BP plc · LSE:BP.
BP — Q2 2004 Earnings Presentation
28 slides from BP's earnings presentation, Jul 27, 2004
Slide 1: Presentation to the financial community: 2Q results
presentation to the financial community 2Q results tuesday 27th july 2004
Slide 2: Forward Looking Statements Cautionary Statement
Forward Looking Statements Cautionary Statement This presentation and the associated slides and discussion contain forward looking statements, particularly those regarding BP’s asset portfolio and changes to it, capital expenditure, capital employed, cash flow, cash returns, costs, divestments, divi
Slide 3: John Browne, chief executive: introduction
John Browne chief executive introduction
Slide 4: Agenda
agenda z context: mid 2004 z 1H 2004 strategic overview z results z q&a
Slide 5: Context: mid 2004
context: mid 2004 z world economy and energy demand z oil prices and capacity utilisation z refining margins
Slide 6: Highlights of 1H 2004
highlights of 1H 2004 z record result of $8.6bn z record adjusted operating cash flow of $12.4bn z record production of 3993 mboed z record quarterly dividend of 7.1c/share, up 9% vs 2Q03
Slide 7: Generating free cash flow
generating free cash flow z full year capital spending estimated to be around $14bn, slightly higher than March estimate z divestments above forecast range: $3.5bn year to date z 1H04 cash returns strong: 34% z gearing below target band of 25-35% z distribution to shareholders of $6.2bn
Slide 8: Highlights of 1H 2004
highlights of 1H 2004 z implementation of strategy major upstream projects on track TNK-BP performance to plan near record refining and marketing result Olefins & Derivatives separation progressing z shareholder distributions dividends up 9%: reduction of shares outstanding allows acceleration of pe
Slide 9: 2004 strategic progress: exploration and production
2004 strategic progress: exploration and production z full year expected production of over 4mmboed z full year capital estimated at $9.5bn increase from March estimate of $9bn due to: - forex - inflationary pressures z new projects on track for delivery
Slide 10: Strategic progress - projects on track: exploration and production
strategic progress - projects on track: exploration and production z Algeria: In Salah first gas sales z Trinidad: Atlas Methanol on line z Australia: NWS T4 on track - 3Q start-up z Angola: Kizomba A ahead - 3Q start-up z Gulf of Mexico: Holstein on track - 4Q start-up z existing profit centres: No
Slide 11: TNK-BP strategy update
TNK-BP strategy update z operations and performance to plan z expected production growth of 12% in 2004 z 2004 capex of $1.3bn, self funded z 2004 dividend of $2bn+
Slide 12: 2004 strategic progress: refining & marketing, gas, power & renewables
2004 strategic progress: refining & marketing z 1H refining availability 95.1% z 1H shop sales up 2%, lubricants up 8% (like-for-like) z Ultimate fuels launched in Germany and Austria gas, power & renewables z 1H growth in natural gas sales, NGL sales and equity gas into LNG plants z Tangguh sales a
Slide 13: 2004 strategic progress: petrochemicals
2004 strategic progress: petrochemicals z Olefins & Derivatives separation re-positioning planned for end 2004 new management teams appointed Aromatics & Acetyls to become part of Refining & Marketing Olefins & Derivatives to be run as semi-autonomous business ahead of potential IPO during 2H
Slide 14: Reserve reporting: 2003 20-F filing
reserve reporting 2003 20-F filing z BP’s proved reserves are unchanged and as stated in the Annual Report and Accounts z difference between BP’s proved reserves and 2003 Form 20-F is immaterial z reserve estimation and reporting centrally managed and controlled
Slide 15: Delivery against targets
delivery against targets z reinvest for long term growth 9 on track z increase dividends per share 9 +9% vs. 1H 03 z distribute 100% of additional free cash flow 9 $3.25bn share buybacks in 1H 04
Slide 16: Shareholder distributions
shareholder distributions Average. 1H01 1H02 1H03 1H04 Brent $/bbl 26.6 23.1 28.8 33.7 HH $/mcf 5.8 2.9 5.9 5.8 refining $/bbl 5.1 1.8 3.9 6.2 $bn 0 1 2 3 4 5 6 7 8 1H01 dividends share buybacks 1H02 1H03 1H04
Slide 17: Byron Grote, chief financial officer: 2Q 2004 results
Byron Grote chief financial officer 2Q 2004 results
Slide 18: Trading environment
trading environment $/bbl $/mcf $/bbl $/te 40 6 9 160 35 8 petrochemicals 140 5 30 oil 7 120 25 4 6 100 gas refining 20 3 5 80 4 15 2 3 60 10 2 40 5 1 20 1 0 0 0 0 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2003 2004 2003 2004 ∆ % vs 2003 ∆ % vs 2003 average realisations 2Q 1H indicator margins 2Q 1H crude
Slide 19: Financial results
financial results $bn % change z results for the second quarter vs 2Q03 pro forma 3.9 23 replacement cost 3.4 35 historical cost 3.9 146 post-tax adjusted operating cash flow* 5.3 (4) z results for the first half vs 1H03 pro forma 8.6 20 replacement cost 7.6 28 historical cost 8.7 50 post-tax adjust
Slide 20: Exceptional & non-operating items
exceptional & non-operating items $ (millions) 1Q04 2Q04 $bn exceptional items 1,300 (99) post-tax non-operating items and UPIS (123) (159) 1.5 Total 1,177 (258) 1.0 0.5 0.0 1Q 2Q 3Q 4Q 1Q 2Q (0.5) 2003 2004
Slide 21: Return on average capital employed
return on average capital employed % 35 competitor range* BP 30 25 20 15 10 5 0 (5) (10) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2002 2003 2004 *BP, ExxonMobil, Shell, ChevronTexaco, Total ROACE = (pro forma result + after tax finance interest + MSI) / pro forma average capital employed
Slide 22: Pre-tax cash returns
pre-tax cash returns* % 45 40 35 30 25 20 15 10 5 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2002 2003 2004 *pre-tax cash return = pro forma RCP before interest & tax – exceptional items + pro forma DD&A / pro forma average operating capital employed
Slide 23: 1H 2004 vs 1H 2003 result
1H 2004 vs 1H 2003 result pro forma basis $bn post-tax 10 9 8 7 exceptionals & non-operating 6 items 5 4 3 2 1 0 1H03 e&noi env. forex a&d dd&a tax rate other 1H04
Slide 24: TNK-BP
TNK-BP 1Q 04 2Q 04 $m impact on BP results BP share of TNK-BP net income 219 374 deferred shares consideration accretion (26) (26) impact on BP net income 193 348 production mboed 832 891 dividend received 262 - z 2Q benefits from export duty lag z future production tax/export duty increases z $450m
Slide 25: Sources and uses of cash
sources and uses of cash $bn post-tax 18 1H 2003 1H 2004 16 disposals pensions 14 disposals 12 buybacks 10 dividends 8 operations acquisitions 6 operations 12.5* 11* 4 organic capex 2 0 sources uses sources uses *post-tax adjusted operating cash flow before discretionary pension contributions of $(0
Slide 26: Gearing
gearing % 40 35 30 25 20 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2001 2002 2003 2004 pro forma gearing = net debt/(net debt + equity – acquisition adjustment)
Slide 27: Shareholder distributions
shareholder distributions $bn 10 8 buybacks 6 dividends 4 share issues 2 0 (2) 2001 2002 2003 1H04
Slide 28: Q&A session
q&a session John Browne chief executive Byron Grote chief financial officer Tony Hayward chief executive, e&p Fergus MacLeod head of investor relations