BP plc · LSE:BP.
BP — H1 2005 Earnings Presentation
34 slides from BP's earnings presentation, Jul 26, 2005
Slide 1: Presentation to the Financial community: First half 2005 results
Presentation to the Financial community First half 2005 results 26 July 2005
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 capital expenditure, cash generation and cash returns, cost inflation, decline in production, dividends, share buybacks and othe
Slide 3: John Browne, Group Chief Executive
John Browne Group Chief Executive
Slide 4: 1H highlights
1H highlights • Replacement cost profit of $10.5bn up 29% • Replacement cost profit per share 49¢ up 33% • Quarterly dividend per share 8.925¢ up 26% • Post tax operating cash flow of $16.1bn up 32% • Share buybacks of $4.1bn • Gearing at 18% 4
Slide 5: Agenda
Agenda • Trading environment • Highlights of first half • Medium term production growth • Use of funds 5
Slide 6: Oil price
Oil price 60 $50 50 Dated Brent $/bbl +47% 40 $34 30 20 10 Jan ‘04 June ‘04 Jan ‘05 June ‘05 • Oil prices remain strong • Potential $40/bbl medium-term average • $20-35/bbl longer-term range 6
Slide 7: Gas price
Gas price 8 $/mmbtu (US Henry Hub, first of the month index) 7 $6.51 6 $5.84 +11% 5 4 3 Jan ‘04 June ‘04 Jan ‘05 June ‘05 • US: gas prices generally moving in line with oil prices • US: demand flat but domestic supplies tight • UK: supply expected to tighten at the year end 7
Slide 8: Refining margin
Refining margin 12 10 bp GIM $/bbl 8 $7.19 $6.59 +9% 6 4 2 0 Jan ‘04 June ‘04 Jan ‘05 June ‘05 • 1H 2005 refining margin $7.19/bbl: + $0.60/bbl vs 1H 2004 • Medium-term outlook improved 8
Slide 9: Approach to investments
Approach to investments • Testing projects at a wide spectrum of prices to understand price leverage • Disciplined investment approach continues: − Maintain underlying growth rate − Develop high quality portfolio of opportunities at steady and efficient pace − Increase technological capability − Mai
Slide 10: E&P operational highlights
E&P operational highlights Production • +2.9% vs. 1H 2004 Exploration successes • US • Angola Start-ups • Mad Dog • Clair • Kizomba B • Azeri • Baku-Tbilisi-Ceyhan pipeline inauguration 10
Slide 11: E&P projects update
E&P projects update 2004 2005 2006 Mar 04 current Mar 04 current Mar 04 current view view view view view view Atlas Mad Dog early 05 9 Atlantis 2006 Methanol early 04 9 Azeri 2005 9 Dalia 2006 In Salah mid 04 9 Kizomba B late 05/ early 06 9 Shah Deniz late 06 Australia BTC 2005 LNG Train 4 2004 9 Ca
Slide 12: Customer-facing businesses: Operational highlights
Customer-facing businesses: Operational highlights • Retail same store sales growth • Retail volumes maintained • Ultimate fuels launched in South Florida and the Netherlands • BP / Sinopec Acetic Acid JV contract signed 12
Slide 13: Production growth 2000 - 2004
Production growth 2000 - 2004 6 5.4 5 Compound annual growth rate (%) 4 3 2.0 2 1 0.3 0 BP actual Global average Supermajors* *Supermajors: ExxonMobil, Shell, Chevron and Total 13
Slide 14: 2004 returns
2004 returns BP Supermajors* 25 20 2004 ROACE (%) 15 10 5 0 RC ROACE Goodwill & asset Excess E&P Supermajors' revaluation capital RC range not in service *Supermajors: ExxonMobil, Shell, Chevron and Total 14
Slide 15: Reserves and resources
Reserves and resources Billion boe 60 57bn 50 40 30 24bn 20 17bn 16bn 10 0 EPC NPC TNK-BP Total Proved developed Proved undeveloped Non-proved Reported data end 2004 15
Slide 16: Project start-ups
Project start-ups 2004 - 2005 2006 - 2007 2008 - 2010 9 Atlas Methanol Atlantis ACG Phase 3 Kizomba C 9 In Salah Dalia Angel Kovytka Regional 9 Australia LNG Train 4 Greater Plutonio Atlantis N Flank Mad Dog SW Ridge 9 Kizomba A In Amenas Australia LNG Train 5 Puma 9 Holstein Kizomba A Phase 2 Block
Slide 17: Existing profit centres
Existing profit centres • Average decline of 3% per year expected: − Underlying performance on track − New projects started and new opportunities identified − Continuing focus on operating efficiency 17
Slide 18: Production
Production Thousand boed 6000 5000 4000 3000 2000 1000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Actual prices and portfolio Production adjusted to $20/bbl Existing profit centres New profit centres TNK-BP Source: BP estimates for 2005-10 18
Slide 19: Sources and uses of cash
Sources and uses of cash 1st half Full year $bn 20 • Minimum buybacks 18 ca. $10bn subject to Disposals 16 market conditions 14 12 Buybacks • Divestments ca. 10 $2bn, excluding 8 Operations Dividends Innovene 16.1 6 4 • Capex ca. $14.5bn Organic Capex 2 0 Sources Uses 19
Slide 20: Share buybacks
Share buybacks • 7% of shares in issue since 2000 • $4.1bn in 1H 2005 • Minimum $6bn expected for 2H 2005 20
Slide 21: Indicators: 1H 2005
Indicators: 1H 2005 Production • 2.9% growth vs. 1H 2004 • Expectation for growth extended to 2010 Cash returns • Pre-tax cash returns on track Capex • ca. $14.5bn in 2005 • ca. $15bn in 2006 21
Slide 22: Summary
Summary • Momentum continues − Combination of strategy and discipline • Delivering growth while maintaining financial strength • Distributing excess free cash to shareholders − Share buybacks ca. $10bn subject to market conditions and constraints • 26% increase in dividend per share 22
Slide 23: Byron Grote, Chief Financial Officer
Byron Grote Chief Financial Officer
Slide 24: Trading environment
Trading environment Oil realization Gas realization 50 8 40 6 $/mcf 30 $/bbl 4 20 10 2 0 0 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2004 2005 2004 2005 Refining indicator margin Change vs 2004 10 Average realizations 2Q 1H 8 Crude oil $/bbl 39% 39% $/bbl 6 4 Natural gas $/mcf 19% 16% 2 Total hydrocarbon
Slide 25: Financial results
Financial results Results for the second quarter $bn change vs. 2Q 04 % % per share • Profit for the quarter − Replacement cost profit 5.0 +29 +32 − Profit including inventory 5.6 +29 +33 gains/losses • Net cash provided by operating 6.7 +31 +35 activities ¢/ share • Dividend to be paid next quarter
Slide 26: Non-operating items (NOIs)
Non-operating items (NOIs) $m 1Q 05 2Q 05 1H 05 $bn post-tax Non-operating items 787 (1,206) (419) Tax (252) 380 128 1.0 Total post-tax 535 (826) (291) 0.5 0.0 (0.5) (1.0) (1.5) 1Q 2Q 3Q 4Q 1Q 2Q 2004 2005 26
Slide 27: 1H 05 vs 1H 04 group result
1H 05 vs 1H 04 group result Field start-up costs $bn post tax Wellwork & repairs Higher tax rate 12 10 8 Higher E&P volume Supply optimization 6 Olefins & Derivatives 4 2 0 1H 04 NOIs Price / Forex A&D DD&A Other 1H 05 Margin 27
Slide 28: Segment results: E&P and R&M
Segment results E&P R&M 7 7 6 6 5 $bn pre-tax* $bn pre-tax* 5 4 4 3 3 2 2 1 1 0 0 2Q 04 2Q 05 2Q 04 2Q 05 NOIs included $(274)m $(652)m $55m $(658)m above • Strong price environment • Strong refining margins • Production growth • Reduced refining availability • Embedded derivatives loss (NOI) • Texa
Slide 29: Segment results: GP&R and OB&C
Segment results GP&R OB&C 0.4 0.4 0.2 0.2 $bn pre-tax* $bn pre-tax* 0.0 0.0 (0.2) (0.2) (0.4) (0.4) 2Q 04 2Q 05 2Q 04 2Q 05 NOIs included - $87m $(68)m $17m above • Lower gas marketing and NGL • Higher margins and volumes in contributions Olefins & Derivatives • Embedded derivatives gain (NOI) • Low
Slide 30: Sources and uses of cash
Sources and uses of cash $bn post tax 2Q 04 2Q 05 8 7 Disposals 6 Buybacks Disposals Buybacks 5 4 Dividends Dividends 3 Operations Operations 5.2 6.7 2 Organic Organic capex capex 1 0 Sources Uses Sources Uses 30
Slide 31: Pre-tax cash returns
Pre-tax cash returns % 45 40 35 30 25 20 1Q 2Q 3Q 4Q 1Q 2Q 2004 2005 Pre-tax cash return = RCP before interest & tax – non-operating items + DD&A + interest and tax from equity accounted entities / average operating capital employed 31
Slide 32: Net debt ratio
Net debt ratio % 40 35 30 25 20 15 10 1Q 2Q 3Q 4Q 1Q 2Q 2004 2005 Net debt ratio = net debt / (net debt + equity) 32
Slide 33: Shareholder distributions
Shareholder distributions $bn – full year $bn – first half 16 8 Buybacks 14 7 Dividends paid 12 6 Share issues 10 5 8 4 6 3 4 2 2 1 0 0 (2) (1) 2002 2003 2004 1H 05 33
Slide 34: Q&A
Q&A Vivienne Cox John Browne Chief Executive Group Chief Executive Gas, Power & Renewables Tony Hayward Byron Grote Chief Executive Chief Financial Officer Exploration & Production Fergus MacLeod John Manzoni Head of Investor Chief Executive Relations Refining & Marketing 34