BP plc · LSE:BP.
BP — Q2 2016 Earnings Presentation
32 slides from BP's earnings presentation, Jul 26, 2016
Slide 1: 2Q 2016 Results
2Q 2016 Results 26 July 2016 Cherry Point refinery, Washington
Slide 2: Jess Mitchell, Head of Group Investor Relations
Jess Mitchell Head of Group Investor Relations ATA fabrication yard, Azerbaijan
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’), BP is providing the following cautionary statement. This presentation and the associated slides
Slide 4: Bob Dudley, Group Chief Executive
Bob Dudley Group Chief Executive Deepsea Aberdeen drilling rig, North Sea
Slide 5: Agenda
Agenda Environment Overview 2Q 2016 results Financial frame Business update Q&A 5
Slide 6: Oil prices rebound as the market approaches balance
Oil prices rebound as the market approaches balance OECD commercial inventories(1) Brent oil price(2) mbbls $/bbl 3,400 60 2010-2014 monthly inventories range 55 3,200 2015-2016 monthly inventories 50 3,000 45 40 Spot price 2,800 35 Futures 2,600 30 2,400 25 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Oct 15 Apr
Slide 7: Sustainable value growth
Sustainable value growth • Relentless focus on safety and reliability • A balanced portfolio with distinctive capabilities • Portfolio actively managed for value over volume • Continued capital and cost discipline • Growing sustainable free cash flow and distributions over the long term 7
Slide 8: Resilience, sustainability and growth
Resilience, sustainability and growth Organic capital expenditure • Deepwater Horizon commitments clarified $bn 30-40% • Ongoing safe, reliable and efficient operations 23.1 24.6 22.9 • Rebalancing the financial framework 18.2 19.1 18.7 <17 15-17 – Strong momentum on resetting capital and cash costs
Slide 9: Brian Gilvary, Chief Financial Officer
Brian Gilvary Chief Financial Officer Whiting refinery, Indiana
Slide 10: Environment
Environment Brent oil price(1) Henry Hub gas price(1) Refining Marker Margin(2) $/bbl $/mmbtu $/bbl 55 3.0 17 16 2.8 15 50 2.6 14 2.4 13 45 2.2 12 11 2.0 40 10 1.8 9 35 1.6 8 Apr 16 May 16 Jun 16 Jul 16 Apr 16 May 16 Jun 16 Jul 16 Apr 16 May 16 Jun 16 Jul 16 (1) Source: Thomson Reuters Datastream (2
Slide 11: 2Q 2016 Summary
2Q 2016 Summary Underlying earnings figures are adjusted for the costs associated with the Gulf of Mexico oil spill, other non-operating items and fair value accounting effects $bn 2Q15 1Q16 2Q16 % Y-o-Y % Q-o-Q (1) Replacement cost profit before Upstream 0.5 (0.7) 0.0 interest and tax (RCPBIT) (2)
Slide 12: Upstream
Upstream Realisations(1) Volume Underlying RCPBIT(2) $/bbl $/mcf mboe/d $bn 70 18 3,000 1.5 16 60 2,750 14 1.0 0.8 50 12 2,500 0.5 0.5 40 10 2,250 30 8 0.0 0.0 6 2,000 20 4 1,750 -0.5 10 2 (0.7) 1,500 (0.7) 0 0 -1.0 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 Liquids $
Slide 13: Downstream
Downstream Refining environment Refining availability Underlying RCPBIT(2) $/bbl % $bn 24 98 2.5 2.3 20 96 2.0 1.9 1.8 16 94 1.5 1.5 1.2 12 92 1.0 8 90 0.5 4 88 0 86 0.0 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 RMM WTI - WCS spread (1) Fuels Lubricants Petrochemical
Slide 14: Rosneft
Rosneft BP share of underlying net BP’s share of Rosneft Average Urals price income (1) annual dividend(2) $/bbl $bn $bn 70 0.6 0.8 60 0.7 0.5 0.6 50 0.4 0.5 40 0.3 0.4 30 0.3 0.2 20 0.2 10 0.1 0.1 0 0.0 0.0 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 2014 2015 2016 (1) On a replacement cost b
Slide 15: Other items
Other items OB&C underlying RCPBIT(1) Underlying effective tax rate(2) $bn % 2Q15 3Q15 4Q15 1Q16 2Q16 50 0.0 40 (0.1) 30 (0.2) (0.2) 20 (0.2) 10 (0.3) (0.3) 0 (0.4) (0.4) (10) (0.4) (20) (0.5) 2Q15 3Q15 4Q15 1Q16 2Q16 (1) Other businesses and corporate replacement cost profit before interest and tax
Slide 16: Gulf of Mexico oil spill costs and provisions
Gulf of Mexico oil spill costs and provisions pre-tax(1) To end Cumulative $bn 1Q 2016 2Q 2016 2015 to date Income statement Charge / (credit) for the period 55.5 0.9 5.2 61.6 Balance sheet (2) Brought forward 18.8 18.6 Charge / (credit) to income statement 55.5 0.9 5.2 61.6 Payments into Trust Fund
Slide 17: Sources and uses of cash
Sources and uses of cash 1H 2015 organic cash inflows/outflows 1H 2016 organic cash inflows/outflows $bn $bn 14 14 12 12 (2) Dividends 10 10 Dividends (2) 8 8 6 6 Underlying Organic Underlying Organic (1) cash flow (1) capex cash flow capex 4 4 2 2 0 0 $bn Other inflows/outflows $bn Other inflows/ou
Slide 18: Balancing the financial frame
Balancing the financial frame Organic cash balance and growth Organic sources and uses of cash in 2017 $70/bbl 0 5 10 15 20 25 30 $99/bbl Cash Capital Capex $70/bbl Dividend expenditure Judgement $45/bbl $40-$50/bbl Operating cash $45/bbl $50-$60/bbl $45-50/bbl $60-$70/bbl $52/bbl 2014 2015 2016 201
Slide 19: Balance sheet resilience
Balance sheet resilience Gearing % • 10-20% gearing band put in 40 place in 2010 to manage uncertainty 30 20-30% • Clarity on material Deepwater 20-30% Horizon commitments 20 10-20% • Gearing band of 20-30% re-established 10 0 19
Slide 20: Bob Dudley, Group Chief Executive
Bob Dudley Group Chief Executive Ocean Victory drilling rig, Trinidad and Tobago
Slide 21: Upstream key messages from Baku
Upstream key messages from Baku • Safety and reliability – committed to improving year-on-year • Portfolio – balanced, focused, resilient, creative models • Capability – world class people, functional model driving competitiveness • Efficiency – cost and capital down, top quartile production cost -
Slide 22: Rigorous capital allocation
Rigorous capital allocation 2017 Upstream capital expenditure • No compromising safety or integrity $bn Exploration • Capital allocation based on investment hurdles 35% • Driving efficiency Major projects • Capturing market rates Drilling • Flexible short-cycle investments Integrity/LTO(1) Flexible
Slide 23: Driving performance improvement
Driving performance improvement Production Costs $/boe 15 • Continuous improvement and simpler organisation 10 BP • Aggressively addressing third-party spend 5 Competitor range(1) 0 • Improving operating efficiency 2009 2010 2011 2012 2013 2014 2015 2016 % CAGR Managed base decline • Flattening base
Slide 24: Growth to 2020 – adding material new capacity
Growth to 2020 – adding material new capacity 800mboed of new BP-net Recent and potential new FIDs production (1) 2016 2018 2020 Recent FIDs Potential new FIDs (1) Cumulative BP-net production from new major projects starting-up after 1 January 2015 24
Slide 25: Post 2020 - capacity to grow value organically
Post 2020 - capacity to grow value organically 2020 base business, 800mboed including future drilling from 2020 wedge activity projects Post-2020 major projects Progression of E&A and new opportunities 2015 2020 2025 2030 • Drill-out of major hubs • Mad Dog Phase2 • ILX in North Sea, Trinidad and NW
Slide 26: Downstream strategy and performance improvement
Downstream strategy and performance improvement • Safe and reliable operations % Pre-tax returns(1) 20 Actual returns • Advantaged manufacturing – Top quartile refining 10 Margin – Higher earning potential in petrochemicals adjusted(2) • Profitable marketing growth 0 2013 2014 2015 2Q16 – Investing
Slide 27: Expanding earnings potential and improving resilience
Expanding earnings potential and improving resilience Expanding earnings potential Improved Downstream resilience $2.4bn improvement in pre-tax earnings Pre-tax RMM RMM(1) earnings $/bbl $/bbl $bn 8 25 25 +50% RMM required to generate 15% pre-tax returns 20 20 4 2011 - 2015 RMM range RMM 15 15 0 10
Slide 28: Advantaged manufacturing in refining
Advantaged manufacturing in refining Refining pre-tax earnings more than double at constant 2014 RMM(1) • Top quartile refining $bn +125% • Competitively advantaged portfolio • Improved reliability and efficiency • Advantaged feedstock and optimisation 2014 2015 Four quarters to 2Q16 (1) Pre-tax ear
Slide 29: Marketing profitability and growth
Marketing profitability and growth Fuels marketing: Pre-tax material and growing earnings +35% $bn • Fuels marketing and lubricants 2 Fuels – ~50% of Downstream pre-tax earnings 1 Marketing – Strong returns 0 2013 2014 2015 Four quarters to 2Q16 Pre-tax – Track record of growth earnings Lubricants:
Slide 30: Downstream simplification and efficiency
Downstream simplification and efficiency Material reduction in cash costs >20% • ~$2.5bn of cost efficiencies by 2017(1) • Right-sizing the organisation • Reduction of 5,000 roles by 2017(1) 2014 2015 2016 Headcount evolution • Manufacturing efficiency 40 '000 >5,000 30 Agency • Reduction in third-p
Slide 31: Our future
Our future A clear set of enduring principles A medium-term financial frame • Relentless focus on safety and • Capex: below $17bn for 2016; $15-17bn in reliability 2017 • A balanced portfolio with distinctive • Cash costs reduced by $7bn for 2017 versus capabilities 2014 • Balance organic sources an
Slide 32: Q&A
Q&A Bob Dudley Tufan Erginbilgic Group Chief Executive Chief Executive, Downstream Bernard Looney Jess Mitchell Chief Executive, Upstream Head of Group Investor Relations 32