REG - BP PLC - 1Q24 Trading statement part 1 of 1

BPAnnouncement

09/04/2024 07:00

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RNS Number : 7516J  BP PLC  09 April 2024

 FOR IMMEDIATE RELEASE
 London 9 April 2024
 BP p.l.c. Trading Statement

 

First quarter 2024 trading statement

The following Trading Statement provides a summary of BP p.l.c.'s (bp) current
estimates and expectations for the first quarter of 2024, including data on
the economic environment as well as group performance during the period.

The information presented is not comprehensive of all factors which may impact
bp's group results for the first quarter 2024 and is not an estimate of those
results. Also refer to bp's fourth quarter and full year 2023 group results
announcement on 6 February 2024 for guidance items which continue to apply
unless explicitly stated. A summary of that guidance is also provided in the
Appendix to this Trading Statement. All information provided is subject to the
finalization of bp's financial reporting processes and actual results may
vary.

bp's group results for the first quarter 2024 are expected to be published on
7 May 2024.

Updated 1Q24 guidance(a)

•      Upstream production(b) in the first quarter is expected to be
higher compared to the prior quarter, with production higher in  oil
production & operations and slightly higher in gas & low carbon
energy.

•      In the gas & low carbon energy segment, realizations(c)
compared to the prior quarter are expected to have an adverse impact in the
range of $0.2-0.4 billion, including declines in non-Henry Hub natural gas
marker prices. There is also expected to be an adverse impact of around $0.2
billion as a result of the devaluation of the Egyptian Pound. In addition, the
gas marketing and trading result is expected to be strong following a strong
result in the fourth quarter 2023.

•      In the oil production & operations segment, realizations(c)
compared to the prior quarter are expected to have an adverse impact in the
range of $0.3-0.6 billion, including price lags on bp's production in the Gulf
of Mexico and the UAE and also declines in non-Henry Hub natural gas marker
prices.

•      The customers and products segment, compared to the prior
quarter, is expected to be impacted by the following factors: in products,
improving realized refining margins, expected to result in a benefit in the
range of $0.1-0.2 billion; a significantly lower level of turnaround activity
than the prior quarter, offset by the impacts of the 1 February plant-wide
power outage at the Whiting refinery which, after a phased start-up, resumed
normal operations on 15 March; the oil trading result is expected to be strong
following a weak result in the fourth quarter 2023; and in customers,
significantly weaker fuel margins, seasonally lower volumes, and the absence
of one-off positive effects that impacted the prior quarter.

•      Other items: Net debt is expected to increase in the first
quarter mainly reflecting a working capital build plus phasing of capex and
divestment and other proceeds as previously guided.

(a               ) All impacts influence bp's underlying RC
profit before interest and tax, unless stated otherwise.

(b               ) Includes bp's share of production of
equity-accounted entities.

(c               ) Realizations are based on sales by
consolidated subsidiaries only - this excludes equity-accounted entities.

Trading conditions

Brent averaged $83.16/bbl in the first quarter 2024 compared to $84.34/bbl in
the fourth quarter 2023.

US gas Henry Hub first of month index averaged $2.25/mmBtu in the first
quarter compared to $2.88/mmBtu in the fourth quarter 2023.

The bp average refining marker margin averaged $20.6/bbl in the first quarter
compared to $18.5/bbl in the fourth quarter 2023.

Further information on prices and bp's current rules of thumb can be found at
the following link: bp.com Rules of Thumb
(https://www.bp.com/en/global/corporate/investors/regulatory-news-updates-and-filings/trading-conditions-update.html)

Cautionary Statement

In order to utilize the 'safe harbor' provisions of the United States Private
Securities Litigation Reform Act of 1995 (the 'PSLRA') and the general
doctrine of cautionary statements, bp is providing the following cautionary
statement: The discussion in this announcement contains certain forecasts,
projections and forward-looking statements - that is, statements related to
future, not past events and circumstances - with respect to the financial
condition, results of operations and businesses of bp and certain of the plans
and objectives of bp with respect to these items. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that will or may occur in the future and
are outside the control of bp. Actual results or outcomes, may differ
materially from those expressed in such statements, depending on a variety of
factors, including (without limitation): price fluctuations in crude oil and
natural gas; changes in demand for bp's products; currency fluctuations;
drilling and production results; reserves estimates; sales volume and sales
mix numbers; supply and demand imbalances including as a result of direct or
indirect restrictions on production; regional pricing differentials and
refining margins; seasonal impacts on product demand and operating expenses;
resolution of trading and derivative positions for the quarter; the timing and
level of maintenance and/or turnaround activity; the timing and volume of
refinery additions and outages; the timing of bringing new fields onstream;
natural disasters and adverse weather conditions; changes in public
expectations and other changes to business conditions; wars and acts of
terrorism; cyber-attacks or sabotage as well as those factors discussed under
"Risk factors" in bp's Annual Report and Form-20F 2023 as filed with the US
Securities and Exchange Commission. Furthermore, additional factors may exist
that will be relevant to bp's group results for the first quarter of 2024 that
are not currently known or fully understood. Neither BP plc nor any of its
subsidiaries assumes any obligation to update, revise or supplement any
forward-looking statement contained in this announcement to reflect future
circumstances, events or information.

The contents of websites referred to in this announcement do not form part of
this announcement.

 

 

 

 FOR IMMEDIATE RELEASE
 London 9 April 2024
 BP p.l.c. Trading Statement

 

Appendix: Guidance issued in 4Q23 Stock Exchange Announcement(a)

 Guidance Area                                 Full Year 2024                                                                   1Q24 vs 4Q23
 Reported and underlying* upstream production  Slightly higher than 2023, of which Oil production & operations higher and       •       expected to be higher
                                               Gas & low carbon energy lower
 Customers                                     Growth from convenience, including TravelCenters of America; stronger Castrol,   •       expect seasonally lower volumes across most businesses
                                               bp pulse margin growth; fuels margins to remain sensitive to movements in cost

                                               of supply                                                                        •       absence of fourth quarter one-off positive effects

                                                                                                                                •       fuels margins to remain sensitive to movements in cost of
                                                                                                                                supply
 Products                                      Lower level of industry refining margins, with realized margins impacted by      •       significantly lower levels of refinery turnaround activity
                                               narrower North American heavy crude oil differentials; turnaround activity

                                               broadly in line with 2023 but heavily weighted towards the second half           •       lower industry refining margins with a larger reduction in
                                                                                                                                realized margins due to narrower North American heavy crude oil differentials
 OB&C                                          Around $1.0bn charge; quarterly charges may vary
 DD&A                                          Slightly higher than 2023
 Underlying effective tax rate*(b)             Expected to be around 40%
 Capital expenditure*                          Around $16bn, weighted to the first half
 Divestment and other proceeds                 $2-3bn, weighted to the second half
 Gulf of Mexico oil spill payments             ~$1.2bn pre-tax, of which $1.1bn 2Q

(a               ) Refer to bp's fourth quarter and full year
2023 group results announcement and bp.com for full text.

(b               ) Underlying effective tax rate 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.

*        See Glossary.

Contacts

                     London                Houston

 Press Office        David Nicholas        Paul Takahashi
                     +44 (0) 7831 095541    +1 713 903 9729

 Investor Relations  Craig Marshall        Graham Collins
 bp.com/investors    +44 (0) 203 401 5592  +1 832 753 5116

Glossary

Underlying production - 2024 underlying production, when compared with 2023,
is production after adjusting for acquisitions and divestments, curtailments,
and entitlement impacts in our production-sharing agreements/contracts and
technical service contract*.

Underlying RC profit or loss before interest and tax for the operating
segments or customers & products businesses is calculated as RC profit or
loss (as defined above) including profit or loss attributable to
non-controlling interests before interest and tax for the operating segments
and excluding net adjusting items for the respective operating segment or
business.

Underlying effective tax rate (ETR) is a non-IFRS measure. The underlying ETR
is calculated by dividing taxation on an underlying replacement cost (RC)
basis by underlying RC profit or loss before tax. Taxation on an underlying RC
basis for the group is calculated as taxation as stated on the group income
statement adjusted for taxation on inventory holding gains and losses and
total taxation on adjusting items. Information on underlying RC profit or loss
is provided below. Taxation on an underlying RC basis presented for the
operating segments is calculated through an allocation of taxation on an
underlying RC basis to each segment. bp believes it is helpful to disclose the
underlying ETR because this measure may help investors to understand and
evaluate, in the same manner as management, the underlying trends in bp's
operational performance on a comparable basis, period on period. Taxation on
an underlying RC basis and underlying ETR are non-IFRS measures. The nearest
equivalent measure on an IFRS basis is the ETR on profit or loss for the
period.

Capital expenditure is total cash capital expenditure as stated in the
condensed group cash flow statement. Capital expenditure for the operating
segments, gas & low carbon energy businesses and customers & products
businesses is presented on the same basis.

Technical service contract (TSC) - Technical service contract is an
arrangement through which an oil and gas company bears the risks and costs of
exploration, development and production. In return, the oil and gas company
receives entitlement to variable physical volumes of hydrocarbons,
representing recovery of the costs incurred and a profit margin which reflects
incremental production added to the oilfield.

 

BP p.l.c.'s LEI Code 213800LH1BZH3D16G760

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