REG - BP PLC - 1Q24 Part 1 of 1
07/05/2024 07:15
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RNS Number : 3361N BP PLC 07 May 2024
Top of page 1
FOR IMMEDIATE RELEASE
London 7 May 2024
BP p.l.c. Group results
First quarter 2024
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Resilient performance, committed distributions
Financial summary First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Profit for the period attributable to bp shareholders 2,263 371 8,218
Inventory holding (gains) losses*, net of tax (657) 1,155 452
Replacement cost (RC) profit* 1,606 1,526 8,670
Net (favourable) adverse impact of adjusting items*, net of tax 1,117 1,465 (3,707)
Underlying RC profit* 2,723 2,991 4,963
Operating cash flow* 5,009 9,377 7,622
Capital expenditure* (4,278) (4,711) (3,625)
Divestment and other proceeds((a)) 413 300 800
Net issue (repurchase) of shares (1,750) (1,350) (2,448)
Net debt*((b)) 24,015 20,912 21,232
Adjusted EBITDA* 10,306 10,568 13,066
Announced dividend per ordinary share (cents per share) 7.270 7.270 6.610
Underlying RC profit per ordinary share* (cents) 16.24 17.77 27.74
Underlying RC profit per ADS* (dollars) 0.97 1.07 1.66
Highlights
• Resilient financial and operational performance: Adjusted EBITDA
$10.3 billion; underlying RC profit $2.7 billion; upstream* production grew
+2.1% vs 1Q23; start up of new Azeri Central East (ACE) platform in Caspian
Sea
• Growing shareholder distributions: 1Q24 $1.75 billion share
buyback announced as part of our $3.5 billion commitment for the first half of
2024; Dividend per ordinary share of 7.270 cents
• Focus on delivering our six priorities: announcement to simplify
organizational structure; target to deliver at least $2 billion of cash cost*
savings by the end of 2026
We've delivered another resilient quarter financially and continued to make
progress on our strategy. Oil production was up and our ACE platform in the
Caspian is now producing. We are simplifying and reducing complexity across bp
and plan to deliver at least $2 billion of cash cost savings by the end of
2026 through high grading our portfolio, digital transformation, supply chain
efficiencies and global capability hubs.
Murray Auchincloss
Chief executive officer
(a) Divestment proceeds are disposal proceeds as per the condensed
group cash flow statement. There were no other proceeds for all periods
stated.
(b) See Note 9 for more information.
RC profit, underlying RC profit, 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 30.
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bp reported solid financial performance in the first quarter with adjusted
EBITDA* of $10.3 billion and underlying replacement cost profit of $2.7
billion. Our financial frame is unchanged, and we are delivering competitive
shareholder distributions, announcing a $1.75 billion share buyback for the
first quarter as part of our commitment of $3.5 billion for the first half of
2024.
Kate Thomson Chief financial officer
Highlights
1Q24 underlying replacement cost (RC) profit* $2.7 billion
• Underlying RC profit for the quarter was $2.7 billion, compared with $3.0
billion for the previous quarter. Compared with the fourth quarter 2023, the
result reflects lower oil and gas realizations, the impacts of the Whiting
refinery outage and significantly weaker fuels margin, partially offset by
significantly lower level of turnaround activity, a strong oil trading result
and higher realized refining margins. The underlying effective tax rate (ETR)*
in the quarter was 43%.
• Reported profit for the quarter was $2.3 billion, compared with $0.4 billion
for the fourth quarter 2023. The reported result for the first quarter is
adjusted for inventory holding gains* of $0.7 billion (net of tax) and a net
adverse impact of adjusting items* of $1.1 billion (net of tax) to derive the
underlying RC profit. Adjusting items pre-tax include net impairment charges
of $0.6 billion, largely as a result of regulatory and portfolio changes, and
adverse fair value accounting effects* of $0.2 billion.
Segment results
• Gas & low carbon energy: The RC profit before interest and tax for the
first quarter 2024 was $1.0 billion, compared with $2.2 billion for the
previous quarter. After adjusting RC profit before interest and tax for a net
adverse impact of adjusting items of $0.6 billion, the underlying RC profit
before interest and tax* for the first quarter was $1.7 billion, compared
with $1.8 billion in the fourth quarter 2023. The first quarter underlying
result reflects lower realizations and foreign exchange losses on Egyptian
pound balances, partially offset by lower exploration write-offs. Gas
marketing and trading was strong following a strong result in the fourth
quarter.
• Oil production & operations: The RC profit before interest and tax for the
first quarter 2024 was $3.1 billion, compared with $1.9 billion for the
previous quarter. After adjusting RC profit before interest and tax for a net
adverse impact of adjusting items of $0.1 billion, the underlying RC profit
before interest and tax for the first quarter was $3.1 billion, compared with
$3.5 billion in the fourth quarter 2023. The first quarter underlying result
reflects lower realizations, partially offset by higher production.
• Customers & products: The RC profit before interest and tax for the first
quarter 2024 was $1.0 billion, compared with a loss of $0.6 billion for the
previous quarter. After adjusting RC profit before interest and tax for a net
adverse impact of adjusting items of $0.3 billion, the underlying RC profit
before interest and tax for the first quarter was $1.3 billion, compared with
$0.8 billion in the fourth quarter 2023. The customers first quarter
underlying result was lower by $0.5 billion, reflecting significantly weaker
fuels margin, seasonally lower volumes, and the absence of one-off positive
effects that benefited the prior quarter, partly offset by lower costs. The
products first quarter underlying result was higher by $1.0 billion,
reflecting higher realized refining margins, a significantly lower level of
turnaround activity and higher commercial optimization, partially offset by
the impacts of the Whiting refinery outage. The oil trading contribution was
strong following a weak result in the fourth quarter.
Operating cash flow* $5.0 billion
• Operating cash flow in the quarter of $5.0 billion includes a working capital*
build (after adjusting for inventory holding gains, fair value accounting
effects and other adjusting items) of $2.4 billion, reflecting seasonal
inventory effects, timing of various payments and the price environment. (see
page 27).
Delivering the next wave of efficiencies - at least $2 billion cash cost*
savings
• bp has a target to deliver at least $2 billion of cash cost savings by the end
of 2026 relative to 2023. The reduction is expected to result from cost-saving
measures across bp's business underpinned by high-grading the portfolio,
digital transformation, supply chain efficiencies and global capability hubs.
Some of these cost savings may have associated restructuring charges.
Further $1.75 billion share buyback announced for 1Q24; $3.5 billion for first
half 2024 unchanged
• The $1.75 billion share buyback programme announced with the fourth quarter
results was completed on 3 May 2024.
• 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 first
quarter, bp has announced a dividend per ordinary share of 7.270 cents.
• bp is committed to maintaining a strong investment grade credit rating.
Through the cycle, we are targeting to further improve our credit metrics
within an 'A' grade credit range.
• bp continues to invest with discipline and a returns focused approach in our
transition growth* engines and in our oil, gas and refining businesses. For
2024 and 2025 we expect capital expenditure of around $16 billion per annum.
• 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 maintaining a
strong investment grade credit rating.
The commentary above contains forward-looking statements and should be read in
conjunction with the cautionary statement on page 36.
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Financial results
In addition to the highlights on page 2:
• Profit attributable to bp shareholders in the first quarter was
$2.3 billion, compared with a profit of $8.2 billion in the same period of
2023.
- After adjusting profit attributable to bp shareholders for inventory holding
gains* and net impact of adjusting items*, underlying replacement cost (RC)
profit* for the first quarter was $2.7 billion, compared with $5.0 billion
for the same period of 2023. This reduction in underlying RC profit for the
first quarter mainly reflects lower realizations, lower industry refining
margins, a strong gas marketing and trading result compared with an
exceptional result in the first quarter in 2023 and the impacts of the Whiting
refinery outage.
- Adjusting items in the first quarter had a net adverse pre-tax impact of
$1.2 billion, compared with a net favourable pre-tax impact of $3.9 billion
in the same period of 2023.
- Adjusting items for the first quarter of 2024 include an adverse impact of
pre-tax fair value accounting effects*, relative to management's internal
measure of performance, of $0.2 billion, compared with a favourable pre-tax
impact of $4.3 billion in the same period of 2023. This difference is
primarily due to a small decline in the forward price of LNG over the quarter
compared to a large decline in this price during the first quarter of 2023.
• The effective tax rate (ETR) on RC profit or loss* for the first quarter
was 54%, compared with 29% for the same period in 2023. Excluding adjusting
items, the underlying ETR* for the first quarter was 43%, compared with 39%
for the same period a year ago. The higher underlying ETR for the first
quarter reflects foreign exchange impacts which are not tax deductible. ETR on
RC profit or loss and underlying ETR are non-IFRS measures.
• Operating cash flow* for the first quarter was $5.0 billion, compared
with $7.6 billion for the same period in 2023, reflecting the difference in
the underlying RC profit for the respective periods.
• Capital expenditure* in the first quarter was $4.3 billion, compared with
$3.6 billion in the same period of 2023.
• Total divestment and other proceeds for the first quarter were
$0.4 billion, compared with $0.8 billion for the same period in 2023. There
were no other proceeds for both periods.
• At the end of the first quarter, net debt* was $24.0 billion, compared
with $20.9 billion at the end of the fourth quarter 2023 and $21.2 billion
at the end of the first quarter 2023. The increase in the net debt is mainly
attributable to a working capital* build.
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Analysis of RC profit (loss) before interest and tax and reconciliation to
profit (loss) for the period
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
RC profit (loss) before interest and tax
gas & low carbon energy 1,036 2,169 7,347
oil production & operations 3,060 1,879 3,317
customers & products 988 (554) 2,680
other businesses & corporate (300) (16) (90)
Consolidation adjustment - UPII* 32 95 (22)
RC profit before interest and tax 4,816 3,573 13,232
Finance costs and net finance expense relating to pensions and other (1,034) (977) (785)
post-retirement benefits
Taxation on a RC basis (2,030) (1,005) (3,573)
Non-controlling interests (146) (65) (204)
RC profit attributable to bp shareholders* 1,606 1,526 8,670
Inventory holding gains (losses)* 851 (1,497) (600)
Taxation (charge) credit on inventory holding gains and losses (194) 342 148
Profit for the period attributable to bp shareholders 2,263 371 8,218
Analysis of underlying RC profit (loss) before interest and tax
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Underlying RC profit (loss) before interest and tax
gas & low carbon energy 1,658 1,777 3,456
oil production & operations 3,125 3,549 3,319
customers & products 1,289 803 2,759
other businesses & corporate (154) (97) (296)
Consolidation adjustment - UPII 32 95 (22)
Underlying RC profit before interest and tax 5,950 6,127 9,216
Finance costs and net finance expense relating to pensions and other (942) (891) (681)
post-retirement benefits
Taxation on an underlying RC basis (2,139) (2,180) (3,368)
Non-controlling interests (146) (65) (204)
Underlying RC profit attributable to bp shareholders* 2,723 2,991 4,963
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 First quarter 2024 vs First quarter 2023
Tier 1 and tier 2 process safety events* 14 +5
Reported recordable injury frequency* 0.218 +8.9%
upstream* production((a)) (mboe/d) 2,378 +2.1%
upstream unit production costs*((b)) ($/boe) 6.00 +4.7%
bp-operated upstream plant reliability* 94.9% -0.6
bp-operated refining availability*((a)) 90.4% -5.7
(a) 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.
(b) Mainly reflecting portfolio mix.
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Outlook & Guidance
2Q 2024 guidance
• Looking ahead, bp expects second quarter 2024 reported upstream*
production to be slightly lower compared with first-quarter 2024.
• In its customers business, bp expects seasonally higher volumes and fuels
margin to remain sensitive to movements in the cost of supply.
• In products, bp expects realized margins to be impacted by narrower North
American heavy crude oil differentials, and to remain sensitive to relative
movements in product cracks. In addition, bp expects the absence of the first
quarter plant-wide power outage at the Whiting refinery to be partly offset by
a higher level of turnaround activity.
2024 guidance
In addition to the guidance on page 2:
• bp continues to expect both reported and underlying upstream production*
to be slightly higher compared with 2023. Within this, bp continues to expect
underlying production from oil production & operations to be higher and
production from gas & low carbon energy to be lower.
• In its customers business, bp continues to expect growth from convenience,
including a full year contribution from TravelCenters of America; a stronger
contribution from Castrol underpinned by volume growth in focus markets; and
continued margin growth from bp pulse driven by higher energy sold. In
addition, bp continues to expect fuels margin to remain sensitive to the cost
of supply.
• In products, bp continues to expect a lower level of industry refining
margins, with realized margins impacted by narrower North American heavy crude
oil differentials. bp continues to expect refinery turnaround activity to have
a similar impact on both throughput and financial performance compared to
2023, with phasing of activity in 2024 heavily weighted towards the second
half.
• bp continues to expect the other businesses & corporate underlying
annual charge to be around $1.0 billion for 2024. The charge may vary from
quarter to quarter.
• bp continues to expect the depreciation, depletion and amortization to be
slightly higher than 2023.
• bp continues to expect the underlying ETR* for 2024 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.
• bp continues to expect capital expenditure* for 2024 to be around $16
billion, but now expects the phasing to be split broadly evenly between the
first half and the second half.
• bp continues to expect divestment and other proceeds of $2-3 billion in
2024, weighted towards the second half. Having realized $18.2 billion of
divestment and other proceeds since the second quarter of 2020, bp 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 $1.2 billion pre-tax including $1.1 billion pre-tax paid during the
second quarter.
The commentary above contains forward-looking statements and should be read in
conjunction with the cautionary statement on page 36.
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gas & low carbon energy*
Financial results
• The replacement cost (RC) profit before interest and tax for the
first quarter was $1,036 million, compared with $7,347 million for the same
period in 2023. The first quarter is adjusted by an adverse impact of net
adjusting items* of $622 million, compared with a favourable impact of net
adjusting items of $3,891 million for the same period in 2023. Adjusting items
include impacts of fair value accounting effects*, relative to management's
internal measure of performance, which are a favourable impact of $113 million
for the first quarter in 2024 and a favourable impact of $3,934 million for
the same period in 2023. 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.
• After adjusting RC profit before interest and tax for adjusting
items, the underlying RC profit before interest and tax* for the first quarter
was $1,658 million, compared with $3,456 million for the same period in 2023.
• The underlying RC profit for the first quarter, compared with
the same period in 2023, reflects lower realizations, foreign exchange losses
on Egyptian pound balances, higher exploration write-offs, and a strong gas
marketing and trading result compared with an exceptional result in the first
quarter in 2023.
Operational update
• Reported production for the quarter was 914mboe/d, 5.7% lower
than the same period in 2023. Underlying production* was 3.5% lower, mainly
due to base decline partially offset by major projects* which started up in
2023. Reported production includes the effect of the disposal of the Algeria
business in 2023.
• Renewables pipeline* at the end of the quarter was 58.5GW (bp
net), including 20.4GW bp net share of Lightsource bp's (LSbp's) pipeline. The
renewables pipeline increased by 0.2GW net during the quarter. In addition,
there is over 9.5GW (bp net) of early stage opportunities in LSbp's hopper.
Strategic progress
gas
• On 14 February, ADNOC and bp announced that they have agreed
to form a new joint venture (JV) in Egypt. The JV (51% bp and 49% ADNOC) will
combine the pair's deep technical capabilities and proven track records as it
aims to grow a highly competitive gas portfolio. As part of the agreement, bp
will contribute its interests in three development concessions, as well as
exploration agreements, in Egypt to the new JV. ADNOC will make a
proportionate cash contribution which can be used for future growth
opportunities. Subject to regulatory approvals and clearances, the formation
of the JV is expected to complete during the second half of 2024.
• On 15 February, the floating liquefied natural gas (FLNG)
vessel that is a core component of the Greater Tortue Ahmeyim (GTA) LNG
project arrived at its destination on the Mauritania and Senegal maritime
border. GTA Phase 1 is operated by bp (56%) with partners Kosmos Energy,
Société Mauritanienne des Hydrocarbures and Société
des Pétroles du Sénégal.
• In April bp and the Korea Gas Corporation signed an
agreement for bp to supply up to 9.8 million tonnes of LNG over an 11 year
period starting in 2026 from bp's global LNG portfolio.
low carbon energy
• Following the announcement in January that bp and Equinor
had signed an agreement under which they would restructure their investments
in their US offshore wind projects, on 4 April, bp announced it has received
all the necessary regulatory approvals and it is now 100% owner of the Beacon
US offshore wind projects and Equinor the Empire projects.
• On March 15, our UK joint ventures Net Zero Teesside Power
(bp 75%, Equinor 25%) and the Northern Endurance Partnership (bp 45%, Equinor
45%, Total Energies 10%) announced the selection of contractors for
engineering, procurement, and construction contracts with a combined value of
around $5 billion. The final award of contracts is subject to the receipt of
relevant regulatory clearances and positive Final Investment Decisions (FID)
by the projects and the UK government.
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gas & low carbon energy (continued)
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Profit before interest and tax 1,036 2,169 7,348
Inventory holding (gains) losses* - - (1)
RC profit before interest and tax 1,036 2,169 7,347
Net (favourable) adverse impact of adjusting items 622 (392) (3,891)
Underlying RC profit before interest and tax 1,658 1,777 3,456
Taxation on an underlying RC basis (518) (746) (961)
Underlying RC profit before interest 1,140 1,031 2,495
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Depreciation, depletion and amortization
Total depreciation, depletion and amortization 1,293 1,290 1,440
Exploration write-offs
Exploration write-offs 203 349 (1)
Adjusted EBITDA*
Total adjusted EBITDA 3,154 3,416 4,895
Capital expenditure*
gas 639 848 647
low carbon energy 659 478 366
Total capital expenditure 1,298 1,326 1,013
First Fourth First
quarter quarter quarter
2024 2023 2023
Production (net of royalties)((a))
Liquids* (mb/d) 102 99 114
Natural gas (mmcf/d) 4,708 4,637 4,962
Total hydrocarbons* (mboe/d) 914 899 969
Average realizations*((b))
Liquids ($/bbl) 76.92 78.87 79.44
Natural gas ($/mcf) 5.45 6.18 7.41
Total hydrocarbons* ($/boe) 36.64 40.17 46.95
(a) Includes bp's share of production of equity-accounted entities
in the gas & low carbon energy segment.
(b) Realizations are based on sales by consolidated subsidiaries only
- this excludes equity-accounted entities.
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gas & low carbon energy (continued)
31 March 31 December 31 March
low carbon energy((c)) 2024 2023 2023
Renewables (bp net, GW)
Installed renewables capacity* 2.7 2.7 2.2
Developed renewables to FID* 6.2 6.2 5.9
Renewables pipeline 58.5 58.3 38.8
of which by geographical area:
Renewables pipeline - Americas 18.1 18.8 17.5
Renewables pipeline - Asia Pacific 21.3 21.3 12.2
Renewables pipeline - Europe 15.7 14.6 8.9
Renewables pipeline - Other 3.5 3.5 0.1
of which by technology:
Renewables pipeline - offshore wind 9.6 9.3 5.3
Renewables pipeline - onshore wind 12.7 12.7 6.3
Renewables pipeline - solar 36.2 36.3 27.2
Total Developed renewables to FID and Renewables pipeline 64.7 64.5 44.7
(c) Because of rounding, some totals may not agree exactly with the
sum of their component parts.
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oil production & operations
Financial results
• The replacement cost (RC) profit before interest and tax for the
first quarter was $3,060 million, compared with $3,317 million for the same
period in 2023. The first quarter is adjusted by an adverse impact of net
adjusting items* of $65 million, compared with an adverse impact of net
adjusting items of $2 million for the same period in 2023.
• After adjusting RC profit before interest and tax for adjusting
items, the underlying RC profit before interest and tax* for the first quarter
was $3,125 million, compared with $3,319 million for the same period in 2023.
• The underlying RC profit for the first quarter, compared with
the same period in 2023, primarily reflects lower realizations and increased
depreciation charges partly offset by increased volume.
Operational update
• Reported production for the quarter was 1,463mboe/d, 7.6% higher
than the first quarter of 2023. Underlying production* for the quarter was
7.4% higher compared with the first quarter of 2023 reflecting bpx energy
performance and major projects* partly offset by base performance.
Strategic Progress
• On 16 April, bp, as operator of the Azeri-Chirag-Gunashli (ACG)
project, announced the start-up of oil production from the new Azeri Central
East (ACE) platform as part of the ACG field development in the Azerbaijan
sector of the Caspian Sea, which is the first remotely operated offshore
platform in the Caspian (bp share 30.37%).
• In April bpx energy successfully brought online 'Checkmate', its
third central processing facility in the Permian Basin. It is a low-emission,
electrified facility that will enable further production growth for bpx energy
in the basin (bp 100% operator).
• Final investment decision taken on the Atlantis Drill Center
Expansion which will be a two well tie back to the Atlantis facility in the
Gulf of Mexico (bp share 56%).
• bp has been awarded a licence for two blocks in the central
North Sea, consolidating our position around our Eastern Trough Area Project
(ETAP) central processing facility. The award aligns with our strategic focus
on oil and gas opportunities that can be developed through established
production facilities.
• Aker BP was awarded interest in 27 licences (of which it will
operate 17) in the North Sea and Norwegian Sea (bp interest in Aker BP 15.9%).
• In May Azule Energy announced it had agreed to acquire a 42.5%
interest in exploration block 2914A (PEL85), Orange Basin, offshore Namibia.
Completion of the deal is subject to customary third-party approvals from the
Namibian authorities and JV parties. Azule Energy is a 50:50 joint venture
between bp and Eni, based in Angola.
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Profit before interest and tax 3,059 1,879 3,318
Inventory holding (gains) losses* 1 - (1)
RC profit before interest and tax 3,060 1,879 3,317
Net (favourable) adverse impact of adjusting items 65 1,670 2
Underlying RC profit before interest and tax 3,125 3,549 3,319
Taxation on an underlying RC basis (1,509) (1,433) (1,766)
Underlying RC profit before interest 1,616 2,116 1,553
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oil production & operations (continued)
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Depreciation, depletion and amortization
Total depreciation, depletion and amortization 1,657 1,563 1,327
Exploration write-offs
Exploration write-offs 3 32 51
Adjusted EBITDA*
Total adjusted EBITDA 4,785 5,144 4,697
Capital expenditure*
Total capital expenditure 1,776 1,636 1,520
First Fourth First
quarter quarter quarter
2024 2023 2023
Production (net of royalties)((a))
Liquids* (mb/d) 1,056 1,024 1,005
Natural gas (mmcf/d) 2,364 2,305 2,060
Total hydrocarbons* (mboe/d) 1,463 1,421 1,360
Average realizations*((b))
Liquids ($/bbl) 70.53 76.22 71.63
Natural gas ($/mcf) 2.66 3.65 6.57
Total hydrocarbons* ($/boe) 54.11 59.69 62.36
(a) Includes bp's share of production of equity-accounted entities
in the oil production & operations segment.
(b) Realizations are based on sales by consolidated subsidiaries only
- this excludes equity-accounted entities.
Top of page 11
customers & products
Financial results
• The replacement cost (RC) profit before interest and tax for the
first quarter was $988 million, compared with a profit of $2,680 million for
the same period in 2023. The first quarter is adjusted by an adverse impact of
net adjusting items* of $301 million, compared with an adverse impact of net
adjusting items of $79 million for the same period in 2023. Adjusting items
include impacts of fair value accounting effects*, relative to management's
internal measure of performance, which are an adverse impact of $144 million
for the quarter in 2024, compared with a favourable impact of $77 million for
the same period in 2023.
• After adjusting RC profit before interest and tax for adjusting
items, the underlying RC profit before interest and tax* for the first quarter
was $1,289 million, compared with $2,759 million for the same period in 2023.
• The customers & products result for the first quarter was
significantly lower than the same period in 2023, primarily reflecting a lower
refining result.
• customers - the convenience and mobility result, excluding
Castrol, for the first quarter was lower than the same period in 2023. The
first quarter result benefited from higher retail fuels margin and continued
strong growth in convenience, more than offset by a weaker performance in
midstream and biofuels. The contribution of TravelCenters of America was
impacted by the ongoing US freight recession.
Castrol result for the first quarter was higher compared with the same period
in 2023, primarily due to higher margins partly offset by adverse foreign
exchange impacts.
• products - the products result for the first quarter was
significantly lower compared with the same period in 2023. In refining, the
result for the first quarter reflected lower industry refining margins, with
realized margins impacted by narrower North American heavy crude oil
differentials. In addition, the first quarter was significantly impacted by
the plant-wide power outage at the Whiting refinery. The oil trading
contribution for the first quarter was strong, consistent with the result in
the same period last year.
Operational update
• bp-operated refining availability* for the first quarter was
90.4%, lower compared with 96.1% for the same period in 2023, mainly due to
the plant-wide power outage at the Whiting refinery.
Strategic progress
• In March, bp announced plans to transform the Gelsenkirchen
refinery site by the end of the decade. The plans include simplification of
the site to improve competitiveness, including a controlled reduction in total
production capacity from 2025 and increased production of lower-emission fuels
using co-processing.
• In April, bp's Archaea Energy announced it had brought online in
March its largest Archaea Modular Design (AMD) renewable natural gas (RNG)
plant in Kansas City, Missouri. The plant can convert 9,600 standard cubic
feet of landfill gas per minute into lower-carbon RNG. In addition, on 4
April, Archaea Energy completed the purchase of Sunshine Gas Producers and now
fully owns and operates the current landfill-gas-to-electric facility in
California, with plans to develop an RNG plant.
• In April, bp launched its new hydrotreated vegetable oil (HVO)
bioenergy brand, commencing with roll out at sites across the UK and the
Netherlands. Marketed as "bp bioenergy HVO", it joins bp pulse as customers
& products' second transition growth engine brand.
• In March, bp acquired the freehold of one of the largest truck
stops in Europe, Ashford International Truckstop in Kent. The acquisition
presents bp with the opportunity to help meet the comprehensive needs of UK
and European HGV operators transitioning to EVs. In addition, in April, bp
opened its first bp pulse branded Gigahub in Houston, Texas, with 24
ultra-fast charge points, building momentum in our US charging business
offering.
• In February, bp New Zealand was announced as a foundation
partner for Woolworths' loyalty programme, "Everyday Rewards". The loyalty
scheme enables current customers and over one million new customers to collect
points and obtain instant rewards at bp retail sites.
Top of page 12
customers & products (continued)
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Profit (loss) before interest and tax 1,840 (2,051) 2,078
Inventory holding (gains) losses* (852) 1,497 602
RC profit (loss) before interest and tax 988 (554) 2,680
Net (favourable) adverse impact of adjusting items 301 1,357 79
Underlying RC profit before interest and tax 1,289 803 2,759
Of which:((a))
customers - convenience & mobility 370 882 391
Castrol - included in customers 184 213 161
products - refining & trading 919 (79) 2,368
Taxation on an underlying RC basis (333) (239) (777)
Underlying RC profit before interest 956 564 1,982
(a) A reconciliation to RC profit before interest and tax by
business is provided on page 28.
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Adjusted EBITDA*((b))
customers - convenience & mobility 854 1,348 732
Castrol - included in customers 226 256 200
products - refining & trading 1,379 397 2,824
2,233 1,745 3,556
Depreciation, depletion and amortization
Total depreciation, depletion and amortization 944 942 797
Capital expenditure*
customers - convenience & mobility 566 790 458
Castrol - included in customers 43 90 68
products - refining & trading 554 813 532
Total capital expenditure 1,120 1,603 990
(b) A reconciliation to RC profit before interest and tax by business
is provided on page 28.
Retail((c)) First Fourth First
quarter quarter quarter
2024 2023 2023
bp retail sites* - total (#) 21,150 21,100 20,700
Strategic convenience sites* 2,900 2,850 2,450
(c) Reported to the nearest 50.
Marketing sales of refined products (mb/d) First Fourth First
quarter quarter quarter
2024 2023 2023
US 1,080 1,205 1,078
Europe 940 1,037 973
Rest of World 469 465 462
2,489 2,707 2,513
Trading/supply sales of refined products 352 355 333
Total sales volume of refined products 2,841 3,062 2,846
Top of page 13
customers & products (continued)
Refining marker margin* First Fourth First
quarter quarter quarter
2024 2023 2023
bp average refining marker margin (RMM) ($/bbl) 20.6 18.5 28.1
Refinery throughputs (mb/d) First Fourth First
quarter quarter quarter
2024 2023 2023
US 525 634 686
Europe 830 678 832
Total refinery throughputs 1,355 1,312 1,518
bp-operated refining availability* (%) 90.4 96.1 96.1
Top of page 14
other businesses & corporate
Other businesses & corporate comprises innovation & engineering, bp
ventures, launchpad, regions, corporates & solutions, our corporate
activities & functions and any residual costs of the Gulf of Mexico oil
spill.
Financial results
• The replacement cost (RC) loss before interest and tax for the
first quarter was $300 million, compared with a loss of $90 million for the
same period in 2023. The first quarter is adjusted by an adverse impact of net
adjusting items* of $146 million, compared with a favourable impact of net
adjusting items of $206 million for the same period in 2023. Adjusting items
include impacts of fair value accounting effects* which are an adverse impact
of $193 million for the quarter in 2024, and a favourable impact of $245
million for the same period in 2023.
• After adjusting RC loss before interest and tax for adjusting
items, the underlying RC loss before interest and tax* for the first quarter
was $154 million, compared with a loss of $296 million for the same period in
2023.
Strategic progress
• In March, bp launchpad divested all of its 100% shareholding in
Insight Analytics Solutions Holdings Limited ("Onyx") to Macquarie Capital.
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Profit (loss) before interest and tax (300) (16) (90)
Inventory holding (gains) losses* - - -
RC profit (loss) before interest and tax (300) (16) (90)
Net (favourable) adverse impact of adjusting items((a)) 146 (81) (206)
Underlying RC profit (loss) before interest and tax (154) (97) (296)
Taxation on an underlying RC basis 99 121 29
Underlying RC profit (loss) before interest (55) 24 (267)
(a) Includes fair value accounting effects relating to hybrid bonds.
See page 31 for more information.
Top of page 15
Financial statements
Group income statement
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Sales and other operating revenues (Note 5) 48,880 52,141 56,182
Earnings from joint ventures - after interest and tax 178 (290) 195
Earnings from associates - after interest and tax 298 156 173
Interest and other income 381 599 248
Gains on sale of businesses and fixed assets 224 (20) 153
Total revenues and other income 49,961 52,586 56,951
Purchases 27,647 31,062 29,122
Production and manufacturing expenses 6,847 5,751 6,982
Production and similar taxes 444 445 474
Depreciation, depletion and amortization (Note 6) 4,150 4,060 3,800
Net impairment and losses on sale of businesses and fixed assets (Note 3) 737 3,958 88
Exploration expense 247 501 106
Distribution and administration expenses 4,222 4,733 3,747
Profit (loss) before interest and taxation 5,667 2,076 12,632
Finance costs 1,075 1,038 843
Net finance (income) expense relating to pensions and other post-retirement (41) (61) (58)
benefits
Profit (loss) before taxation 4,633 1,099 11,847
Taxation 2,224 663 3,425
Profit (loss) for the period 2,409 436 8,422
Attributable to
bp shareholders 2,263 371 8,218
Non-controlling interests 146 65 204
2,409 436 8,422
Earnings per share (Note 7)
Profit (loss) for the period attributable to bp shareholders
Per ordinary share (cents)
Basic 13.57 2.20 45.93
Diluted 13.25 2.15 45.06
Per ADS (dollars)
Basic 0.81 0.13 2.76
Diluted 0.80 0.13 2.70
Top of page 16
Condensed group statement of comprehensive income
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Profit (loss) for the period 2,409 436 8,422
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency translation differences (448) 711 453
Cash flow hedges and costs of hedging (115) 125 546
Share of items relating to equity-accounted entities, net of tax (8) 13 (203)
Income tax relating to items that may be reclassified (4) 64 (76)
(575) 913 720
Items that will not be reclassified to profit or loss
Remeasurements of the net pension and other post-retirement benefit liability (66) (1,209) (87)
or asset
Remeasurements of equity investments (13) 51 -
Cash flow hedges that will subsequently be transferred to the balance sheet (3) 16 -
Income tax relating to items that will not be reclassified(a) 674 357 23
592 (785) (64)
Other comprehensive income 17 128 656
Total comprehensive income 2,426 564 9,078
Attributable to
bp shareholders 2,303 461 8,861
Non-controlling interests 123 103 217
2,426 564 9,078
(a) First quarter 2024 includes a $658-million credit in respect of
the reduction in the deferred tax liability on defined benefit pension plan
surpluses following the reduction in the rate of the authorized surplus
payments tax charge in the UK from 35% to 25%.
Top of page 17
Condensed group statement of changes in equity
bp shareholders' Non-controlling interests Total
$ million equity Hybrid bonds Other interest equity
At 1 January 2024 70,283 13,566 1,644 85,493
Total comprehensive income 2,303 154 (31) 2,426
Dividends (1,222) - (126) (1,348)
Cash flow hedges transferred to the balance sheet, net of tax (2) - - (2)
Repurchase of ordinary share capital (1,751) - - (1,751)
Share-based payments, net of tax 154 - - 154
Issue of perpetual hybrid bonds(a) (4) 1,300 - 1,296
Redemption of perpetual hybrid bonds, net of tax(a) 9 (1,300) - (1,291)
Payments on perpetual hybrid bonds - (84) - (84)
Transactions involving non-controlling interests, net of tax - - 47 47
At 31 March 2024 69,770 13,636 1,534 84,940
bp shareholders' Non-controlling interests Total
$ million equity Hybrid bonds Other interest equity
At 1 January 2023 67,553 13,390 2,047 82,990
Total comprehensive income 8,861 142 75 9,078
Dividends (1,189) - (68) (1,257)
Repurchase of ordinary share capital (3,421) - - (3,421)
Share-based payments, net of tax (29) - - (29)
Issue of perpetual hybrid bonds - 45 - 45
Payments on perpetual hybrid bonds - (80) - (80)
Transactions involving non-controlling interests, net of tax - - (145) (145)
At 31 March 2023 71,775 13,497 1,909 87,181
(a) During the first quarter 2024 BP Capital Markets PLC issued $1.3
billion of US dollar perpetual subordinated hybrid bonds with a coupon fixed
for an initial period up to 2034 of 6.45% and voluntarily bought back $1.3
billion of the non-call 2025 4.375% US dollar hybrid bond issued in 2020.
Taken together these transactions had no significant impact on net debt or
gearing.
Top of page 18
Group balance sheet
31 March 31 December
$ million 2024 2023
Non-current assets
Property, plant and equipment 102,744 104,719
Goodwill 12,378 12,472
Intangible assets 10,008 9,991
Investments in joint ventures 12,467 12,435
Investments in associates 7,932 7,814
Other investments 2,267 2,189
Fixed assets 147,796 149,620
Loans 2,113 1,942
Trade and other receivables 1,735 1,767
Derivative financial instruments 9,686 9,980
Prepayments 665 623
Deferred tax assets 4,227 4,268
Defined benefit pension plan surpluses 7,804 7,948
174,026 176,148
Current assets
Loans 219 240
Inventories 24,310 22,819
Trade and other receivables 29,908 31,123
Derivative financial instruments 10,150 12,583
Prepayments 2,247 2,520
Current tax receivable 766 837
Other investments 615 843
Cash and cash equivalents 31,510 33,030
99,725 103,995
Assets classified as held for sale (Note 2) 1,684 151
101,409 104,146
Total assets 275,435 280,294
Current liabilities
Trade and other payables 58,621 61,155
Derivative financial instruments 4,772 5,250
Accruals 5,189 6,527
Lease liabilities 2,628 2,650
Finance debt 4,665 3,284
Current tax payable 2,804 2,732
Provisions 3,579 4,418
82,258 86,016
Liabilities directly associated with assets classified as held for sale (Note 30 62
2)
82,288 86,078
Non-current liabilities
Other payables 9,914 10,076
Derivative financial instruments 11,140 10,402
Accruals 1,286 1,310
Lease liabilities 8,429 8,471
Finance debt 48,348 48,670
Deferred tax liabilities 8,980 9,617
Provisions 14,835 14,721
Defined benefit pension plan and other post-retirement benefit plan deficits 5,275 5,456
108,207 108,723
Total liabilities 190,495 194,801
Net assets 84,940 85,493
Equity
bp shareholders' equity 69,770 70,283
Non-controlling interests 15,170 15,210
Total equity 84,940 85,493
Top of page 19
Condensed group cash flow statement
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Operating activities
Profit (loss) before taxation 4,633 1,099 11,847
Adjustments to reconcile profit (loss) before taxation to net cash provided by
operating activities
Depreciation, depletion and amortization and exploration expenditure written 4,356 4,441 3,850
off
Net impairment and (gain) loss on sale of businesses and fixed assets 513 3,978 (65)
Earnings from equity-accounted entities, less dividends received (96) 803 1
Net charge for interest and other finance expense, less net interest paid 192 202 63
Share-based payments 161 97 (22)
Net operating charge for pensions and other post-retirement benefits, less (32) (63) (43)
contributions and benefit payments for unfunded plans
Net charge for provisions, less payments (683) (819) (1,099)
Movements in inventories and other current and non-current assets and (2,131) 1,942 (3,755)
liabilities
Income taxes paid (1,904) (2,303) (3,155)
Net cash provided by operating activities 5,009 9,377 7,622
Investing activities
Expenditure on property, plant and equipment, intangible and other assets (3,718) (4,247) (3,129)
Acquisitions, net of cash acquired (106) (38) 52
Investment in joint ventures (353) (347) (540)
Investment in associates (101) (79) (8)
Total cash capital expenditure (4,278) (4,711) (3,625)
Proceeds from disposal of fixed assets 66 31 15
Proceeds from disposal of businesses, net of cash disposed 347 269 785
Proceeds from loan repayments 16 16 6
Cash provided from investing activities 429 316 806
Net cash used in investing activities (3,849) (4,395) (2,819)
Financing activities
Net issue (repurchase) of shares (Note 7) (1,750) (1,350) (2,448)
Lease liability payments (694) (722) (555)
Proceeds from long-term financing 2,259 1,522 2,395
Repayments of long-term financing (674) (11) (799)
Net increase (decrease) in short-term debt 16 87 (529)
Issue of perpetual hybrid bonds(a) 1,296 13 45
Redemption of perpetual hybrid bonds(a) (1,288) - -
Payments relating to perpetual hybrid bonds (256) (264) (236)
Payments relating to transactions involving non-controlling interests (Other - (7) (180)
interest)
Receipts relating to transactions involving non-controlling interests (Other 16 10 7
interest)
Dividends paid - bp shareholders (1,219) (1,224) (1,183)
- non-controlling interests (126) (77) (68)
Net cash provided by (used in) financing activities (2,420) (2,023) (3,551)
Currency translation differences relating to cash and cash equivalents (260) 145 (14)
Increase (decrease) in cash and cash equivalents (1,520) 3,104 1,238
Cash and cash equivalents at beginning of period 33,030 29,926 29,195
Cash and cash equivalents at end of period 31,510 33,030 30,433
(a) See Condensed group statement of changes in equity - footnote
(a) for further information.
Top of page 20
Notes
Note 1. Basis of preparation
The interim financial information included in this report has been prepared in
accordance with IAS 34 'Interim Financial Reporting'.
The results for the interim periods are unaudited and, in the opinion of
management, include all adjustments necessary for a fair presentation of the
results for each period. All such adjustments are of a normal recurring
nature. This report should be read in conjunction with the consolidated
financial statements and related notes for the year ended 31 December 2023
included in bp Annual Report and Form 20-F 2023.
bp prepares its consolidated financial statements included within bp Annual
Report and Form 20-F on the basis of International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board
(IASB), IFRS as adopted by the UK, and European Union (EU), and in accordance
with the provisions of the UK Companies Act 2006 as applicable to companies
reporting under international accounting standards. IFRS as adopted by the UK
does not differ from IFRS as adopted by the EU. IFRS as adopted by the UK and
EU differ in certain respects from IFRS as issued by the IASB. The differences
have no impact on the group's consolidated financial statements for the
periods presented. The financial information presented herein has been
prepared in accordance with the accounting policies expected to be used in
preparing bp Annual Report and Form 20-F 2024 which are the same as those used
in preparing bp Annual Report and Form 20-F 2023.
There are no other new or amended standards or interpretations adopted from 1
January 2024 onwards that have a significant impact on the financial
information.
Significant accounting judgements and estimates
bp's significant accounting judgements and estimates were disclosed in bp
Annual Report and Form 20-F 2023. These have been subsequently considered at
the end of this quarter to determine if any changes were required to those
judgements and estimates. No significant changes were identified.
Note 2. Non-current assets held for sale
The carrying amount of assets classified as held for sale at 31 March 2024 is
$1,684 million, with associated liabilities of $30 million. These relate to
the transactions described below.
On 14 February 2024, bp and ADNOC announced that they had agreed to form a new
joint venture (JV) in Egypt (51% bp and 49% ADNOC). As part of the agreement,
bp will contribute its interests in three development concessions, as well as
exploration agreements, in Egypt to the new JV. ADNOC will make a
proportionate cash contribution. Subject to regulatory approvals and
clearances, the formation of the JV is expected to complete during the second
half of 2024. The carrying amount of assets classified as held for sale at 31
March 2024 is $1,583 million, with associated liabilities of $23 million.
On 16 November 2023, bp entered into an agreement to sell its Türkiye ground
fuels business to Petrol Ofisi. This includes the group's interest in three
joint venture terminals in Türkiye. Completion of the sale is subject to
regulatory approvals. The carrying amount of assets classified as held for
sale at 31 March 2024 is $101 million, with associated liabilities of $7
million. Cumulative foreign exchange losses within reserves of approximately
$900 million are expected to be recycled to the group income statement at
completion.
Note 3. Impairment and losses on sale of businesses and fixed assets
Net impairment charges and losses on sale of businesses and fixed assets for
the first quarter were $737 million, compared with net charges of
$88 million for the same period in 2023 and include net impairment charges
for the first quarter of $649 million, compared with net impairment reversals
of $41 million for the same period in 2023.
Top of page 21
Note 4. Analysis of replacement cost profit (loss) before interest and tax and
reconciliation to profit (loss) before taxation
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
gas & low carbon energy 1,036 2,169 7,347
oil production & operations 3,060 1,879 3,317
customers & products 988 (554) 2,680
other businesses & corporate (300) (16) (90)
4,784 3,478 13,254
Consolidation adjustment - UPII* 32 95 (22)
RC profit (loss) before interest and tax 4,816 3,573 13,232
Inventory holding gains (losses)*
gas & low carbon energy - - 1
oil production & operations (1) - 1
customers & products 852 (1,497) (602)
Profit (loss) before interest and tax 5,667 2,076 12,632
Finance costs 1,075 1,038 843
Net finance expense/(income) relating to pensions and other post-retirement (41) (61) (58)
benefits
Profit (loss) before taxation 4,633 1,099 11,847
RC profit (loss) before interest and tax*
US 1,610 1,154 3,075
Non-US 3,206 2,419 10,157
4,816 3,573 13,232
Top of page 22
Note 5. Sales and other operating revenues
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
By segment
gas & low carbon energy 8,675 11,670 17,886
oil production & operations 6,432 6,749 6,153
customers & products 39,895 40,374 38,882
other businesses & corporate 606 657 738
55,608 59,450 63,659
Less: sales and other operating revenues between segments
gas & low carbon energy 270 65 536
oil production & operations 5,913 6,464 6,261
customers & products 293 (105) 144
other businesses & corporate 252 885 536
6,728 7,309 7,477
External sales and other operating revenues
gas & low carbon energy 8,405 11,605 17,350
oil production & operations 519 285 (108)
customers & products 39,602 40,479 38,738
other businesses & corporate 354 (228) 202
Total sales and other operating revenues 48,880 52,141 56,182
By geographical area
US 19,858 20,920 19,160
Non-US 39,208 40,808 46,350
59,066 61,728 65,510
Less: sales and other operating revenues between areas 10,186 9,587 9,328
48,880 52,141 56,182
Revenues from contracts with customers
Sales and other operating revenues include the following in relation to
revenues from contracts with customers:
Crude oil 548 760 637
Oil products 29,840 32,124 30,141
Natural gas, LNG and NGLs 5,751 7,660 9,644
Non-oil products and other revenues from contracts with customers 2,928 2,911 1,872
Revenue from contracts with customers 39,067 43,455 42,294
Other operating revenues((a)) 9,813 8,686 13,888
Total sales and other operating revenues 48,880 52,141 56,182
(a) Principally relates to commodity derivative transactions
including sales of bp own production in trading books.
( )
Top of page 23
Note 6. Depreciation, depletion and amortization
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Total depreciation, depletion and amortization by segment
gas & low carbon energy 1,293 1,290 1,440
oil production & operations 1,657 1,563 1,327
customers & products 944 942 797
other businesses & corporate 256 265 236
4,150 4,060 3,800
Total depreciation, depletion and amortization by geographical area
US 1,570 1,547 1,254
Non-US 2,580 2,513 2,546
4,150 4,060 3,800
Note 7. Earnings per share and shares in issue
Basic earnings per ordinary share (EpS) amounts are calculated by dividing the
profit (loss) for the period attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the period.
Against the authority granted at bp's 2023 annual general meeting,
292 million ordinary shares repurchased for cancellation were settled during
the first quarter 2024 for a total cost of $1,750 million. A further
115 million ordinary shares were repurchased between the end of the reporting
period and the date when the financial statements are authorised for issue for
a total cost of $747 million. This amount has been accrued at 31 March 2024.
The number of shares in issue is reduced when shares are repurchased, but is
not reduced in respect of the period-end commitment to repurchase shares
subsequent to the end of the period.
The calculation of EpS is performed separately for each discrete quarterly
period, and for the year-to-date period. As a result, the sum of the discrete
quarterly EpS amounts in any particular year-to-date period may not be equal
to the EpS amount for the year-to-date period.
For the diluted EpS calculation the weighted average number of shares
outstanding during the period is adjusted for the number of shares that are
potentially issuable in connection with employee share-based payment plans
using the treasury stock method.
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Results for the period
Profit (loss) for the period attributable to bp shareholders 2,263 371 8,218
Less: preference dividend - - -
Less: (gain) loss on redemption of perpetual hybrid bonds((a)) (10) - -
Profit (loss) attributable to bp ordinary shareholders 2,273 371 8,218
Number of shares (thousand)((b))
Basic weighted average number of shares outstanding 16,751,887 16,834,354 17,891,455
ADS equivalent((c)) 2,791,981 2,805,725 2,981,909
Weighted average number of shares outstanding used to calculate diluted 17,153,505 17,269,574 18,238,522
earnings per share
ADS equivalent((c)) 2,858,917 2,878,262 3,039,753
Shares in issue at period-end 16,687,850 16,824,651 17,703,285
ADS equivalent((c)) 2,781,308 2,804,108 2,950,547
(a) See Condensed group statement of changes in equity - footnote
(a) for further information.
(b) Excludes treasury shares and includes certain shares that will be
issued in the future under employee share-based payment plans.
(c) One ADS is equivalent to six ordinary shares.
Top of page 24
Note 8. Dividends
Dividends payable
bp today announced an interim dividend of 7.270 cents per ordinary share which
is expected to be paid on 28 June 2024 to ordinary shareholders and American
Depositary Share (ADS) holders on the register on 17 May 2024. The ex-dividend
date will be 16 May 2024. The corresponding amount in sterling is due to be
announced on 11 June 2024, calculated based on the average of the market
exchange rates over three dealing days between 5 June 2024 and 7 June 2024.
Holders of ADSs are expected to receive $0.43620 per ADS (less applicable
fees). The board has decided not to offer a scrip dividend alternative in
respect of the first quarter 2024 dividend. Ordinary shareholders and ADS
holders (subject to certain exceptions) will be able to participate in a
dividend reinvestment programme. Details of the first quarter dividend and
timetable are available at bp.com/dividends and further details of the
dividend reinvestment programmes are available at bp.com/drip.
First Fourth First
quarter quarter quarter
2024 2023 2023
Dividends paid per ordinary share
cents 7.270 7.270 6.610
pence 5.692 5.737 5.551
Dividends paid per ADS (cents) 43.62 43.62 39.66
Note 9. Net debt
Net debt* 31 March 31 December 31 March
$ million 2024 2023 2023
Finance debt((a)) 53,013 51,954 48,595
Fair value (asset) liability of hedges related to finance debt((b)) 2,512 1,988 3,070
55,525 53,942 51,665
Less: cash and cash equivalents 31,510 33,030 30,433
Net debt((c)) 24,015 20,912 21,232
Total equity 84,940 85,493 87,181
Gearing* 22.0% 19.7% 19.6%
(a) The fair value of finance debt at 31 March 2024 was
$49,263 million (31 December 2023 $48,795 million, 31 March 2023 $45,071
million).
(b) Derivative financial instruments entered into for the purpose of
managing foreign currency exchange risk associated with net debt with a fair
value liability position of $96 million at 31 March 2024 (fourth quarter
2023 liability of $73 million and first quarter 2023 liability of
$97 million) are not included in the calculation of net debt shown above as
hedge accounting is not applied for these instruments.
(c) Net debt does not include accrued interest, which is reported
within other receivables and other payables on the balance sheet and for which
the associated cash flows are presented as operating cash flows in the group
cash flow statement.
Note 10. Statutory accounts
The financial information shown in this publication, which was approved by the
Board of Directors on 6 May 2024, is unaudited and does not constitute
statutory financial statements. Audited financial information will be
published in bp Annual Report and Form 20-F 2024. bp Annual Report and Form
20-F 2023 has been filed with the Registrar of Companies in England and Wales.
The report of the auditor on those accounts was unqualified, did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying the report and did not contain a statement under
section 498(2) or section 498(3) of the UK Companies Act 2006.
Top of page 25
Additional information
Capital expenditure*
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Capital expenditure
Organic capital expenditure* 3,979 4,673 3,495
Inorganic capital expenditure* 299 38 130
4,278 4,711 3,625
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Capital expenditure by segment
gas & low carbon energy 1,298 1,326 1,013
oil production & operations 1,776 1,636 1,520
customers & products 1,120 1,603 990
other businesses & corporate 84 146 102
4,278 4,711 3,625
Capital expenditure by geographical area
US 1,776 2,164 1,697
Non-US 2,502 2,547 1,928
4,278 4,711 3,625
Top of page 26
Adjusting items*
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
gas & low carbon energy
Gains on sale of businesses and fixed assets 2 3 15
Net impairment and losses on sale of businesses and fixed assets (536) (937) (2)
Environmental and other provisions - - -
Restructuring, integration and rationalization costs - - -
Fair value accounting effects((a)(b)) 113 1,887 3,934
Other((c)) (201) (561) (56)
(622) 392 3,891
oil production & operations
Gains on sale of businesses and fixed assets 184 (55) 137
Net impairment and losses on sale of businesses and fixed assets (120) (1,635) 8
Environmental and other provisions (77) 48 (49)
Restructuring, integration and rationalization costs - - -
Fair value accounting effects - - -
Other (52) (28) (98)
(65) (1,670) (2)
customers & products
Gains on sale of businesses and fixed assets 5 23 1
Net impairment and losses on sale of businesses and fixed assets (96) (1,396) (83)
Environmental and other provisions - (86) (10)
Restructuring, integration and rationalization costs 1 - (2)
Fair value accounting effects((b)) (144) 144 77
Other (67) (42) (62)
(301) (1,357) (79)
other businesses & corporate
Gains on sale of businesses and fixed assets 32 1 -
Net impairment and losses on sale of businesses and fixed assets 26 19 (6)
Environmental and other provisions((d)) (9) (565) (14)
Restructuring, integration and rationalization costs 11 51 (10)
Fair value accounting effects((b)) (193) 579 245
Gulf of Mexico oil spill (11) (11) (9)
Other (2) 7 -
(146) 81 206
Total before interest and taxation (1,134) (2,554) 4,016
Finance costs((e)) (92) (86) (104)
Total before taxation (1,226) (2,640) 3,912
Taxation on adjusting items((f)) 109 1,175 (205)
Total after taxation for period (1,117) (1,465) 3,707
(a) Under IFRS bp marks-to-market the value of the hedges used to
risk-manage LNG contracts, but not the contracts themselves, resulting in a
mismatch in accounting treatment. The fair value accounting effect includes
the change in value of LNG contracts that are being risk managed, and the
underlying result reflects how bp risk-manages its LNG contracts.
(b) For further information, including the nature of fair value
accounting effects reported in each segment, see pages 3, 6 and 31.
(c) Fourth quarter 2023 includes $600 million of impairment charges
recognized through equity-accounted earnings relating to our US offshore wind
projects.
(d) Fourth quarter 2023 includes charges related to the control,
abatement, clean-up or elimination of environmental pollution and legal
settlements.
(e) Includes the unwinding of discounting effects relating to Gulf
of Mexico oil spill payables and the income statement impact of temporary
valuation differences associated with the group's interest rate and foreign
currency exchange risk management of finance debt.
(f) Includes certain foreign exchange effects on tax as adjusting
items. These amounts represent the impact of: (i) foreign exchange on deferred
tax balances arising from the conversion of local currency tax base amounts
into functional currency, and (ii) taxable gains and losses from the
retranslation of US dollar-denominated intra-group loans to local currency.
Top of page 27
Net debt including leases
Net debt including leases* 31 March 31 December 31 March
$ million 2024 2023 2023
Net debt 24,015 20,912 21,232
Lease liabilities 11,057 11,121 8,605
Net partner (receivable) payable for leases entered into on behalf of joint (130) (131) 19
operations
Net debt including leases 34,942 31,902 29,856
Total equity 84,940 85,493 87,181
Gearing including leases* 29.1% 27.2% 25.5%
Gulf of Mexico oil spill
31 March 31 December
$ million 2024 2023
Gulf of Mexico oil spill payables and provisions (8,826) (8,735)
Of which - current (1,138) (1,133)
Deferred tax asset 1,334 1,320
Payables and provisions presented in the table above reflect the latest
estimate for the remaining costs associated with the Gulf of Mexico oil spill.
Where amounts have been provided on an estimated basis, the amounts ultimately
payable may differ from the amounts provided and the timing of payments is
uncertain. Further information relating to the Gulf of Mexico oil spill,
including information on the nature and expected timing of payments relating
to provisions and other payables, is provided in bp Annual Report and Form
20-F 2023 - Financial statements - Notes 7, 22, 23, 29, and 33.
Working capital* reconciliation
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Movements in inventories and other current and non-current assets and (2,131) 1,942 (3,755)
liabilities as per condensed group cash flow statement((a))
Adjusted for inventory holding gains (losses)* (Note 4) 851 (1,497) (600)
Adjusted for fair value accounting effects* relating to subsidiaries (274) 2,610 4,242
Other adjusting items((b)) (834) (966) (1,298)
Working capital release (build) after adjusting for net inventory gains (2,388) 2,089 (1,411)
(losses), fair value accounting effects and other adjusting items
(a) The movement in working capital includes outflows relating to
the Gulf of Mexico oil spill on a pre-tax basis of $7 million in the first
quarter 2024 (fourth quarter 2023 nil, first quarter 2023 $12 million).
(b) Other adjusting items relate to the non-cash movement of US
emissions obligations carried as a provision that will be settled by
allowances held as inventory.
Top of page 28
Adjusted earnings before interest, taxation, depreciation and amortization
(adjusted EBITDA)*
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
Profit for the period 2,409 436 8,422
Finance costs 1,075 1,038 843
Net finance (income) expense relating to pensions and other post-retirement (41) (61) (58)
benefits
Taxation 2,224 663 3,425
Profit before interest and tax 5,667 2,076 12,632
Inventory holding (gains) losses*, before tax (851) 1,497 600
RC profit before interest and tax 4,816 3,573 13,232
Net (favourable) adverse impact of adjusting items*, before interest and tax 1,134 2,554 (4,016)
Underlying RC profit before interest and tax 5,950 6,127 9,216
Add back:
Depreciation, depletion and amortization 4,150 4,060 3,800
Exploration expenditure written off 206 381 50
Adjusted EBITDA 10,306 10,568 13,066
Reconciliation of customers & products RC profit before interest and tax
to underlying RC profit before interest and tax* to adjusted EBITDA* by
business
First Fourth First
quarter quarter quarter
$ million 2024 2023 2023
RC profit before interest and tax for customers & products 988 (554) 2,680
Less: Adjusting items* gains (charges) (301) (1,357) (79)
Underlying RC profit before interest and tax for customers & products 1,289 803 2,759
By business:
customers - convenience & mobility 370 882 391
Castrol - included in customers 184 213 161
products - refining & trading 919 (79) 2,368
Add back: Depreciation, depletion and amortization 944 942 797
By business:
customers - convenience & mobility 484 466 341
Castrol - included in customers 42 43 39
products - refining & trading 460 476 456
Adjusted EBITDA for customers & products 2,233 1,745 3,556
By business:
customers - convenience & mobility 854 1,348 732
Castrol - included in customers 226 256 200
products - refining & trading 1,379 397 2,824
Top of page 29
Realizations* and marker prices
First Fourth First
quarter quarter quarter
2024 2023 2023
Average realizations((a))
Liquids* ($/bbl)
US 62.20 67.66 62.66
Europe 85.00 81.02 79.26
Rest of World 79.83 87.27 82.55
bp average 71.24 76.50 72.58
Natural gas ($/mcf)
US 1.69 2.04 2.47
Europe 10.27 15.12 26.83
Rest of World 5.45 6.18 7.41
bp average 4.62 5.45 7.20
Total hydrocarbons* ($/boe)
US 41.50 45.68 45.00
Europe 76.65 83.21 107.07
Rest of World 46.61 50.74 54.63
bp average 46.42 50.90 54.96
Average oil marker prices ($/bbl)
Brent 83.16 84.34 81.17
West Texas Intermediate 77.01 78.60 75.97
Western Canadian Select 59.45 55.06 56.67
Alaska North Slope 81.33 84.23 79.02
Mars 76.90 78.35 74.24
Urals (NWE - cif) 68.34 72.48 46.19
Average natural gas marker prices
Henry Hub gas price((b)) ($/mmBtu) 2.25 2.88 3.44
UK Gas - National Balancing Point (p/therm) 68.72 98.68 130.81
(a) Based on sales of consolidated subsidiaries only - this excludes
equity-accounted entities.
(b) Henry Hub First of Month Index.
Exchange rates
First Fourth First
quarter quarter quarter
2024 2023 2023
$/£ average rate for the period 1.27 1.24 1.21
$/£ period-end rate 1.26 1.28 1.24
$/€ average rate for the period 1.09 1.07 1.07
$/€ period-end rate 1.08 1.11 1.09
$/AUD average rate for the period 0.66 0.65 0.68
$/AUD period-end rate 0.65 0.69 0.67
Top of page 30
Legal proceedings
For a full discussion of the group's material legal proceedings, see pages
242-243 of bp Annual Report and Form 20-F 2023.
Glossary
Non-IFRS measures are provided for investors because they are closely tracked
by management to evaluate bp's operating performance and to make financial,
strategic and operating decisions. Non-IFRS measures are sometimes referred to
as alternative performance measures.
Adjusted EBITDA is a non-IFRS measure presented for bp's operating segments
and is defined as replacement cost (RC) profit before interest and tax,
excluding net adjusting items* before interest and tax, and adding back
depreciation, depletion and amortization and exploration write-offs (net of
adjusting items). Adjusted EBITDA by business is a further analysis of
adjusted EBITDA for the customers & products businesses. bp believes it is
helpful to disclose adjusted EBITDA by operating segment and by business
because it reflects how the segments measure underlying business delivery. The
nearest equivalent measure on an IFRS basis for the segment is RC profit or
loss before interest and tax, which is bp's measure of profit or loss that is
required to be disclosed for each operating segment under IFRS. A
reconciliation to IFRS information is provided on page 28 for the customers
& products businesses.
Adjusted EBITDA for the group is defined as profit or loss for the period,
adjusting for finance costs and net finance (income) or expense relating to
pensions and other post-retirement benefits and taxation, inventory holding
gains or losses before tax, net adjusting items before interest and tax, and
adding back depreciation, depletion and amortization (pre-tax) and exploration
expenditure written-off (net of adjusting items, pre-tax). The nearest
equivalent measure on an IFRS basis for the group is profit or loss for the
period. A reconciliation to IFRS information is provided on page 28 for the
group.
Adjusting items are items that bp discloses separately because it considers
such disclosures to be meaningful and relevant to investors. They are items
that management considers to be important to period-on-period analysis of the
group's results and are disclosed in order to enable investors to better
understand and evaluate the group's reported financial performance. Adjusting
items include gains and losses on the sale of businesses and fixed assets,
impairments, environmental and other provisions and charges, restructuring,
integration and rationalization costs, fair value accounting effects and costs
relating to the Gulf of Mexico oil spill and other items. Adjusting items
within equity-accounted earnings are reported net of incremental income tax
reported by the equity-accounted entity. Adjusting items are used as a
reconciling adjustment to derive underlying RC profit or loss and related
underlying measures which are non-IFRS measures. An analysis of adjusting
items by segment and type is shown on page 26.
Blue hydrogen - Hydrogen made from natural gas in combination with carbon
capture and storage (CCS).
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.
Cash balance point is defined as the implied Brent oil price 2021 real to
balance bp's sources and uses of cash assuming an average bp refining marker
margin around $11/bbl and Henry Hub at $3/mmBtu in 2021 real terms.
Cash costs is a non-IFRS measure and a subset of production and manufacturing
expenses plus distribution and administration expenses and excludes costs that
are classified as adjusting items. They represent the substantial majority of
the remaining expenses in these line items but exclude certain costs that are
variable, primarily with volumes (such as freight costs). Management believes
that cash costs is a performance measure that provides investors with useful
information regarding the company's financial performance because it considers
these expenses to be the principal operating and overhead expenses that are
most directly under their control although they also include certain foreign
exchange and commodity price effects.
Consolidation adjustment - UPII is unrealized profit in inventory arising on
inter-segment transactions.
Developed renewables to final investment decision (FID) - Total generating
capacity for assets developed to FID by all entities where bp has an equity
share (proportionate to equity share at the time of FID). If asset is
subsequently sold bp will continue to record capacity as developed to FID.
Divestment proceeds are disposal proceeds as per the condensed group cash flow
statement.
Effective tax rate (ETR) on replacement cost (RC) profit or loss is a non-IFRS
measure. The ETR on RC profit or loss is calculated by dividing taxation on a
RC basis by RC profit or loss before tax. Taxation on a 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. Information on RC profit or
loss is provided below. bp believes it is helpful to disclose the ETR on RC
profit or loss because this measure excludes the impact of price changes on
the replacement of inventories and allows for more meaningful comparisons
between reporting periods. Taxation on a RC basis and ETR on RC profit or loss
are non-IFRS measures. The nearest equivalent measure on an IFRS basis is the
ETR on profit or loss for the period.
Electric vehicle charge points / EV charge points are defined as the number of
connectors on a charging device, operated by either bp or a bp joint venture
as adjusted to be reflective of bp's accounting share of joint arrangements.
Top of page 31
Glossary (continued)
Fair value accounting effects are non-IFRS adjustments to our IFRS profit
(loss). They reflect the difference between the way bp manages the economic
exposure and internally measures performance of certain activities and the way
those activities are measured under IFRS. Fair value accounting effects are
included within adjusting items. They relate to certain of the group's
commodity, interest rate and currency risk exposures as detailed below. Other
than as noted below, the fair value accounting effects described are reported
in both the gas & low carbon energy and customer & products segments.
bp uses derivative instruments to manage the economic exposure relating to
inventories above normal operating requirements of crude oil, natural gas and
petroleum products. Under IFRS, these inventories are recorded at historical
cost. The related derivative instruments, however, are required to be recorded
at fair value with gains and losses recognized in the income statement. This
is because hedge accounting is either not permitted or not followed,
principally due to the impracticality of effectiveness-testing requirements.
Therefore, measurement differences in relation to recognition of gains and
losses occur. Gains and losses on these inventories, other than net realizable
value provisions, are not recognized until the commodity is sold in a
subsequent accounting period. Gains and losses on the related derivative
commodity contracts are recognized in the income statement, from the time the
derivative commodity contract is entered into, on a fair value basis using
forward prices consistent with the contract maturity.
bp enters into physical commodity contracts to meet certain business
requirements, such as the purchase of crude for a refinery or the sale of bp's
gas production. Under IFRS these physical contracts are treated as derivatives
and are required to be fair valued when they are managed as part of a larger
portfolio of similar transactions. Gains and losses arising are recognized in
the income statement from the time the derivative commodity contract is
entered into.
IFRS require that inventory held for trading is recorded at its fair value
using period-end spot prices, whereas any related derivative commodity
instruments are required to be recorded at values based on forward prices
consistent with the contract maturity. Depending on market conditions, these
forward prices can be either higher or lower than spot prices, resulting in
measurement differences.
bp enters into contracts for pipelines and other transportation, storage
capacity, oil and gas processing, liquefied natural gas (LNG) and certain gas
and power contracts that, under IFRS, are recorded on an accruals basis. These
contracts are risk-managed using a variety of derivative instruments that are
fair valued under IFRS. This results in measurement differences in relation to
recognition of gains and losses.
The way that bp manages the economic exposures described above, and measures
performance internally, differs from the way these activities are measured
under IFRS. bp calculates this difference for consolidated entities by
comparing the IFRS result with management's internal measure of performance.
We believe that disclosing management's estimate of this difference provides
useful information for investors because it enables investors to see the
economic effect of these activities as a whole.
These include:
• Under management's internal measure of performance the
inventory, transportation and capacity contracts in question are valued based
on fair value using relevant forward prices prevailing at the end of the
period.
• Fair value accounting effects also include changes in the fair
value of the near-term portions of LNG contracts that fall within bp's risk
management framework. LNG contracts are not considered derivatives, because
there is insufficient market liquidity, and they are therefore accrual
accounted under IFRS. However, oil and natural gas derivative financial
instruments used to risk manage the near-term portions of the LNG contracts
are fair valued under IFRS. The fair value accounting effect, which is
reported in the gas and low carbon energy segment, represents the change in
value of LNG contacts that are being risk managed and which is reflected in
the underlying result, but not in reported earnings. Management believes that
this gives a better representation of performance in each period.
Furthermore, the fair values of derivative instruments used to risk manage
certain other oil, gas, power and other contracts, are deferred to match with
the underlying exposure. The commodity contracts for business requirements are
accounted for on an accruals basis.
In addition, fair value accounting effects include changes in the fair value
of derivatives entered into by the group to manage currency exposure and
interest rate risks relating to hybrid bonds to their respective first call
periods. The hybrid bonds which were issued on 17 June 2020 are classified as
equity instruments and were recorded in the balance sheet at that date at
their USD equivalent issued value. Under IFRS these equity instruments are not
remeasured from period to period, and do not qualify for application of hedge
accounting. The derivative instruments relating to the hybrid bonds, however,
are required to be recorded at fair value with mark to market gains and losses
recognized in the income statement. Therefore, measurement differences in
relation to the recognition of gains and losses occur. The fair value
accounting effect, which is reported in the other businesses & corporate
segment, eliminates the fair value gains and losses of these derivative
financial instruments that are recognized in the income statement. We believe
that this gives a better representation of performance, by more appropriately
reflecting the economic effect of these risk management activities, in each
period.
Gas & low carbon energy segment comprises our gas and low carbon
businesses. Our gas business includes regions with upstream activities that
predominantly produce natural gas, integrated gas and power, and gas trading.
Our low carbon business includes solar, offshore and onshore wind, hydrogen
and CCS and power trading. Power trading includes trading of both renewable
and non-renewable power.
Top of page 32
Glossary (continued)
Gearing and net debt are non-IFRS measures. Net debt is calculated as finance
debt, as shown in the balance sheet, plus the fair value of associated
derivative financial instruments that are used to hedge foreign currency
exchange and interest rate risks relating to finance debt, for which hedge
accounting is applied, less cash and cash equivalents. Net debt does not
include accrued interest, which is reported within other receivables and other
payables on the balance sheet and for which the associated cash flows are
presented as operating cash flows in the group cash flow statement. Gearing is
defined as the ratio of net debt to the total of net debt plus total equity.
bp believes these measures provide useful information to investors. Net debt
enables investors to see the economic effect of finance debt, related hedges
and cash and cash equivalents in total. Gearing enables investors to see how
significant net debt is relative to total equity. The derivatives are reported
on the balance sheet within the headings 'Derivative financial instruments'.
The nearest equivalent measures on an IFRS basis are finance debt and finance
debt ratio. A reconciliation of finance debt to net debt is provided on page
24.
We are unable to present reconciliations of forward-looking information for
net debt or gearing to finance debt and total equity, because without
unreasonable efforts, we are unable to forecast accurately certain adjusting
items required to present a meaningful comparable IFRS forward-looking
financial measure. These items include fair value asset (liability) of hedges
related to finance debt and cash and cash equivalents, that are difficult to
predict in advance in order to include in an IFRS estimate.
Gearing including leases and net debt including leases are non-IFRS measures.
Net debt including leases is calculated as net debt plus lease liabilities,
less the net amount of partner receivables and payables relating to leases
entered into on behalf of joint operations. Gearing including leases is
defined as the ratio of net debt including leases to the total of net debt
including leases plus total equity. bp believes these measures provide useful
information to investors as they enable investors to understand the impact of
the group's lease portfolio on net debt and gearing. The nearest equivalent
measures on an IFRS basis are finance debt and finance debt ratio. A
reconciliation of finance debt to net debt including leases is provided on
page 27.
Green hydrogen - Hydrogen produced by electrolysis of water using renewable
power.
Hydrocarbons - Liquids and natural gas. Natural gas is converted to oil
equivalent at 5.8 billion cubic feet = 1 million barrels.
Hydrogen pipeline - Hydrogen projects which have not been developed to final
investment decision (FID) but which have advanced to the concept development
stage.
Inorganic capital expenditure is a subset of capital expenditure on a cash
basis and a non-IFRS measure. Inorganic capital expenditure comprises
consideration in business combinations and certain other significant
investments made by the group. It is reported on a cash basis. bp believes
that this measure provides useful information as it allows investors to
understand how bp's management invests funds in projects which expand the
group's activities through acquisition. The nearest equivalent measure on an
IFRS basis is capital expenditure on a cash basis. Further information and a
reconciliation to IFRS information is provided on page 25.
Installed renewables capacity is bp's share of capacity for operating assets
owned by entities where bp has an equity share.
Inventory holding gains and losses are non-IFRS adjustments to our IFRS profit
(loss) and represent:
• the difference between the cost of sales calculated using the
replacement cost of inventory and the cost of sales calculated on the first-in
first-out (FIFO) method after adjusting for any changes in provisions where
the net realizable value of the inventory is lower than its cost. Under the
FIFO method, which we use for IFRS reporting of inventories other than for
trading inventories, the cost of inventory charged to the income statement is
based on its historical cost of purchase or manufacture, rather than its
replacement cost. In volatile energy markets, this can have a significant
distorting effect on reported income. The amounts disclosed as inventory
holding gains and losses represent the difference between the charge to the
income statement for inventory on a FIFO basis (after adjusting for any
related movements in net realizable value provisions) and the charge that
would have arisen based on the replacement cost of inventory. For this
purpose, the replacement cost of inventory is calculated using data from each
operation's production and manufacturing system, either on a monthly basis, or
separately for each transaction where the system allows this approach; and
• an adjustment relating to certain trading inventories that are
not price risk managed which relate to a minimum inventory volume that is
required to be held to maintain underlying business activities. This
adjustment represents the movement in fair value of the inventories due to
prices, on a grade by grade basis, during the period. This is calculated from
each operation's inventory management system on a monthly basis using the
discrete monthly movement in market prices for these inventories.
The amounts disclosed are not separately reflected in the financial statements
as a gain or loss. No adjustment is made in respect of the cost of inventories
held as part of a trading position and certain other temporary inventory
positions that are price risk-managed. See Replacement cost (RC) profit or
loss definition below.
Liquids - Liquids comprises crude oil, condensate and natural gas liquids. For
the oil production & operations segment, it also includes bitumen.
Low carbon activity - An activity relating to low carbon including: renewable
electricity; bioenergy; electric vehicles and other future mobility solutions;
trading and marketing low carbon products; blue or green hydrogen* and carbon
capture, use and storage (CCUS).
Note that, while there is some overlap of activities, these terms do not mean
the same as bp's strategic focus area of low carbon energy or our low carbon
energy sub-segment, reported within the gas & low carbon energy segment.
Top of page 33
Glossary (continued)
Major projects have a bp net investment of at least $250 million, or are
considered to be of strategic importance to bp or of a high degree of
complexity.
Operating cash flow is net cash provided by (used in) operating activities as
stated in the condensed group cash flow statement.
Organic capital expenditure is a non-IFRS measure. Organic capital expenditure
comprises capital expenditure on a cash basis less inorganic capital
expenditure. bp believes that this measure provides useful information as it
allows investors to understand how bp's management invests funds in developing
and maintaining the group's assets. The nearest equivalent measure on an IFRS
basis is capital expenditure on a cash basis and a reconciliation to IFRS
information is provided on page 25.
We are unable to present reconciliations of forward-looking information for
organic capital expenditure to total cash capital expenditure, because without
unreasonable efforts, we are unable to forecast accurately the adjusting item,
inorganic capital expenditure, that is difficult to predict in advance in
order to derive the nearest IFRS estimate.
Production-sharing agreement/contract (PSA/PSC) is an arrangement through
which an oil and gas company bears the risks and costs of exploration,
development and production. In return, if exploration is successful, the oil
company receives entitlement to variable physical volumes of hydrocarbons,
representing recovery of the costs incurred and a stipulated share of the
production remaining after such cost recovery.
Realizations are the result of dividing revenue generated from hydrocarbon
sales, excluding revenue generated from purchases made for resale and royalty
volumes, by revenue generating hydrocarbon production volumes. Revenue
generating hydrocarbon production reflects the bp share of production as
adjusted for any production which does not generate revenue. Adjustments may
include losses due to shrinkage, amounts consumed during processing, and
contractual or regulatory host committed volumes such as royalties. For the
gas & low carbon energy and oil production & operations segments,
realizations include transfers between businesses.
Refining availability represents Solomon Associates' operational availability
for bp-operated refineries, which is defined as the percentage of the year
that a unit is available for processing after subtracting the annualized time
lost due to turnaround activity and all planned mechanical, process and
regulatory downtime.
The Refining marker margin (RMM) is the average of regional indicator margins
weighted for bp's crude refining capacity in each region. Each regional marker
margin is based on product yields and a marker crude oil deemed appropriate
for the region. The regional indicator margins may not be representative of
the margins achieved by bp in any period because of bp's particular refinery
configurations and crude and product slate.
Renewables pipeline - Renewable projects satisfying the following criteria
until the point they can be considered developed to final investment decision
(FID): Site based projects that have obtained land exclusivity rights, or for
power purchase agreement based projects an offer has been made to the
counterparty, or for auction projects pre-qualification criteria has been met,
or for acquisition projects post a binding offer being accepted.
Replacement cost (RC) profit or loss / RC profit or loss attributable to bp
shareholders reflects the replacement cost of inventories sold in the period
and is calculated as profit or loss attributable to bp shareholders, adjusting
for inventory holding gains and losses (net of tax). RC profit or loss for the
group is not a recognized IFRS measure. bp believes this measure is useful to
illustrate to investors the fact that crude oil and product prices can vary
significantly from period to period and that the impact on our reported result
under IFRS can be significant. Inventory holding gains and losses vary from
period to period due to changes in prices as well as changes in underlying
inventory levels. In order for investors to understand the operating
performance of the group excluding the impact of price changes on the
replacement of inventories, and to make comparisons of operating performance
between reporting periods, bp's management believes it is helpful to disclose
this measure. The nearest equivalent measure on an IFRS basis is profit or
loss attributable to bp shareholders. A reconciliation to IFRS information is
provided on page 1. RC profit or loss before interest and tax is bp's measure
of profit or loss that is required to be disclosed for each operating segment
under IFRS.
Reported recordable injury frequency measures the number of reported
work-related employee and contractor incidents that result in a fatality or
injury per 200,000 hours worked. This represents reported incidents occurring
within bp's operational HSSE reporting boundary. That boundary includes bp's
own operated facilities and certain other locations or situations. Reported
incidents are investigated throughout the year and as a result there may be
changes in previously reported incidents. Therefore comparative movements are
calculated against internal data reflecting the final outcomes of such
investigations, rather than the previously reported comparative period, as
this represents a more up to date reflection of the safety environment.
Retail sites include sites operated by dealers, jobbers, franchisees or brand
licensees or joint venture (JV) partners, under the bp brand. These may move
to and from the bp brand as their fuel supply agreement or brand licence
agreement expires and are renegotiated in the normal course of business.
Retail sites are primarily branded bp, ARCO, Amoco, Aral, Thorntons and
TravelCenters of America and also includes sites in India through our Jio-bp
JV.
Solomon availability - See Refining availability definition.
Strategic convenience sites are retail sites, within the bp portfolio, which
sell bp-supplied vehicle energy (e.g. bp, Aral, Arco, Amoco, Thorntons, bp
pulse, TA and PETRO) and either carry one of the strategic convenience brands
(e.g. M&S, Rewe to Go) or a differentiated bp-controlled convenience
offer. To be considered a strategic convenience site, the convenience offer
should have a demonstrable level of differentiation in the market in which it
operates. Strategic convenience site count includes sites under a pilot phase.
Top of page 34
Glossary (continued)
Surplus cash flow does not represent the residual cash flow available for
discretionary expenditures. It is a non-IFRS financial measure that should be
considered in addition to, not as a substitute for or superior to, net cash
provided by operating activities, reported in accordance with IFRS. bp
believes it is helpful to disclose the surplus cash flow because this measure
forms part of bp's financial frame.
Surplus cash flow refers to the net surplus of sources of cash over uses of
cash, after reaching the $35 billion net debt target. Sources of cash include
net cash provided by operating activities, cash provided from investing
activities and cash receipts relating to transactions involving
non-controlling interests. Uses of cash include lease liability payments,
payments on perpetual hybrid bond, dividends paid, cash capital expenditure,
the cash cost of share buybacks to offset the dilution from vesting of awards
under employee share schemes, cash payments relating to transactions involving
non-controlling interests and currency translation differences relating to
cash and cash equivalents as presented on the condensed group cash flow
statement.
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.
Tier 1 and tier 2 process safety events - Tier 1 events are losses of primary
containment from a process of greatest consequence - causing harm to a member
of the workforce, damage to equipment from a fire or explosion, a community
impact or exceeding defined quantities. Tier 2 events are those of lesser
consequence. These represent reported incidents occurring within bp's
operational HSSE reporting boundary. That boundary includes bp's own operated
facilities and certain other locations or situations. Reported process safety
events are investigated throughout the year and as a result there may be
changes in previously reported events. Therefore comparative movements are
calculated against internal data reflecting the final outcomes of such
investigations, rather than the previously reported comparative period, as
this represents a more up to date reflection of the safety environment.
Transition growth - Activities, represented by a set of transition growth
engines, that transition bp toward its objective to be an integrated energy
company, and that comprise our low carbon activity* alongside other businesses
that support transition, such as our power trading and marketing business and
convenience.
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.
We are unable to present reconciliations of forward-looking information for
underlying ETR to ETR on profit or loss for the period, because without
unreasonable efforts, we are unable to forecast accurately certain adjusting
items required to present a meaningful comparable IFRS forward-looking
financial measure. These items include the taxation on inventory holding gains
and losses and adjusting items, that are difficult to predict in advance in
order to include in an IFRS estimate.
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 / underlying RC profit or loss attributable to bp
shareholders is a non-IFRS measure and is RC profit or loss* (as defined on
page 33) after excluding net adjusting items and related taxation. See page 26
for additional information on the adjusting items that are used to arrive at
underlying RC profit or loss in order to enable a full understanding of the
items and their financial impact.
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.
bp believes that underlying RC profit or loss is a useful measure for
investors because it is a measure closely tracked by management to evaluate
bp's operating performance and to make financial, strategic and operating
decisions and because it 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, by adjusting for the
effects of these adjusting items. The nearest equivalent measure on an IFRS
basis for the group is profit or loss attributable to bp shareholders. The
nearest equivalent measure on an IFRS basis for segments and businesses is RC
profit or loss before interest and taxation. A reconciliation to IFRS
information is provided on page 1 for the group and pages 6-14 for the
segments.
Top of page 35
Glossary (continued)
Underlying RC profit or loss per share / underlying RC profit or loss per ADS
is a non-IFRS measure. Earnings per share is defined in Note 7. Underlying RC
profit or loss per ordinary share is calculated using the same denominator as
earnings per share as defined in the consolidated financial statements. The
numerator used is underlying RC profit or loss attributable to bp
shareholders, rather than profit or loss attributable to bp ordinary
shareholders. Underlying RC profit or loss per ADS is calculated as outlined
above for underlying RC profit or loss per share except the denominator is
adjusted to reflect one ADS equivalent to six ordinary shares. bp believes it
is helpful to disclose the underlying RC profit or loss per ordinary share and
per ADS because these measures 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. The nearest equivalent
measure on an IFRS basis is basic earnings per share based on profit or loss
for the period attributable to bp ordinary shareholders.
upstream includes oil and natural gas field development and production within
the gas & low carbon energy and oil production & operations segments.
upstream/hydrocarbon plant reliability (bp-operated) is calculated taking 100%
less the ratio of total unplanned plant deferrals divided by installed
production capacity, excluding non-operated assets and bpx energy. Unplanned
plant deferrals are associated with the topside plant and where applicable the
subsea equipment (excluding wells and reservoir). Unplanned plant deferrals
include breakdowns, which does not include Gulf of Mexico weather related
downtime.
upstream unit production costs are calculated as production cost divided by
units of production. Production cost does not include ad valorem and severance
taxes. Units of production are barrels for liquids and thousands of cubic feet
for gas. Amounts disclosed are for bp subsidiaries only and do not include
bp's share of equity-accounted entities.
Working capital is movements in inventories and other current and non-current
assets and liabilities as reported in the condensed group cash flow statement.
Change in working capital adjusted for inventory holding gains/losses, fair
value accounting effects relating to subsidiaries and other adjusting items is
a non-IFRS measure. It is calculated by adjusting for inventory holding
gains/losses reported in the period; fair value accounting effects relating to
subsidiaries reported within adjusting items for the period; and other
adjusting items relating to the non-cash movement of US emissions obligations
carried as a provision that will be settled by allowances held as inventory.
This represents what would have been reported as movements in inventories and
other current and non-current assets and liabilities, if the starting point in
determining net cash provided by operating activities had been underlying
replacement cost profit rather than profit for the period. The nearest
equivalent measure on an IFRS basis for this is movements in inventories and
other current and non-current assets and liabilities.
bp utilizes various arrangements in order to manage its working capital
including discounting of receivables and, in the supply and trading business,
the active management of supplier payment terms, inventory and collateral.
Trade marks
Trade marks of the bp group appear throughout this announcement. They include:
bp, Amoco, Aral, bp pulse, Castrol, PETRO, TA, Thorntons and Gigahub
Top of page 36
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 results 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. These statements may
generally, but not always, be identified by the use of words such as 'will',
'expects', 'is expected to', 'aims', 'should', 'may', 'objective', 'is likely
to', 'intends', 'believes', 'anticipates', 'plans', 'we see' or similar
expressions.
In particular, the following, among other statements, are all forward looking
in nature: plans, expectations and assumptions regarding oil and gas demand,
supply, prices or volatility; expectations regarding reserves; expectations
regarding production and volumes; expectations regarding bp's customers &
products business; expectations regarding margins, including sensitivity of
fuels margin to costs of supply; expectations regarding the simplification of
bp's organizational structure and related cash cost savings; expectations
regarding underlying effective tax rate; expectations regarding turnaround and
maintenance activity; expectations regarding financial performance, results of
operations and cash flows; expectations regarding future project start-ups;
expectations regarding bp's customers & products businesses, including
TravelCenters of America, Castrol and bp pulse; bp's plans regarding
transforming to an IEC; price assumptions used in accounting estimates; bp's
plans and expectations regarding the amount and timing of share buybacks and
dividends; plans and expectations regarding bp's credit rating, including in
respect of maintaining a strong investment grade credit rating and targeting
further improvements in credit metrics; plans and expectations regarding the
allocation of surplus cash flow to share buybacks and strengthening the
balance sheet; plans and expectations regarding LNG sales; plans and
expectations the sale of its investments, including those relating to the sale
of its Türkiye ground fuels business; plans and expectations regarding
investments, collaborations and partnerships in electric vehicle (EV) charging
infrastructure; plans and expectations related to bp's transition growth
engines, including expected capital expenditures; plans and expectations
regarding the amount or timing of payments related to divestment and other
proceeds, and the timing, quantum and nature of certain acquisitions and
divestments; expectations regarding the timing and amount of future payments
relating to the Gulf of Mexico oil spill; plans and expectations regarding
bp's guidance for 2024 and the second quarter of 2024, including expected
growth, margins, other businesses & corporate underlying annual charge,
depreciation, depletion and amortization; plans and expectations regarding
capital expenditure for 2024 and 2025; expectations regarding greenhouse gas
emissions; and plans and expectations regarding bp-operated projects and
ventures, including plans for the Gelsenkirchen refinery site, and its
projects, joint ventures, partnerships and agreements with commercial entities
and other third party partners.
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: the extent and
duration of the impact of current market conditions including the volatility
of oil prices, the effects of bp's plan to exit its shareholding in Rosneft
and other investments in Russia, overall global economic and business
conditions impacting bp's business and demand for bp's products as well as the
specific factors identified in the discussions accompanying such
forward-looking statements; changes in consumer preferences and societal
expectations; the pace of development and adoption of alternative energy
solutions; developments in policy, law, regulation, technology and markets,
including societal and investor sentiment related to the issue of climate
change; the receipt of relevant third party and/or regulatory approvals; 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; the timing, quantum and nature of certain acquisitions and
divestments; future levels of industry product supply, demand and pricing,
including supply growth in North America and continued base oil and additive
supply shortages; OPEC+ quota restrictions; PSA and TSC effects; operational
and safety problems; potential lapses in product quality; economic and
financial market conditions generally or in various countries and regions;
political stability and economic growth in relevant areas of the world;
changes in laws and governmental regulations and policies, including related
to climate change; changes in social attitudes and customer preferences;
regulatory or legal actions including the types of enforcement action pursued
and the nature of remedies sought or imposed; the actions of prosecutors,
regulatory authorities and courts; delays in the processes for resolving
claims; amounts ultimately payable and timing of payments relating to the Gulf
of Mexico oil spill; exchange rate fluctuations; development and use of new
technology; recruitment and retention of a skilled workforce; the success or
otherwise of partnering; the actions of competitors, trading partners,
contractors, subcontractors, creditors, rating agencies and others; bp's
access to future credit resources; business disruption and crisis management;
the impact on bp's reputation of ethical misconduct and non-compliance with
regulatory obligations; trading losses; major uninsured losses; the
possibility that international sanctions or other steps taken by governmental
authorities or any other relevant persons may impact bp's ability to sell its
interests in Rosneft, or the price for which bp could sell such interests; the
actions of contractors; 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; and those factors discussed
under "Risk factors" in bp's Annual Report and Form 20-F for fiscal year 2023
as filed with the US Securities and Exchange Commission.
Top of page 37
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
BP p.l.c.'s LEI Code 213800LH1BZH3D16G760
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