existing production assets customer facing z expand customer capture z improve quality to grow gross margin z grow cash flow at constant cash returns
Slide 18: Oil price uncertainties
oil price uncertainties z demand z supply OPEC non OPEC
Slide 19: Oil prices: the last 20 years
oil prices: the last 20 years frequency 60 50 40 30 20 10 0 16-17 19-20 22-23 Brent 60 month moving average oil prices $/bbl
Slide 20: Oil prices
oil prices z $20/bbl for resource allocation z $16/bbl for contingency planning z $20/bbl for financial planning
Slide 21: Future oil prices
future oil prices considerations z OPEC’s track record z OPEC dynamics z demand z historical real oil prices ($24/bbl) z forward markets
Slide 22: Business segments
business segments z resources business existing profit centres new profit centres Russia future growth z customer facing businesses refining and marketing petrochemicals gas, power & renewables
Slide 23: Existing profit centres: production and capex
existing profit centres: production and capex mmboed $bn 3.0 5 4 2.0 3 2 1.0 1 0.0 0 02 03 04 05 06 07 08 production excluding new projects new projects capex 04-08 BP estimates
Slide 24: Existing profit centres: managing production
existing profit centres: managing production z new projects z operational uptime z addition of reserves z control of investments and costs
Slide 25: Existing profit centres: cash returns
existing profit centres: cash returns mmboed % 3.0 40 2.5 30 2.0 1.5 20 1.0 10 0.5 0.0 0 02 03 04 05 06 07 08 production cash returns 04-08 BP estimates
Slide 26: New profit centres: projects
new profit centres: projects 2004 2005 Atlas Methanol Mad Dog In Salah Thunderhorse Kizomba A Azeri Holstein BTC NW Shelf LNG T4 In Amenas Trinidad LNG T4
Slide 27: New profit centres: cash returns
new profit centres: cash returns % 80 mmboed % 3.0 40 2.5 60 2.0 40 1.5 20 1.0 20 0.5 0.0 0 0 02 03 04 05 06 07 08 production operating capital employed cash returns in service 04-08 BP estimates
Slide 28: Existing and new profit centres
existing and new profit centres $bn % $bn 70 40 10 60 8 50 40 6 20 30 4 20 2 10 0 0 0 02 03 04 05 06 07 08 operating capital employed cash returns capex 04-08 BP estimates
Slide 29: TNK-BP: capital employed and oil production
TNK-BP: capital employed and oil production mmbd $bn 1.2 8 7 1 6 0.8 5 0.6 4 3 0.4 2 0.2 1 0 0 03 04 05 06 07 08 production capital employed data prior to August 2003 represents BP interest in assets contributed to TNK-BP. 2003 partial year production. 04-08 BP estimates. includes Slavneft.
Slide 30: TNK-BP
TNK-BP z synergies and additional production z dividend from strong residual cash flow z continued investment self-financed z longer term importance
Slide 31: E&P: beyond 2008
e&p: beyond 2008 z resources existing and new profit centres 24bn boe Russia 13bn boe z capex (2007 and beyond) $8-9bn p.a. z long term production growth
Slide 32: Resources business summary
resources business summary z existing profit centres managing decline z new profit centres capital in service z TNK-BP dividends
Slide 33: Business segments
business segments z resources business existing profit centres new profit centres Russia future growth z customer facing businesses refining and marketing petrochemicals gas, power & renewables
Slide 34: Customer facing businesses: investment
customer facing businesses: investment $bn $bn 50 5 40 4 30 3 20 2 10 1 0 0 01 02 03 04 05 06 operating capital employed capex 04-06 BP estimates
Slide 35: Customer facing businesses: returns
customer facing businesses: returns $bn % 50 60 50 40 40 30 30 20 20 10 10 0 0 01 02 03 04 05 06 operating capital employed cash returns 04-06 BP estimates
Slide 36: Refining & marketing
refining & marketing refining z portfolio US and Europe z availability and costs z capex declining marketing z new formats and products z sales growth z market leadership
Slide 37: Oil products marketing
oil products marketing fuels retailing index 120 convenience retailing lubricants index 115 index 120 120 110 115 115 105 110 110 100 105 105 95 100 100 90 95 95 00 01 02 03 90 average throughput 90 00 01 02 03 per site 00 01 02 03 same store sales lubricants volume market BP
Slide 38: Petrochemicals
petrochemicals z returns z disposals z operations reliability cost reductions z portfolio advantaged products olefins and derivatives
Slide 39: Petrochemicals: cash returns
petrochemicals: cash returns % 25 20 15 10 5 0 00 01 02 03 advantaged (aromatics + acetyls) olefins and derivatives
Slide 40: Gas, power and renewables
gas, power and renewables z developing customers for equity gas z three principal sub-segments marketing and trading NGLs LNG
Slide 41: Summary: customer facing segments
summary: customer facing segments z portfolio z returns z skills z new products and offers
Slide 42: Patterns of investment
patterns of investment $bn 2003 2004 2005-06 capital expenditure 14.0 13.5 12.0-12.5 p.a. upstream 9.7 9.0 gp&r 0.3 0.6 refining & marketing 3.0 2.8 petrochemicals 0.8 0.9 other 0.2 0.2 acquisitions 6.0 1.4 divestments (6.4) (3.0-4.0) (1.0) p.a. note: TNK-BP consideration (equity) 1.25 1.25 p.a. 04-
Slide 43: Group cash returns: pre-tax
group cash returns: pre-tax $bn % 120 40 100 30 80 60 20 40 10 20 0 0 01 02 03 04 05 06 operating capital employed cash returns 04-06 BP estimates
Slide 44: Distributions
distributions z dividends z gearing z excess free cash flow
Slide 45: Gearing
gearing z gearing band unchanged z manage weighted average cost of capital z headroom at low oil prices z distribute excess cash
Slide 46: Shareholder distribution potential
shareholder distribution potential 2001-2003 2004-2006 cases avg. case A B C 26 Brent $/bbl 20 25 30 4.3 HH $/mcf 3.5 4.4 5.3 3.3 refining $/bbl 2.7 2.7 2.7 $bn 0 10 20 30 40 2001-2003 share buybacks dividends shareholder distribution A potential 2004-2006 B C 04-06 BP estimates
Slide 47: Organisation
organisation z new framework z individual accountabilities z control processes z targets z deliver performance z manage risk
Slide 48: Summary
summary z free cash flow z financial strength z asset quality z returns
Slide 49: Targets
targets z reinvest for long term growth z increase dividends z distribute 100% of excess cash flow
Slide 50: Strategic indicators
strategic indicators z production growth from 2003 to 2008 • 5% p.a. average without TNK-BP • 7% p.a. average with TNK-BP z pre-tax cash returns improvement of around 2 percentage points by end 2006 z pre-tax operating capital employed growth of around 15% by end 2006 z F&D costs in range of $4-5/bb
Slide 51: Exploration and production
Tony Hayward exploration and production
Slide 52: Exploration and production
exploration and production z exploration and reserve base z managing decline in our existing profit centres z progress in developing our new profit centres z TNK-BP z 2008 and beyond
Slide 53: Reserves replacement
reserves replacement replacement ratio: extensions and discoveries average 98-02 reserves replacement ratio 1.4 200% BP 1.2 Total 150% 1.0 0.8 100% XOM 0.6 CVX 0.4 50% Shell 0.2 0 0% 0 1 2 3 4 94 95 96 97 98 99 00 01 02 03 F cost ($/boe) source: company reports
Slide 54: Proved reserves
proved reserves TNK-BP TNK-BP existing profit oil oil oil centres new gas profit gas oil centres gas oil oil gas existing profit new profit centres centres developed undeveloped 9.8bn boe * 8.5bn boe * total proved reserves: 18.3 billon boe, 56% oil and 44% gas *as at end of 2003
Slide 55: Finding & development costs
finding & development costs 5 yr moving average $/bbl supermajors 9 rest of industry 8 BP 7 6 5 4 3 2 1 0 85 87 89 91 93 95 97 99 01
Slide 56: Existing profit centres: managed decline
existing profit centres: managed decline mboed $m divestments 2500 02-03 5000 other 2000 4000 Middle East Egypt 1500 3000 Latin America incl. associates 1000 2000 North Sea North America 500 1000 Gas Alaska 0 0 capex 02 03 04 05 06 07 08 04-08 BP estimates
Slide 57: Existing profit centres: managed decline
existing profit centres: managed decline mboed 3000 divestments 2500 operating efficiency new projects 2000 1500 1000 500 0 02 03 04 05 06 07 08 04-08 BP estimates
Slide 58: Existing profit centres: decline management
existing profit centres: decline management mboed 300 2003 production added 280mboed for 250 $2.1bn in 2003 from the following activities: 200 reservoir management 150 wellwork new development wells 100 facility upgrades 50 0 reservoir well work new wells facility total management upgrades
Slide 59: Drilling performance
drilling performance ratio: current performance to best possible performance drilling rate % days/10k ft 70 30 60 25 50 20 40 15 30 10 20 10 5 0 0 BP other companies 01 02 03 Internal benchmarking from public databases, 2002 BP data (normalised for ’01 portfolio)
Slide 60: Additions from reservoir management
additions from reservoir management BP cumulative reserve adds – improved recovery and revisions mmboe 4000 3000 2000 1000 0 94 95 96 97 98 99 00 01 02 03
Slide 61: Existing profit centres: cash costs
existing profit centres: cash costs $m $/boe 5000 12 total cash costs total cash costs/boe 10 4000 8 3000 6 2000 4 1000 2 0 0 02 03 04 05 06 07 08 04-08 BP estimates
Slide 62: Existing profit centres: managed decline
existing profit centres: managed decline mboed $m divestments 2500 02-03 5000 other 2000 4000 Middle East Egypt 1500 3000 Latin America incl. associates 1000 2000 North Sea North America 500 1000 Gas Alaska 0 0 capex 02 03 04 05 06 07 08 04-08 BP estimates
Slide 63: New profit centres: production and capex
new profit centres: production and capex mboed $m 2500 7000 RoW 6000 2000 Asia Pacific 5000 Azerbaijan 1500 4000 Angola 3000 1000 Trinidad 2000 500 GoM Deep 1000 Water capex 0 0 02 03 04 05 06 07 08 04-08 BP estimates
Slide 64: New profit centres: project start-ups
new profit centres: project start-ups 2003 2004 2005 2006-7 start-ups start-ups start-ups start-ups Feb 03 Current Feb 03 Current Feb 03 Current Feb 03 Current view view view view view view view view Trinidad Atlas Mad Dog early ’05 Kizomba B late ’05 LNG Train 3 Mid ’03 Methanol early ’04 - early ’
Slide 65: New profit centres: production and capex
new profit centres: production and capex mboed $m 2500 7000 RoW 6000 2000 Asia Pacific 5000 Azerbaijan 1500 4000 Angola 3000 1000 Trinidad 2000 500 GoM Deep 1000 Water capex 0 0 02 03 04 05 06 07 08 04-08 BP estimates
Slide 66: TNK-BP update
Bob Dudley CEO, TNK-BP TNK-BP update
Slide 67: TNK-BP strategic priorities
TNK-BP strategic priorities z resources to reserves to production z margin enhancement z gas - longer term monetisation
Slide 68: Resources to reserves to production
resources to reserves to production estimated resources 30.8bn boe estimated (bn boe) proved 35 reserves 01/01/03 SEC basis SPE basis PD 3.2 6.1 international 30 markets PD+PUD 4.1 9.4 infrastructure access 25 possible near infrastructure led 20 development Ryabchik probable 15 infill drilling field
Slide 69: Margin enhancement
margin enhancement z upgrading opportunities refinery yield enhancement z debottlenecking export options short term: rail and barge z high oil price environment tariffs, taxes
Slide 70: TNK-BP: production and capex
TNK-BP: production and capex mboed TNK-BP (gross) outlook $m 2500 3000 2500 2000 2000 1500 1500 1000 1000 500 500 0 0 03 04 05 06 07 gas oil capex 04-07 BP estimates
Slide 71: TNK BP summary
TNK BP summary z operations and performance to plan z production growth strong, extended z continued investment self-funded z closed Slavneft acquisition
Slide 72: Exploration and production
Tony Hayward exploration and production
Slide 73: 2008 and beyond
2008 and beyond existing PCs new PCs discoveries Russia • base efficiency • projects • Gulf of Mexico • Kovytka Gas – Angola: Block 15 – Tubular Bells • exploration • tie backs Kizomba C – Puma – Sakhalin – Egypt: Saqqara – Angola: Block 17 – Cascade • Projects Rosa – Shenzi – Pt. Thompson – ACG Pha
Slide 74: New profit centres: resource base
new profit centres: resource base Azerbaijan TNK-BP Sakhalin Black Sea GoM DW Trinidad Brazil Angola DW New basin tests New PCs remaining resources proved non proved BP projection yet to find (BP share)
Slide 75: E&P segment: production and capex
e&p segment: production and capex million boed TNK-BP $m 6 new profit centres production 12000 existing profit centres production segment capex 5 10000 4 3 8000 2 6000 1 0 4000 02 03 04 05 06 07 08 04-08 BP estimates
Slide 76: E&P segment summary
e&p segment summary z exploration track record continues z 11 years of reserve replacement above 100% z existing profit centres decline at 3% cash returns reduced slightly z new profit centres projects on track strong volume growth cash returns increasing z TNK-BP improving operating performance res
Slide 77: Gas, power & renewables
Ralph Alexander gas, power & renewables
Slide 78: Participating at scale
participating at scale z market leadership in gas z market leadership in North American NGLs z LNG plans accelerating
Slide 79: Group gas sales
group gas sales bcfd 30 >20% annual growth 25 20 15 10 5 00 01 02 03
Slide 80: Going forward
going forward z grow gas sales volumes 3-5% per year z increase share of target market segments z deliver economies of scale
Slide 81: Group NGL sales
group NGL sales kbd 600 Equity NGL Production 13% annual growth 400 200 00 01 02 03
Slide 82: Going forward
going forward z grow NGL sales volume around 5% per year z commission new plants z increase share of target market segments z deliver economies of scale
Slide 83: LNG
LNG z capture markets ahead of supply z maximise gas resource value z focus on key markets z 35 bcf/d market potential
Slide 84: Atlantic Basin
Atlantic Basin Isle of Grain New Jersey Bilbao Cove Point Egypt Adgas Trinidad existing LNG supply market access Angola future LNG supply
Slide 85: Pacific Basin
Pacific Basin Japan Buyers Kwangyang Ensenada Fujian Guangdong Adgas Tangguh Bontang NWS existing LNG supply market access future LNG supply
Slide 86: LNG: markets ahead of supply
LNG: markets ahead of supply BP gas supplied to plants markets captured mmcfd mmcfd end 2002 3000 3000 New LNG Trinidad 2500 Indonesia 2500 Australia China 2000 2000 Other 15% annual growth 1500 1500 Americas 1000 1000 Spain 500 500 Japan 00 01 02 03 04 05 06 08 BP estimates 04 - 05, 08
Slide 87: LNG: markets ahead of supply
LNG: markets ahead of supply BP gas supplied to plants markets captured mmcfd mmcfd end 2003 3000 Other Trinidad 3000 New LNG Trinidad 2500 Indonesia 2500 2003 market Australia China 2000 2000 Other 20% annual growth 1500 1500 Americas 1000 1000 Spain 500 500 Japan 00 01 02 03 04 05 06 08 BP estimat
Slide 88: Solar
solar z business restructured z cost base reduced z uncompetitive technologies eliminated
Slide 89: Summary
summary z deliver marketing plans z leverage economies of scale z capture LNG markets ahead of supply
Slide 90: Petrochemicals
Iain Conn petrochemicals
Slide 91: Petrochemicals: cash returns
petrochemicals: cash returns % 25 20 15 10 5 0 00 01 02 03 advantaged (aromatics + acetyls) olefins and derivatives
Slide 92: Advantaged products
advantaged products z 40% of segment capital employed ($5bn) z high growth, 2-4x GDP z leading global market shares z distinctive technology z material exposure to Asia segment capital employed refers to average operating capital employed
Slide 93: Olefins & derivatives
olefins & derivatives z 60% of segment capital employed ($8bn) z moderate growth, 1-2x GDP z low global market shares z competitive but undifferentiated technology z bias to Europe and US segment capital employed refers to average operating capital employed
Slide 94: Market trends
market trends z experience curve – margin erosion z globalising product markets z middle east gas feedstock advantaged at higher oil prices z strong euro z china – major driver of: growth price setting mechanisms finished products exports
Slide 95: China growth
china growth 950 93 – 03 CAGR PTA China Global 850 PTA 26% 11% 750 Acetic 11% 6% 650 GDP 9% 3% 550 450 350 index acetic acid 250 1993 = 100 China GDP 150 global GDP 50 93 94 95 96 97 98 99 00 01 02 03
Slide 96: Petrochemicals capex
petrochemicals capex $bn 1.4 1.2 SECCO+Chocolate Bayou olefins & derivatives 1.0 advantaged 0.8 0.6 0.4 0.2 0.0 00 01 02 03 04 05 06 07 08 notes: excludes inorganics 04-08 BP estimates
Slide 97: Portfolio
portfolio z disposals fabrics and fibres linear and poly alpha olefins z on track for 90% capital employed associated with core by end 2006
Slide 98: Performance improvement
performance improvement z margin capture enhance reliability/ uptime marketing/ system optimisation z costs continue fixed/ variable costs reductions focused revenue investment reduce overhead
Slide 99: Petrochemicals: summary
petrochemicals: summary z different management approach advantaged products olefins & derivatives z capex lower post 2005 bias to advantaged products z olefins & derivatives - cash returns focus
Slide 100: Refining & marketing
John Manzoni refining & marketing
Slide 101: R&M: summary
r&m: summary z capture more customers z upgrade offer quality and unit margin z grow cash
Slide 102: R&M: business models
r&m : business models 2003 operating capital employed (pro forma)* 5% 8% 6% refining retail business marketing 45% lubricants new markets 37% * Year End 2003
Slide 103: Refining: portfolio journey
refining: portfolio journey capacity mbd avg. site capacity MBD 4 0.22 0.20 3 0.18 2 0.16 RoW 0.14 1 EU 0.12 US 0 0.10 97 pre Amoco 00 post Amoco and Arco 04 post Veba* * 04 BP estimate
Slide 104: Refining: portfolio quality
refining: portfolio quality capacity mbd margin margin $/bbl * $/bbl * 1.5 Mid West $5.6 $4.7 NWE 1.0 Gulf Coast $5.9 Med $4.2 0.5 West Coast $12.2 Rhine $5.4 0.0 US EU upgrading % 97** 04 US 55 66 EU 16 36 * 5-year average regional market crack spreads ** pre amoco merger
Slide 105: Refining: operations
refining: operations availability % energy index % 100 102 100 98 90 96 94 92 80 90 00 01 02 03 availability* eii (energy intensity index)* * measures calculated using solomon methodology
Slide 106: Refining: investment
refining: investment $bn 1.0 0.8 0.5 0.3 0.0 00 01 02 03 04 05 06 clean fuels and growth capital investment base capital investment* 04–06 BP estimates * excludes capital investment for turnarounds
Slide 107: Marketing: scale
marketing: scale retail customers per day millions 16 14 12 10 8 6 4 2 0 * * BP estimate source: corporate websites
Slide 108: Marketing: business customers
marketing: business customers we are the largest supplier 23% of all LPG imports of American, the world’s into China are made by BP biggest airline BP provided the lubricants for the mars probe Castrol is the leading joint activities with Ford passenger car lubricants brand in the world
Slide 109: Retail: offer quality
retail: offer quality shop sales premium fuels since launch $bn millions litres per month 6 150 5 4 100 3 2 50 1 0 0 00 01 02 03 prior year launch year
Slide 110: Retail: case study – the UK
retail: case study – the UK $k/m2 growth site labour costs 15.5 index 100 15.0 14.5 80 14.0 13.5 60 02 03 02 03 throughput per site mlpa 6.7 6.6 6.5 02 03
Slide 111: Retail: operations
retail: operations mlpa store sales per m2 $k/m2 average fuel volume 9.5 4.3 per site 4.0 7.5 3.8 3.5 5.5 00 01 02 03
Slide 112: Retail: investment
retail: investment sites $bn 000’s capital investment 1.4 34 disposals number of sites 1.2 32 1.0 30 0.8 0.6 28 0.4 26 0.2 0.0 24 00 01 02 03
Slide 113: Lubricants: offer quality
lubricants: offer quality index % US premium products 2000 = 100 sales growth 12 110 10 105 8 6 100 4 95 BP volume* growth 2 lubricants market* growth 0 90 02 03 00 01 02 03 *market growth from PFC, BP projection 03, 04 lubricants market is automotive lubricants
Slide 114: R&M: summary
r&m: summary z world scale marketing business z strong refining portfolio z high quality offer; continuously improving z focused on leading market positions
Slide 115: OB&C and group
Byron Grote ob&c and group
Slide 116: OB&C result
ob&c result $bn pre-tax history 0.0 z reported result volatile due to non-operating items (0.2) z 2000-2003 average c.$(600)m (0.4) outlook (0.6) z structural changes (0.8) disposals compliance (1.0) 00 01 02 03 environmental interest income z $(900)m / year ± $200m as reported excluding exceptional
Slide 117: Forex
forex estimated 2004 exposure 10% weaker $ $bn pre-tax cash flow earnings gross margin 1.1 1.1 cash costs (1.1) (1.1) DD&A - (0.3) operations - (0.3) capex (0.2) - annual hedge 0.1 0.1 total (0.1) (0.2)
Slide 118: Interest expense
interest expense $bn year-end history interest expense debt z maintain minimal cash (2.5) 25 balance z move towards fully floating (2.0) 20 debt (1.5) 15 z gearing in 25-35% band (1.0) 10 outlook (0.5) 5 z interest on BP debt will move proportionately to: 0.0 0 capital employed 00 01 02 03 market in
Slide 119: Income tax
income tax effective tax rate* ( ETR) cash tax rate* (CTR) history 40% z ETR reduced to 34-35% z CTR at 26% 30% outlook 20% z rates flat in similar environment z marginal ETR & CTR: 40% 10% 0% 00 01 02 03 * before impact of exceptional items and one-time non-operating tax charges
Slide 120: Net cash flow 2000 – 2003
net cash flow 2000 – 2003 $bn history 100 pension funding cash balanced $26bn shareholder distribution disposals acquisitions 80 outlook 60 lower pension funding organic capex lower net investment 40 operations* increased cash from operations new profit centres in E&P buybacks 20 customer facing seg
Slide 121: Gearing
gearing proforma net debt ratio* % 40 history gearing maintained at or 35 below midpoint of band 30 outlook no change in financial 25 framework 20 00 01 02 03 * proforma net debt ratio = net debt / (net debt + proforma equity)
Slide 122: Shareholder distributions
shareholder distributions $bn 10 history dividends: +7% per year since 1999 5 buybacks: $6bn 2000-2003 outlook distribute all surplus cash flow 0 00 01 02 03 dividends share buybacks
Slide 123: Shareholder distribution potential
shareholder distribution potential 2001-2003 2004-2006 cases avg. case A B C 26 Brent $/bbl 20 25 30 4.3 HH $/mcf 3.5 4.4 5.3 3.3 refining $/bbl 2.7 2.7 2.7 $bn 0 10 20 30 40 2001-2003 share buybacks dividends shareholder distribution A potential 2004-2006 B C 04-06 BP estimates
Slide 124: Q&A session
q&a session John Browne group chief executive Dick Olver deputy group chief executive Byron Grote chief financial officer Tony Hayward chief executive, e&p Ralph Alexander chief executive, gp&r John Manzoni chief executive, r&m Iain Conn chief executive, petrochemicals David Allen chief of staff
Slide 125: Back-up slides
BACK-UP SLIDES
Slide 126: Retail: case study – the US
retail: case study – the US $k/m2 growth site labour costs 6.5 index 100 6.0 5.5 80 5.0 4.5 60 2002 2003 2002 2003 mlpa throughput per site 8.4 8.0 7.6 7.2 6.8 2002 2003