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par BP P.l.c. (isin : GB0007980591)

EQS-Adhoc: BP p.l.c.: 3Q23 SEA Part 1 of 1

EQS-Ad-hoc: BP p.l.c. / Key word(s): 9 Month figures
BP p.l.c.: 3Q23 SEA Part 1 of 1

31-Oct-2023 / 08:00 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by EQS News - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.


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FOR IMMEDIATE RELEASE   London 31 October 2023   BP p.l.c. Group results Third quarter and nine months 2023

 

 

“For a printer friendly version of this announcement please click on the link below to open a PDF version of the announcement”

 

 

 

Performing while transforming

 

Financial summary ThirdSecondThird NineNine
  quarterquarterquarter monthsmonths
$ million 202320232022 20232022
Profit (loss) for the period attributable to bp shareholders 4,8581,792(2,163) 14,868(13,290)
Inventory holding (gains) losses*, net of tax (1,212)5492,186 (211)(2,085)
Replacement cost (RC) profit (loss)* 3,6462,34123 14,657(15,375)
Net (favourable) adverse impact of adjusting items*, net of tax (353)2488,127 (3,812)38,221
Underlying RC profit* 3,2932,5898,150 10,84522,846
Operating cash flow* 8,7476,2938,288 22,66227,361
Capital expenditure* (3,603)(4,314)(3,194) (11,542)(8,961)
Divestment and other proceeds(a) 65588606 1,5432,509
Surplus cash flow* 3,107(269)3,496 5,12114,080
Net issue (repurchase) of shares (2,047)(2,073)(2,876) (6,568)(6,756)
Net debt*(b) 22,32423,66022,002 22,32422,002
Adjusted EBITDA* 10,3069,77017,407 33,14247,647
Announced dividend per ordinary share (cents per share) 7.2707.2706.006 21.15017.472
Underlying RC profit per ordinary share* (cents) 19.1414.7743.15 61.83118.61
Underlying RC profit per ADS* (dollars) 1.150.892.59 3.717.12

 

• Underlying RC profit $3.3bn; Operating cash flow $8.7bn; Net debt reduced to $22.3bn • Further $1.5bn share buyback announced  • Delivering resilient hydrocarbons - start up of major project* - Tangguh Expansion; North Sea Murlach project gets regulatory approval; bpx energy brings online 'Bingo' facility • Continued progress to an IEC - first Archaea modular biogas plant; Woodfibre and OMV LNG agreements

 

 

This has been a solid quarter supported by strong underlying operational performance demonstrating our continued focus on delivery. Momentum continues to build across our businesses, with recent start-ups including Tangguh Expansion, bpx energy’s 'Bingo' central processing facility and Archaea Energy's first modular biogas plant in Indiana. As we laid out at our investor update in Denver, we remain committed to executing our strategy, expect to grow earnings through this decade, and on track to deliver strong returns for our shareholders.
 
Murray Auchincloss
Chief executive officer (Interim)
 

 

  1. Divestment proceeds are disposal proceeds as per the condensed group cash flow statement. See page 3 for more information on other proceeds.
  1. See Note 9 for more information.

 

RC profit (loss), underlying RC profit (loss), surplus cash flow, net debt, adjusted EBITDA, underlying RC profit per ordinary share and underlying RC profit per ADS are non-IFRS measures. Inventory holding (gains) losses and adjusting items are non-IFRS adjustments.

* For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 31.

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 Highlights 
 Underlying replacement cost profit* $3.3 billion 
 Underlying replacement cost profit for the quarter was $3.3 billion, compared with $2.6 billion for the previous quarter. Compared to the second quarter 2023, the result reflects: higher realized refining margins, lower level of refining turnaround activity, a very strong oil trading result, higher oil and gas production, partly offset by a weak gas marketing and trading result.
Reported profit for the quarter was $4.9 billion, compared with $1.8 billion for the second quarter 2023. The reported result for the third quarter is adjusted for inventory holding gains* of $1.2 billion (net of tax) and a net favourable impact of adjusting items* of $0.4 billion (net of tax) to derive the underlying replacement cost profit. Adjusting items include impairments of $1.2 billion and favourable fair value accounting effects* of $1.5 billion.
 
 
 Operating cash flow* $8.7 billion and net debt* reduced to $22.3 billion 
 Operating cash flow in the quarter of $8.7 billion includes a working capital* release (after adjusting for inventory holding gains, fair value accounting effects and other adjusting items) of $2.0 billion (see page 27).
Capital expenditure* in the third quarter was $3.6 billion. bp now expects capital expenditure, including inorganic capital expenditure* to be around $16 billion in 2023.
During the third quarter, bp completed $2.0 billion of share buybacks. This included $225 million as part of the $675 million programme announced on 7 February 2023 to offset the expected full-year dilution from the vesting of awards under employee share schemes in 2023. bp completed the $675 million buyback programme on 1 September 2023.
The $1.5 billion share buyback programme announced with the second quarter results was completed on 27 October 2023.
Net debt was reduced by $1.3 billion to $22.3 billion at the end of the third quarter.
 
 Further $ 1.5 billion share buyback within a disciplined financial frame 
 A resilient dividend is bp’s first priority within its disciplined financial frame, underpinned by a cash balance point* of around $40 per barrel Brent, $11 per barrel RMM and $3 per mmBtu Henry Hub (all 2021 real).
For the third quarter, bp has announced a dividend per ordinary share of 7.270 cents.
bp remains committed to using 60% of 2023 surplus cash flow* for share buybacks, subject to maintaining a strong investment grade credit rating.
bp intends to execute a further $1.5 billion share buyback prior to reporting fourth quarter results.
In setting the dividend per ordinary share and buyback each quarter, the board will continue to take into account factors including the cumulative level of and outlook for surplus cash flow, the cash balance point and the maintenance of a strong investment grade credit rating.
bp’s guidance for distributions remains unchanged. Based on bp’s current forecasts, at around $60 per barrel Brent and subject to the board’s discretion each quarter, bp expects to be able to deliver share buybacks of around $4.0 billion per annum, at the lower end of its $14-18 billion capital expenditure range, and have capacity for an annual increase in the dividend per ordinary share of around 4%.
 
 
 Continued progress in transformation to an integrated energy company 
 In resilient hydrocarbons, bp has announced the start-up of Tangguh Expansion – the third major project* in 2023 - adding around 3.8mtpa of producing capacity to the existing 7.6mtpa facility. It has safely produced the first commercial cargo. In August, bpx energy successfully brought online 'Bingo', its second central processing facility in the Permian Basin. In September, a regulatory approval was received for the Murlach oil and gas development in the North Sea, a two well redevelopment of the Marnock-Skua field back to the ETAP (Eastern Trough Area Project) hub. bp has accelerated its biogas strategy – part of its bioenergy transition growth* engine - bp’s Archaea Energy announced the start-up of its original Archaea Modular Design (AMD) renewable natural gas plant in Medora, Indiana.
In convenience and mobility, bp continued to advance its growth strategy in EV charging and convenience: announcing an agreement in October with Tesla for the future purchase of $100 million of ultra-fast chargers in the US – this is part of the approved $500 million of investment in the US; and expanding its successful strategic convenience partnership with Auchan in Poland, with plans to add more than 100 EasyAuchan stores to its retail network by the end of 2025.
In low carbon energy, bp has strengthened its renewables pipeline to 43.9GW net to bp from the rights awarded to develop two offshore wind projects, with total potential generating capacity of 4GW, in the German tender round.
 

 

 
bp delivered robust operating cash flow in the quarter as we continue to execute against our unchanged financial frame. Net debt reduced by $1.3 billion to $22.3 billion; we are investing with discipline; and we are delivering on our commitment to shareholder distributions, announcing a further $1.5 billion share buyback programme.
 
Kate Thomson
Chief financial officer (Interim)
 

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 37.

 

 

 

 

 

 

 

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Financial results

In addition to the highlights on page 2:

  • Profit attributable to bp shareholders in the third quarter and nine months was $4.9 billion and $14.9 billion respectively, compared with a loss of $2.2 billion and $13.3 billion in the same periods of 2022.
  • After adjusting profit attributable to bp shareholders for inventory holding gains* and net impact of adjusting items*, underlying replacement cost profit* for the third quarter and nine months was $3.3 billion and $10.8 billion respectively, compared with $8.2 billion and $22.8 billion for the same periods of 2022. This reduction in underlying replacement cost profit for the third quarter mainly reflects lower oil and gas realizations and a weak gas marketing and trading result. For the nine months, the reduction reflects lower oil and gas realizations; the impact of portfolio changes in oil production & operations; a lower refining and oil trading performance; and a weak gas marketing and trading result in the third quarter.
  • Adjusting items in the third quarter and nine months had a net favourable pre-tax impact of $0.5 billion and $3.8 billion respectively, compared with an adverse pre-tax impact of $8.3 billion and $39.4 billion in the same periods of 2022.
  • Adjusting items for the third quarter and nine months of 2023 include a favourable impact of pre-tax fair value accounting effects*, relative to management's internal measure of performance, of $1.5 billion and $6.8 billion respectively, compared with an adverse pre-tax impact of $10.1 billion and $16.7 billion in the same periods of 2022. This is primarily due to a decline in the forward price of LNG during the 2023 periods, but an increase in the 2022 comparative periods. Under IFRS, reported earnings include the mark-to-market value of the hedges used to risk-manage LNG contracts, but not of the LNG contracts themselves. The underlying result includes the mark-to-market value of the hedges but also recognizes changes in value of the LNG contracts being risk managed.
  • Adjusting items for the nine months 2022 include a pre-tax charge of $24.0 billion relating to bp’s decision to exit its 19.75% shareholding in Rosneft. A further $1.5 billion pre-tax charge relating to bp's decision to exit its other businesses with Rosneft in Russia is also included.
  • The effective tax rate (ETR) on RC profit or loss* for the third quarter and nine months was 33% and 32% respectively, compared with 96% and -242% for the same periods in 2022. Excluding adjusting items, the underlying ETR* for the third quarter and nine months was 33% and 39% respectively, compared with 37% and 33% for the same periods a year ago. The lower underlying ETR for the third quarter reflects adjustments in respect of prior periods. The higher underlying ETR for the nine months reflects changes in the geographical mix of profits and the increased impact of the UK Energy Profits Levy. ETR on RC profit or loss and underlying ETR are non-IFRS measures.
  • Operating cash flow* for the third quarter and nine months was $8.7 billion and $22.7 billion respectively, compared with $8.3 billion and $27.4 billion for the same periods in 2022 driven by the movements in underlying replacement cost profit and working capital in the periods.
  • Capital expenditure* in the third quarter and nine months was $3.6 billion and $11.5 billion respectively, compared with $3.2 billion and $9.0 billion in the same periods of 2022. The nine months 2023 reflected the inorganic $1.1 billion spend on the acquisition of TravelCenters of America in the second quarter 2023.
  • Total divestment and other proceeds for the third quarter and nine months were $0.7 billion and $1.5 billion respectively, compared with $0.6 billion and $2.5 billion for the same periods in 2022. Other proceeds for the third quarter and nine months of 2023 were $0.5 billion of proceeds from the sale of a 49% interest in a controlled affiliate holding certain midstream assets onshore US. Other proceeds for the nine months of 2022 were $0.6 billion of proceeds from the disposal of a loan note related to the Alaska divestment.
  • At the end of the third quarter, net debt* was $22.3 billion, compared with $23.7 billion at the end of the second quarter 2023 and $22.0 billion at the end of the third quarter 2022.

 

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Analysis of RC profit (loss) before interest and tax and reconciliation to profit (loss) for the period

  ThirdSecondThird NineNine
  quarterquarterquarter monthsmonths
$ million 202320232022 20232022
RC profit (loss) before interest and tax       
gas & low carbon energy 2,2752,289(2,956) 11,911(1,743)
oil production & operations 3,4272,5686,965 9,31218,033
customers & products 1,5495552,586 4,7848,098
other businesses & corporate (500)(297)(1,093) (887)(26,840)
Of which:       
other businesses & corporate excluding Rosneft (500)(297)(1,093) (887)(2,807)
Rosneft  (24,033)
Consolidation adjustment – UPII* (57)(30)(21) (109)(8)
RC profit (loss) before interest and tax 6,6945,0855,481 25,011(2,460)
Finance costs and net finance expense relating to pensions and other post-retirement benefits (978)(859)(633) (2,622)(1,816)
Taxation on a RC basis (1,859)(1,724)(4,646) (7,156)(10,327)
Non-controlling interests (211)(161)(179) (576)(772)
RC profit (loss) attributable to bp shareholders* 3,6462,34123 14,657(15,375)
Inventory holding gains (losses)* 1,593(732)(2,868) 2612,779
Taxation (charge) credit on inventory holding gains and losses (381)183682 (50)(694)
Profit (loss) for the period attributable to bp shareholders 4,8581,792(2,163) 14,868(13,290)

Analysis of underlying RC profit (loss) before interest and tax

  ThirdSecondThird NineNine
  quarterquarterquarter monthsmonths
$ million 202320232022 20232022
Underlying RC profit (loss) before interest and tax       
gas & low carbon energy 1,2562,2336,240 6,94512,915
oil production & operations 3,1362,7775,211 9,23215,796
customers & products 2,0557962,725 5,6108,887
other businesses & corporate (303)(170)(405) (769)(865)
Of which:       
other businesses & corporate excluding Rosneft (303)(170)(405) (769)(865)
Rosneft  
Consolidation adjustment – UPII (57)(30)(21) (109)(8)
Underlying RC profit before interest and tax 6,0875,60613,750 20,90936,725
Finance costs and net finance expense relating to pensions and other post-retirement benefits (882)(740)(565) (2,303)(1,560)
Taxation on an underlying RC basis (1,701)(2,116)(4,856) (7,185)(11,547)
Non-controlling interests (211)(161)(179) (576)(772)
Underlying RC profit attributable to bp shareholders* 3,2932,5898,150 10,84522,846

 

Reconciliations of underlying RC profit attributable to bp shareholders to the nearest equivalent IFRS measure are provided on page 1 for the group and on pages 6-14 for the segments.

Operating Metrics

Operating metrics Nine months 2023 vs Nine months 2022
Tier 1 and tier 2 process safety events* 29 -7
Reported recordable injury frequency* 0.255 +31.8%
upstream* production(a) (mboe/d) 2,310 +2.7%
upstream unit production costs*(b) ($/boe) 5.88 -5.9%
bp-operated upstream plant reliability* 95.7% -0.1
bp-operated refining availability*(a) 96.0% 1.6

 

  1. See Operational updates on pages 6, 9 and 11. Because of rounding, upstream production may not agree exactly with the sum of gas & low carbon energy and oil production & operations.
  1. Mainly reflecting impact of portfolio changes.

 

 

 

 

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Outlook & Guidance

Macro outlook

In the fourth quarter:

  • bp expects oil prices to be supported by OPEC+ production restrictions and the continued demand rebound;
  • European gas and Asian LNG prices will be driven by weather, demand recovery in Europe and China and ongoing geopolitical tension. In the US, weather is also a risk factor, but higher than normal storage levels and higher production should help to dampen volatility; and
  • bp expects industry refining margins to be significantly lower than the third quarter.

4Q23 guidance

  • Looking ahead, we expect fourth-quarter 2023 reported upstream* production to be broadly flat compared to third-quarter 2023.
  • In its customers business, bp expects seasonally lower volumes with marketing margins to remain sensitive to movements in the cost of supply. In refining, we expect significantly lower realized refining margins and a higher level of turnaround activity in the fourth quarter.

2023 guidance

In addition to the guidance on page 2:

  • bp expects both reported and underlying upstream production to be higher compared with 2022. Within this, bp expects underlying production from oil production & operations to be higher and production from gas & low carbon energy to be slightly lower. bp continues to expect four major project start-ups during 2023.
  • bp expects the other businesses & corporate underlying annual charge to be at the lower end of the range $1.1-1.3 billion for 2023. The charge may vary from quarter to quarter.
  • bp continues to expect the depreciation, depletion and amortization to be slightly above 2022.
  • bp continues to expect the underlying ETR* for 2023 to be around 40% but it is sensitive to the impact that volatility in the current price environment may have on the geographical mix of the group’s profits and losses.
  • Having realized $17.5 billion of divestment and other proceeds since the second quarter of 2020, bp continues to expect divestment and other proceeds of $2-3 billion in 2023 and continues to expect to reach $25 billion of divestment and other proceeds between the second half of 2020 and 2025.
  • bp continues to expect Gulf of Mexico oil spill payments for the year to be around $1.3 billion pre-tax including the $1.2 billion pre-tax payment made during the second quarter.
  • bp now expects capital expenditure* of around $16 billion in 2023 including inorganic capital expenditure*.
  • bp is committed to maintaining a strong investment grade credit rating, targeting further progress within an 'A' grade credit rating. For 2023 bp continues to intend to allocate 40% of surplus cash flow* to further strengthen the balance sheet.
  • For 2023 and subject to maintaining a strong investment grade credit rating, bp remains committed to using 60% of surplus cash flow for share buybacks.
  • In setting the dividend per ordinary share and buyback each quarter, the board will continue to take into account factors including the cumulative level of and outlook for surplus cash flow, the cash balance point* and the maintenance of a strong investment grade credit rating.
  • Based on bp’s current forecasts, at around $60 per barrel Brent and subject to the board’s discretion each quarter, bp continues to expect to be able to deliver share buybacks of around $4.0 billion per annum, at the lower end of its $14-18 billion capital expenditure range, and have capacity for an annual increase in the dividend per ordinary share of around 4%.

Adjusted EBITDA* aims(a)

  • bp has increased its 2030 Adjusted EBITDA aims for resilient hydrocarbons and group by $2 billion to a range of $41-44 billion and $53-58 billion respectively.
  1. Brent $70/bbl 2021 real, at bp planning assumptions, and at the upper end of the respective expected capital expenditure* ranges.

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 37.

 

 

 

 

 

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gas & low carbon energy*

Financial results

  • The replacement cost (RC) profit before interest and tax for the third quarter and nine months was $2,275 million and $11,911 million respectively, compared with a loss of $2,956 million and $1,743 million for the same periods in 2022. The third quarter and nine months are adjusted by a favourable impact of net adjusting items* of $1,019 million and $4,966 million respectively, compared with an adverse impact of net adjusting items of $9,196 million and $14,658 million for the same periods in 2022. Adjusting items include impacts of fair value accounting effects*, relative to management's internal measure of performance, which are a favourable impact of $1,816 million and $6,972 million for the third quarter and nine months in 2023 and an adverse impact of $9,224 million and $14,313 million for the same periods in 2022. Under IFRS, reported earnings include the mark-to-market value of the hedges used to risk-manage LNG contracts, but not of the LNG contracts themselves. The underlying result includes the mark-to-market value of the hedges but also recognizes changes in value of the LNG contracts being risk managed, which decreased as forward prices fell during the nine months. Adjusting items also include a net impairment charge of $224 million and $1,284 million respectively, compared with net charges of $6 million and $523 million for the same periods in 2022.
  • After adjusting RC profit before interest and tax for adjusting items, the underlying RC profit before interest and tax* for the third quarter and nine months was $1,256 million and $6,945 million respectively, compared with $6,240 million and $12,915 million for the same periods in 2022.
  • The underlying RC profit for the third quarter and nine months, compared with the same periods in 2022, both reflect lower realizations, a higher depreciation, depletion and amortization charge, and a weak gas marketing and trading result in the third quarter.

Operational update

  • Reported production for the quarter was 946mboe/d, 3.6% lower than the same period in 2022. Underlying production* was 2.6% lower, mainly due to base decline and increased planned maintenance offset by major project* delivery.
  • Reported production for the nine months was 940mboe/d, 1.8% lower than the same period in 2022. Underlying production was 2.2% lower, mainly due to base decline partly offset by major project delivery.
  • Renewables pipeline* at the end of the quarter was 43.9GW (bp net), including 17.7GW bp net share of Lightsource bp's (LSbp's) pipeline. The renewables pipeline increased by 6.7GW during the nine months due to bp being awarded the rights to develop two North Sea offshore wind projects in Germany (4GW) and increases to LSbp's pipeline. In addition, there is over 13GW (bp net) of early stage opportunities in LSbp's hopper.

 

Strategic progress

gas

  • On 19 October bp, on behalf of the Tangguh production-sharing contract* partners (bp 40.22% operator), announced that the first cargo of liquefied natural gas (LNG) produced by the new third liquefaction train at the Tangguh LNG facility, in Papua Barat, Indonesia, has safely been loaded and sailed. The start-up of Tangguh Train 3 will add 3.8 million tonnes per annum (mtpa) of gross LNG production capacity to the existing facility, bringing total plant capacity to 11.4mtpa gross.
  • On 26 September bp announced that a bp and Shell joint venture (bp 50%, Shell 50%) had been awarded three deepwater exploration blocks off Trinidad's east coast. 
  • bp continues to work towards its aim of building an LNG portfolio of 30 million tonnes per year (mpta) by 2030:
  • On July 28, bp and OMV announced the signing of a long-term agreement to supply of up to 1mtpa of LNG for 10 years from 2026. This builds on bp in May 2023 agreeing 2bcm per year of regasification capacity for 20 years at the Gate terminal in Rotterdam.
    • On 5 September, bp announced its third long-term LNG offtake contract from Woodfibre’s British Columbia LNG facility with firm offtake totalling 1.95mtpa and any additional production on a flexible offtake basis.

low carbon energy

  • Hydrogen and CCS
    • On 13 October the Midwest Alliance for Clean Hydrogen (MachH2), of which bp is a member, announced it has been selected by the U.S. Department of Energy’s Office of Clean Energy Demonstrations to develop a Regional Clean Hydrogen Hub. Under the proposals, it would include blue hydrogen* production at or near bp’s Whiting refinery and a potential hydrogen mobility corridor across Indiana and neighbouring states.
    • Hydrogen pipeline* at the end of the third quarter was 2.9mtpa, an increase of 1.1mtpa compared with the start of the year.
  • Offshore wind 
    • bp and its partner Equinor continue to work on options for their US offshore wind projects to mitigate the effect of inflationary pressures and permitting delays. A filing on 7 June with the New York Public Services Commission (PSC) requesting to renegotiate the power purchase agreements associated with three wind farms off the coast of New York (Empire Wind 1 and 2, Beacon Wind 1) was rejected on 12 October. Equinor and bp are assessing the impact of the decision on these projects and future development plans. We have recognized a pre-tax impairment charge of $540 million in the third quarter related to these assets. The pre-tax charge is recorded through equity-accounted earnings and is classified as an 'other' adjusting item.

 

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gas & low carbon energy (continued)

  ThirdSecondThird NineNine
  quarterquarterquarter monthsmonths
$ million 202320232022 20232022
Profit (loss) before interest and tax 2,2752,289(2,970) 11,912(1,741)
Inventory holding (gains) losses* 14 (1)(2)
RC profit (loss) before interest and tax 2,2752,289(2,956) 11,911(1,743)
Net (favourable) adverse impact of adjusting items (1,019)(56)9,196 (4,966)14,658
Underlying RC profit before interest and tax 1,2562,2336,240 6,94512,915
Taxation on an underlying RC basis (448)(575)(1,478) (1,984)(3,204)
Underlying RC profit before interest 8081,6584,762 4,9619,711

 

  ThirdSecondThird NineNine
  quarterquarterquarter monthsmonths
$ million 202320232022 20232022
Depreciation, depletion and amortization       
Total depreciation, depletion and amortization 1,5431,4071,177 4,3903,635
        
Exploration write-offs       
Exploration write-offs 15(1)10 138
        
Adjusted EBITDA*       
Total adjusted EBITDA 2,8143,6397,427 11,34816,558
        
Capital expenditure*       
gas 833697872 2,1772,195
low carbon energy 22219086 778447
Total capital expenditure 1,055887958 2,9552,642

 

  ThirdSecondThird NineNine
  quarterquarterquarter monthsmonths
  202320232022 20232022
Production (net of royalties)(a)       
Liquids* (mb/d) 106103117 107117
Natural gas (mmcf/d) 4,8754,6415,011 4,8264,873
Total hydrocarbons* (mboe/d) 946903981 940957
        
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