REG - BP PLC - 4Q23 SEA Part 1 of 1
06/02/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240206:nRSF0920Ca&default-theme=true
RNS Number : 0920C BP PLC 06 February 2024
Top of page 1
FOR IMMEDIATE RELEASE
London 6 February 2024
BP p.l.c. Group results
Fourth quarter and full year 2023
"For a printer friendly version of this announcement please click on the link
below to open a PDF version of the announcement"
http://www.rns-pdf.londonstockexchange.com/rns/0920C_1-2024-2-5.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/0920C_1-2024-2-5.pdf)
2023 : A year of delivery
Financial summary Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Profit (loss) for the period attributable to bp shareholders 371 4,858 10,803 15,239 (2,487)
Inventory holding (gains) losses*, net of tax 1,155 (1,212) 1,066 944 (1,019)
Replacement cost (RC) profit (loss)* 1,526 3,646 11,869 16,183 (3,506)
Net (favourable) adverse impact of adjusting items*, net of tax 1,465 (353) (7,062) (2,347) 31,159
Underlying RC profit* 2,991 3,293 4,807 13,836 27,653
Operating cash flow* 9,377 8,747 13,571 32,039 40,932
Capital expenditure* (4,711) (3,603) (7,369) (16,253) (16,330)
Divestment and other proceeds((a)) 300 655 614 1,843 3,123
Surplus cash flow* 2,755 3,107 4,985 7,876 19,065
Net issue (repurchase) of shares (1,350) (2,047) (3,240) (7,918) (9,996)
Net debt*((b)) 20,912 22,324 21,422 20,912 21,422
Return on average capital employed (ROACE)* (%) 18.1% 30.5%
Adjusted EBITDA* 10,568 10,306 13,100 43,710 60,747
Adjusted EBIDA* 34,345 45,695
Announced dividend per ordinary share (cents per share) 7.270 7.270 6.610 28.420 24.082
Underlying RC profit per ordinary share* (cents) 17.77 19.14 26.44 79.69 145.63
Underlying RC profit per ADS* (dollars) 1.07 1.15 1.59 4.78 8.74
Highlights
• Resilient financial and operational performance: 2023 Operating
cash flow $32.0bn; net debt reduced to $20.9bn
• Executing with discipline: Started up four major projects* in
2023, including Seagull in 4Q; Acquisition of TravelCenters of America;
Agreement to acquire Lightsource bp
• Growing shareholder distributions: Dividend per ordinary share
7.270 cents per share +10% versus 4Q22; 4Q23 $1.75bn share buyback announced;
committed to announcing $3.5bn share buyback for the first half of 2024
• IOC to IEC - destination is unchanged: we will deliver as a
simpler and more focused company
Looking back, 2023 was a year of strong operational performance with real
momentum in delivery right across the business. And as we look ahead, our
destination remains unchanged - from IOC to IEC - focused on growing the value
of bp. We are confident in our strategy, on delivering as a simpler, more
focused and higher-value company, and committed to growing long-term value for
our shareholders.
Murray Auchincloss
Chief executive officer
(a) Divestment proceeds are disposal proceeds as per the condensed
group cash flow statement. See page 3 for more information on other proceeds.
(b) See Note 9 for more information.
RC profit (loss), underlying RC profit (loss), surplus cash flow, net debt,
ROACE, adjusted EBITDA, adjusted EBIDA, 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 34.
Top of page 2
Highlights
Underlying replacement cost profit* $3.0 billion
• Underlying replacement cost profit for the quarter was $3.0
billion, compared with $3.3 billion for the previous quarter. Compared to the
third quarter 2023, the result reflects a strong gas marketing and trading
result, higher oil realizations including the favourable impact of price-lags
on Gulf of Mexico and UAE realizations, higher gas realizations, significantly
lower industry refining margins albeit with a smaller decrease in realized
refining margins, a weak oil trading result, higher exploration write-offs,
and a higher level of refining turnaround activity. An underlying effective
tax rate (ETR)* of 42% in the fourth quarter brings the full year underlying
ETR to 39%.
• Reported profit for the quarter was $0.4 billion, compared with
$4.9 billion for the third quarter 2023. The reported result for the fourth
quarter is adjusted for inventory holding losses* of $1.2 billion (net of tax)
and a net adverse impact of adjusting items* of $1.5 billion (net of tax) to
derive the underlying replacement cost profit. Adjusting items pre-tax include
impairments of $4.6 billion, largely as a result of changes in the group's
price and discount rate assumptions, activity phasing, economic forecasts (in
particular related to the Gelsenkirchen refinery) and portfolio composition,
and favourable fair value accounting effects* of $2.6 billion.
Operating cash flow* $9.4 billion and net debt* reduced to $20.9 billion
• Operating cash flow in the quarter of $9.4 billion includes a
working capital* release (after adjusting for inventory holding losses, fair
value accounting effects and other adjusting items) of $2.1 billion (see page
28).
• Capital expenditure* in the fourth quarter was $4.7 billion and
total 2023 capital expenditure, including inorganic capital expenditure* was
$16.3 billion.
• The $1.5 billion share buyback programme announced with the third
quarter results was completed on 2 February 2024.
• Net debt was reduced by $1.4 billion to $20.9 billion at the end
of the fourth quarter.
Further $1.75 billion share buyback announced for 4Q23; $3.5 billion for first
half 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 fourth quarter, bp has announced a dividend per
ordinary share of 7.270 cents, up 10% from the fourth quarter of 2022.
• 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 line with our medium term target of $14-18 billion.
• Related to the fourth quarter results, bp intends to execute a
$1.75 billion share buyback prior to reporting first quarter results.
Furthermore, bp is committed to announcing $3.5 billion for the first half of
2024. At current market conditions and subject to maintaining a strong
investment grade credit rating, bp plans share buybacks of at least $14
billion through 2025 as part of our commitment, on a point forward basis, to
returning at least 80% of surplus cash flow* to shareholders.
• 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.
Continued progress in transformation to an integrated energy company
• In resilient hydrocarbons, bp announced the start-up of major
project* Seagull, expected to add around 15 thousand barrels of oil equivalent
per day of net production by 2025. In Gulf of Mexico bp sanctioned Argos
Southwest Expansion project and expansion of the Great White development
project. In Brazil, bp was awarded the Tupinambá block located in the Santos
pre-salt basin.Under aim 4, we met our first goal of deploying our methane
measurement approach to all our operated upstream oil and gas assets by the
end of 2023.
• In convenience and mobility, bp continued to progress its
convenience strategy, delivering a record convenience gross margin* for a
fourth quarter, bringing full year to 9%((a)) excluding TravelCenters of
America, underpinned by customer offers driving stronger margin mix,
continued roll-out of strategic conveniences sites*, and strategic convenience
partnerships. bp and Iberdrola formed a joint venture to accelerate EV
charging infrastructure roll-out in Spain and Portugal, with plans to invest
up to €1 billion and install 5,000 fast EV charge points* by 2025 and around
11,700 by 2030.
• In low carbon energy, bp has agreed to acquire the 50.03% interest
it does not already own in Lightsource bp, one of the world's leading
developers and operator of utility-scale solar and battery storage assets.
This transaction is expected to complete in the second half of 2024, subject
to regulatory approvals.
• In November, bp announced that it will be expanding the use of
generative AI through the use of Copilot for Microsoft 365 - bp is one of the
first companies globally to act as a launch partner for 'intelligent AI
assistant'.
(a) Nearest equivalent IFRS measure: Replacement cost profit
(loss) before interest and tax for the customers & products segment is
-52% for 2023 compared with 2022. Convenience gross margins are at constant
foreign exchange - values are at end 2023 foreign exchange rates, excluding
TravelCenters of America and adjusting for other portfolio changes.
bp delivered strong underlying financial performance in 2023 - we raised
dividend per ordinary share by 10% and bought back $7.9 billion of shares. We
remain focused on strengthening the balance sheet, with net debt falling to
$20.9 billion, the lowest level over the past decade. As we look forward, we
are staying disciplined, tightening our capital expenditure frame and
simplifying and enhancing our share buyback guidance through 2025.
Kate Thomson Chief financial officer
The commentary above contains forward-looking statements and should be read in
conjunction with the cautionary statement on page 41.
Top of page 3
Financial results
In addition to the highlights on page 2:
• Profit attributable to bp shareholders in the fourth quarter and full year
was $0.4 billion and $15.2 billion respectively, compared with a profit of
$10.8 billion and a loss of $2.5 billion in the same periods of 2022.
- After adjusting profit attributable to bp shareholders for inventory holding
losses* and net impact of adjusting items*, underlying replacement cost
profit* for the fourth quarter and full year was $3.0 billion and
$13.8 billion respectively, compared with $4.8 billion and $27.7 billion
for the same periods of 2022. This reduction in underlying replacement cost
profit for the fourth quarter mainly reflects lower realizations and the
impact of significantly lower refining margins, partially offset by a strong
gas marketing and trading result. For the full year, the reduction reflects
lower realizations, the impact of portfolio changes, the impact of lower
refining margins and a lower oil trading performance.
- Adjusting items in the fourth quarter and full year had a net adverse
pre-tax impact of $2.6 billion and a net favourable pre-tax impact of
$1.1 billion respectively, compared with a favourable pre-tax impact of
$9.7 billion and an adverse pre-tax impact of $29.8 billion in the same
periods of 2022.
- Adjusting items for the fourth quarter and full year of 2023 include a
favourable impact of pre-tax fair value accounting effects*, relative to
management's internal measure of performance, of $2.6 billion and $9.4 billion
respectively, compared with a favourable pre-tax impact of $13.2 billion and
an adverse pre-tax impact of $3.5 billion in the same periods of 2022. This
is primarily due to a decline in the forward price of LNG during 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.
- Adjusting items for the fourth quarter and full year of 2023 also include
net impairment charges (including impairment charges reported through
equity-accounted earnings) of $4.6 billion and $7.0 billion, compared with net
impairment charges of $3.8 billion and $18.6 billion in the same periods of
2022. The fourth quarter 2023 impairments have arisen largely as a result of
changes in the group's price and discount rate assumptions, activity phasing,
economic forecasts (in particular related to the Gelsenkirchen refinery) and
portfolio composition. For further details on the impairment charges see Note
3.
- Adjusting items for the full year 2022 include a pre-tax charge of
$24.0 billion relating to bp's decision to exit its 19.75% shareholding in
Rosneft. A further $1.5 billion pre-tax charge relating to bp's decision to
exit its other businesses with Rosneft in Russia is also included.
• The effective tax rate (ETR) on RC profit or loss* for the fourth quarter
and full year was 39% and 33% respectively, compared with 33% and 117% for the
same periods in 2022. Excluding adjusting items, the underlying ETR* for the
fourth quarter and full year was 42% and 39% respectively, compared with 40%
and 34% for the same periods a year ago. The higher underlying ETR for the
full year reflects changes in the geographical mix of profits and the
increased impact of the UK Energy Profits Levy. ETR on RC profit or loss and
underlying ETR are non-IFRS measures.
• Operating cash flow* for the fourth quarter and full year was
$9.4 billion and $32.0 billion respectively, compared with $13.6 billion
and $40.9 billion for the same periods in 2022 driven by the movements in
underlying replacement cost profit and working capital in the periods.
• Capital expenditure* in the fourth quarter and full year was $4.7 billion
and $16.3 billion respectively, compared with $7.4 billion and
$16.3 billion in the same periods of 2022. The full year 2023 reflected the
inorganic capital expenditure* of $1.1 billion for the acquisition of
TravelCenters of America in the second quarter 2023. Full year 2022 included
$3.0 billion in respect of the Archaea Energy acquisition.
• Total divestment and other proceeds for the fourth quarter and full year
were $0.3 billion and $1.8 billion respectively, compared with $0.6 billion
and $3.1 billion for the same periods in 2022. Other proceeds for full year
2023 were $0.5 billion of proceeds from the sale of a 49% interest in a
controlled affiliate holding certain midstream assets onshore US. Other
proceeds for full year 2022 were $0.6 billion of proceeds from the disposal of
a loan note related to the Alaska divestment.
• At the end of the fourth quarter, net debt* was $20.9 billion, compared
with $22.3 billion at the end of the third quarter 2023 and $21.4 billion at
the end of the fourth quarter 2022.
Top of page 4
Analysis of RC profit (loss) before interest and tax and reconciliation to
profit (loss) for the period
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
RC profit (loss) before interest and tax
gas & low carbon energy 2,169 2,275 16,439 14,080 14,696
oil production & operations 1,879 3,427 1,688 11,191 19,721
customers & products (554) 1,549 771 4,230 8,869
other businesses & corporate (16) (500) 103 (903) (26,737)
Of which:
other businesses & corporate excluding Rosneft (16) (500) 103 (903) (2,704)
Rosneft - - - - (24,033)
Consolidation adjustment - UPII* 95 (57) 147 (14) 139
RC profit before interest and tax 3,573 6,694 19,148 28,584 16,688
Finance costs and net finance expense relating to pensions and other (977) (978) (818) (3,599) (2,634)
post-retirement benefits
Taxation on a RC basis (1,005) (1,859) (6,103) (8,161) (16,430)
Non-controlling interests (65) (211) (358) (641) (1,130)
RC profit (loss) attributable to bp shareholders* 1,526 3,646 11,869 16,183 (3,506)
Inventory holding gains (losses)* (1,497) 1,593 (1,428) (1,236) 1,351
Taxation (charge) credit on inventory holding gains and losses 342 (381) 362 292 (332)
Profit (loss) for the period attributable to bp shareholders 371 4,858 10,803 15,239 (2,487)
Analysis of underlying RC profit (loss) before interest and tax
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Underlying RC profit (loss) before interest and tax
gas & low carbon energy 1,777 1,256 3,148 8,722 16,063
oil production & operations 3,549 3,136 4,428 12,781 20,224
customers & products 803 2,055 1,902 6,413 10,789
other businesses & corporate (97) (303) (306) (866) (1,171)
Of which:
other businesses & corporate excluding Rosneft (97) (303) (306) (866) (1,171)
Rosneft - - - - -
Consolidation adjustment - UPII 95 (57) 147 (14) 139
Underlying RC profit before interest and tax 6,127 6,087 9,319 27,036 46,044
Finance costs and net finance expense relating to pensions and other (891) (882) (649) (3,194) (2,209)
post-retirement benefits
Taxation on an underlying RC basis (2,180) (1,701) (3,505) (9,365) (15,052)
Non-controlling interests (65) (211) (358) (641) (1,130)
Underlying RC profit attributable to bp shareholders* 2,991 3,293 4,807 13,836 27,653
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.
Top of page 5
Operating Metrics
Operating metrics Year 2023 vs Year 2022
Tier 1 and tier 2 process safety events*((a)) 39 -11
Reported recordable injury frequency*((a)) 0.274 +46.7%
upstream* production((b)) (mboe/d) 2,313 +2.6%
upstream unit production costs*((c)) ($/boe) 5.78 -4.8%
bp-operated upstream plant reliability* 95.0% -1.0
bp-operated refining availability*((b)) 96.1% 1.6
(a) In 2023, bp acquired the US-based TravelCenters of America (TA)
business. At the time of publication, TA reporting processes were still being
integrated into bp's reporting processes and as such, TA performance data is
not included in reported data for 2023.
(b) 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.
(c) Mainly reflecting impact of portfolio changes.
Reserves replacement ratio*
The organic reserves replacement ratio on a combined basis of subsidiaries and
equity-accounted entities was 47% for the year (2022 20%). The increase is
largely due to additions in BPX Energy in the US and in the Middle East.
Outlook & Guidance
1Q24 guidance
• Looking ahead, bp expects first quarter 2024 reported upstream* production
to be higher compared to fourth-quarter 2023.
• In its customers business, bp expects seasonally lower volumes across most
businesses and the absence of one-off positive effects from the fourth
quarter. In addition, bp expects fuels margins to remain sensitive to
movements in cost of supply.
• In products, bp expects a significantly lower level of refinery turnaround
activity compared to the fourth quarter. In addition, bp expects lower
industry refining margins, with a larger reduction in realized margins due to
narrower North American heavy crude oil differentials.
2024 guidance
In addition to the guidance on page 2:
• bp expects both reported and underlying upstream production* to be
slightly higher compared with 2023. Within this, bp expects underlying
production from oil production & operations to be higher and production
from gas & low carbon energy to be lower.
• In its customers business, bp expects continued 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 expects fuels margins to remain sensitive to the cost of supply.
• In products, bp expects a lower level of industry refining margins, with
realized margins impacted by narrower North American heavy crude oil
differentials. bp expects 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 expects the other businesses & corporate underlying annual charge
to be around $1.0 billion for 2024. The charge may vary from quarter to
quarter.
• bp expects the depreciation, depletion and amortization to be slightly
higher than 2023.
• bp expects 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 expects capital expenditure* of around $16 billion, weighted to the
first half.
• bp expects divestment and other proceeds of $2-3 billion in 2024, weighted
towards the second half. Having realized $17.8 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 expects Gulf of Mexico oil spill payments for the year to be around
$1.2 billion pre-tax including $1.1 billion pre-tax to be paid during the
second quarter.
The commentary above contains forward-looking statements and should be read in
conjunction with the cautionary statement on page 41.
Top of page 6
gas & low carbon energy*
Financial results
• The replacement cost (RC) profit before interest and tax for the
fourth quarter and full year was $2,169 million and $14,080 million
respectively, compared with $16,439 million and $14,696 million for the same
periods in 2022. The fourth quarter and full year are adjusted by a favourable
impact of net adjusting items* of $392 million and $5,358 million
respectively, compared with a favourable impact of net adjusting items of
$13,291 million and an adverse impact of $1,367 million for the same periods
in 2022. Adjusting items include impacts of fair value accounting effects*,
relative to management's internal measure of performance, which are a
favourable impact of $1,887 million and $8,859 million for the fourth quarter
and full year in 2023 and a favourable impact of $12,502 million and an
adverse impact of $1,811 million for the same periods in 2022. Under IFRS,
reported earnings include the mark-to-market value of the hedges used to
risk-manage LNG contracts, but not of the LNG contracts themselves. The
underlying result includes the mark-to-market value of the hedges but also
recognizes changes in value of the LNG contracts being risk managed. Adjusting
items also include net impairment charges, see Note 3 for further information.
• After adjusting RC profit before interest and tax for adjusting
items, the underlying RC profit before interest and tax* for the fourth
quarter and full year was $1,777 million and $8,722 million respectively,
compared with $3,148 million and $16,063 million for the same periods in 2022.
• The underlying RC profit for the fourth quarter, compared with
the same period in 2022, reflects lower realizations and lower production,
partially offset by a strong gas marketing and trading result. The underlying
RC profit for the full year, compared with 2022, reflects lower realizations,
and a higher depreciation, depletion and amortization charge.
Operational update
• Reported production for the quarter was 899mboe/d, 6.0% lower
than the same period in 2022. Underlying production* was 3.8% lower, mainly
due to base decline, particularly in Egypt, partly offset by major project*
delivery.
• Reported production for the full year was 929mboe/d, 2.9% lower
than the same period in 2022. Underlying production was 2.3% lower, mainly due
to base decline, partly offset by major project delivery.
• Renewables pipeline* at the end of the quarter was 58.3GW (bp
net), including 19.3GW bp net share of Lightsource bp's (LSbp's) pipeline. The
renewables pipeline increased by 21.1GW net during the full year, including bp
being awarded the rights to develop two North Sea offshore wind projects in
Germany (4GW), increases to LSbp's pipeline (5.3GW), and an increase in
dedicated hydrogen renewables (12.4GW). In addition, there is over 12GW (bp
net) of early stage opportunities in LSbp's hopper.
Strategic progress
gas
• On 5 December, bp announced the restructuring of the
ownership and commercial framework of the Atlantic LNG joint venture with its
partners Shell and the National Gas Company of Trinidad & Tobago. The
restructuring helps provide the certainty required for sanctioning the next
wave of upstream gas projects and secures the long term LNG equity offtake for
shareholders including bp.
• On 18 January the government of the Republic of Senegal
approved bp's exit from the Cayar Offshore Profond production sharing contract
and designation of Kosmos Energy as the Operator of the Yakaar-Teranga gas
resource.
• On 16 November, bp signed a 9-year sales and purchase
agreement (SPA) with State-owned Oman LNG to buy one million metric tonnes per
annum of LNG starting 2026.
low carbon energy
• During the quarter, we secured US Department of Energy
funding confirmation for the MachH2 Hub hydrogen project in the US Midwest.
• On 25 January 2024 bp and Equinor announced they had signed
an agreement under which they will restructure their investments in their US
offshore wind projects. Subject to approvals, bp will assume full ownership of
the Beacon projects and Equinor the Empire projects. bp will independently
pursue future US offshore wind opportunities.
• On 30 November bp announced it has agreed to acquire the
remaining 50.03% of Lightsource bp. LSbp is one of the world's leading
developers and operator of utility-scale solar and battery storage assets,
with 1,200 employees in 19 countries. The acquisition includes LSbp's hopper
of 38GW renewables pipeline and an additional 25GW of early stage
opportunities. The transaction is expected to close in the second half of
2024, subject to regulatory approvals.
• On 17 January 2024 bp announced it has agreed to acquire
GETEC ENERGIE GmbH, a leading independent supplier of energy to commercial and
industrial customers in Germany.
Top of page 7
gas & low carbon energy (continued)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Profit before interest and tax 2,169 2,275 16,429 14,081 14,688
Inventory holding (gains) losses* - - 10 (1) 8
RC profit before interest and tax 2,169 2,275 16,439 14,080 14,696
Net (favourable) adverse impact of adjusting items (392) (1,019) (13,291) (5,358) 1,367
Underlying RC profit before interest and tax 1,777 1,256 3,148 8,722 16,063
Taxation on an underlying RC basis (746) (448) (1,163) (2,730) (4,367)
Underlying RC profit before interest 1,031 808 1,985 5,992 11,696
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Depreciation, depletion and amortization
Total depreciation, depletion and amortization 1,290 1,543 1,373 5,680 5,008
Exploration write-offs
Exploration write-offs 349 15 (6) 362 2
Adjusted EBITDA*
Total adjusted EBITDA 3,416 2,814 4,515 14,764 21,073
Capital expenditure*
gas 848 833 1,032 3,025 3,227
low carbon energy 478 222 577 1,256 1,024
Total capital expenditure 1,326 1,055 1,609 4,281 4,251
Fourth Third Fourth
quarter quarter quarter Year Year
2023 2023 2022 2023 2022
Production (net of royalties)((a))
Liquids* (mb/d) 99 106 121 105 118
Natural gas (mmcf/d) 4,637 4,875 4,844 4,778 4,866
Total hydrocarbons* (mboe/d) 899 946 956 929 957
Average realizations*((b))
Liquids ($/bbl) 78.87 76.69 80.50 77.03 89.86
Natural gas ($/mcf) 6.18 5.38 9.40 6.13 8.91
Total hydrocarbons* ($/boe) 40.17 36.82 57.60 40.21 56.34
(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.
Top of page 8
gas & low carbon energy (continued)
31 December 30 September 31 December
low carbon energy((c)) 2023 2023 2022
Renewables (bp net, GW)
Installed renewables capacity* 2.7 2.5 2.2
Developed renewables to FID* 6.2 6.1 5.8
Renewables pipeline 58.3 43.9 37.2
of which by geographical area:
Renewables pipeline - Americas 18.8 18.4 17.0
Renewables pipeline - Asia Pacific 21.3 12.1 11.8
Renewables pipeline - Europe 14.6 13.4 8.3
Renewables pipeline - Other 3.5 - 0.1
of which by technology:
Renewables pipeline - offshore wind 9.3 9.3 5.2
Renewables pipeline - onshore wind 12.7 6.1 6.3
Renewables pipeline - solar 36.3 28.5 25.7
Total Developed renewables to FID and Renewables pipeline 64.5 50.0 43.0
(c) Because of rounding, some totals may not agree exactly with the
sum of their component parts.
Top of page 9
oil production & operations
Financial results
• The replacement cost (RC) profit before interest and tax for the
fourth quarter and full year was $1,879 million and $11,191 million
respectively, compared with $1,688 million and $19,721 million for the same
periods in 2022. The fourth quarter and full year are adjusted by an adverse
impact of net adjusting items* of $1,670 million and $1,590 million
respectively, mainly relating to net impairment charges (see Note 3), compared
with an adverse impact of net adjusting items of $2,740 million and $503
million for the same periods in 2022.
• After adjusting items, the underlying RC profit before interest
and tax* for the fourth quarter and full year was $3,549 million and $12,781
million respectively, compared with $4,428 million and $20,224 million for the
same periods in 2022.
• The underlying RC profit for the fourth quarter, compared with
the same period in 2022, primarily reflects the impact of lower realizations.
The underlying RC profit for the full year, compared with the same period in
2022, reflects lower realizations, and the impact of portfolio changes, partly
offset by higher volumes.
Operational update
• Reported production for the quarter was 1,421mboe/d, 8.6% higher
than the fourth quarter of 2022. Underlying production* for the quarter was
8.5% higher compared with the fourth quarter of 2022 reflecting bpx energy
performance and major projects*.
• Reported production for the full year was 1,383mboe/d, 6.7%
higher than the same period of 2022. Underlying production for the full year
was 6.3% higher compared with the same period of 2022 reflecting bpx energy
performance and major projects and base performance.
Strategic Progress
• In October bp, with partners Neptune Energy and JAPEX,
successfully started production from the Seagull oil and gas field in the UK
North Sea. Seagull is a four-well development tied back to the Eastern Trough
Area Project (ETAP) hub (bp 50% operator).
• The first of two wells for the Murlach oil and gas field in the
UK North Sea were spudded in October, following regulatory approval of the
field development plan in September (bp 80% operator).
• bp and its partners approved the development of the Argos
Southwest Extension project in the Gulf of Mexico which will be a three well
subsea tie-back to the Argos platform (bp operator 60.5%).
• Partners approved the expansion of the Shell operated Great
White development in the Gulf of Mexico through a phased three well campaign
(bp 33.33%).
• In November, bpx energy production surpassed 400mboe/d, up more
than 25% versus fourth-quarter 2022 levels with contributions across each
operating basin. bpx energy remains on track to deliver 2025 volumes 30 to 40%
higher than 2022 levels.
• bp was the apparent high bidder on 24 lease blocks in the Gulf
of Mexico lease sale 261 held on 20 December 2023.
• In December bp was awarded operatorship of the Tupinamba block,
in the Santos Pre Salt Basin, in Brazil.
• Our Angolan 50:50 joint venture with Eni, Azule Energy,
progressed with four new exploration agreements in blocks adjacent to existing
operations (46, 47, 14/23 and 18/15).
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Profit before interest and tax 1,879 3,426 1,686 11,191 19,714
Inventory holding (gains) losses* - 1 2 - 7
RC profit before interest and tax 1,879 3,427 1,688 11,191 19,721
Net (favourable) adverse impact of adjusting items 1,670 (291) 2,740 1,590 503
Underlying RC profit before interest and tax 3,549 3,136 4,428 12,781 20,224
Taxation on an underlying RC basis (1,433) (1,386) (2,015) (5,998) (9,143)
Underlying RC profit before interest 2,116 1,750 2,413 6,783 11,081
Top of page 10
oil production & operations (continued)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Depreciation, depletion and amortization
Total depreciation, depletion and amortization 1,563 1,432 1,383 5,692 5,564
Exploration write-offs
Exploration write-offs 32 59 73 384 383
Adjusted EBITDA*
Total adjusted EBITDA 5,144 4,627 5,884 18,857 26,171
Capital expenditure*
Total capital expenditure 1,636 1,644 1,430 6,278 5,278
Fourth Third Fourth
quarter quarter quarter Year Year
2023 2023 2022 2023 2022
Production (net of royalties)((a))
Liquids* (mb/d) 1,024 1,011 966 1,010 952
Natural gas (mmcf/d) 2,305 2,155 1,989 2,165 1,998
Total hydrocarbons* (mboe/d) 1,421 1,382 1,309 1,383 1,297
Average realizations*((b))
Liquids ($/bbl) 76.22 71.10 80.43 72.09 89.62
Natural gas ($/mcf) 3.65 3.44 10.20 4.17 10.46
Total hydrocarbons* ($/boe) 59.69 56.76 74.60 58.34 82.23
(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) result before interest and tax for the
fourth quarter and full year was a loss of $554 million and a profit of $4,230
million respectively, compared with a profit of $771 million and $8,869
million for the same periods in 2022. The fourth quarter and full year are
adjusted by an adverse impact of net adjusting items* of $1,357 million and
$2,183 million respectively, mainly relating to an impairment of the
Gelsenkirchen refinery (see Note 3), compared with an adverse impact of net
adjusting items of $1,131 million and $1,920 million for the same periods in
2022. Adjusting items include impacts of fair value accounting effects*,
relative to management's internal measure of performance, which are a
favourable impact of $144 million for the quarter and an adverse impact of $86
million for the full year in 2023, compared with a favourable impact of $189
million and an adverse impact of $309 million for the same periods in 2022.
• After adjusting items, the underlying RC profit before interest
and tax* for the fourth quarter and full year was $803 million and $6,413
million respectively, compared with $1,902 million and $10,789 million for the
same periods in 2022.
• The customers & products result for the fourth quarter was
lower than the same period in 2022, primarily reflecting the impact of
significantly lower refining margins and a lower contribution from oil
trading, partly offset by significantly lower turnaround impacts and a
stronger customers performance. The result for the full year was significantly
lower than the same period in 2022, primarily reflecting the impact of lower
refining margins and a lower oil trading performance.
• customers - the convenience and mobility result, excluding
Castrol, for the fourth quarter was higher than the same period in 2022, with
the benefit of higher fuels margins, a strong aviation result underpinned by
higher volumes and margins, and continued strong growth in convenience. The
fourth quarter and full year results were also impacted by higher costs,
including increased expenditure in our transition growth engines*,
inflationary impacts and increased depreciation.
The Castrol result for the fourth quarter was higher compared to the same
period in 2022, primarily due to higher margins underpinned by lower cost of
supply and higher volumes, with the fourth quarter of 2022 impacted by COVID
restrictions, notably in China.
• products - the products results for the fourth quarter and full
year were lower compared with the same periods in 2022. In refining, the
result for the fourth quarter reflected significantly lower industry refining
margins, partially offset by a significantly lower impact from turnaround and
maintenance activity. The full year result was primarily impacted by
significantly lower industry refining margins, higher turnaround activity
albeit with a lower margin impact, partly offset by a lower level of
maintenance activity. The oil trading contribution for the fourth quarter was
weak compared to the average result in the same period last year. The full
year result was also lower, as the first half of 2022 benefited from an
exceptionally strong oil trading performance.
Operational update
• bp-operated refining availability* for the fourth quarter and
full year was 96.1%, higher compared with 95.0% and 94.5% for the same periods
in 2022 due to a lower level of maintenance activity. Utilization for the
fourth quarter and full year, adjusted for portfolio changes, was lower than
the same periods in 2022, with the fourth quarter utilization impacted by
higher turnaround activity.
Strategic progress
• Strong underlying convenience gross margin* delivery with around
9%((a)(b)) year over year growth, underpinned by customer offers driving
stronger margin mix, continued roll-out of strategic convenience sites*, and
strategic convenience partnerships.
• In November, 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.
• EV charge points* installed and energy sold in the year grew by
around 35% and 150% respectively, compared to 2022, with charge points now
over 29,000. In addition, on 1 December bp and Iberdrola formed a joint
venture to accelerate EV charging infrastructure roll-out in Spain and
Portugal, with plans to invest up to €1 billion and install 5,000 fast((c))
EV charge points by 2025 and around 11,700 by 2030; and in China, bp continues
to invest in fast growing southern districts, and in January acquired 3,000
charge points through the bp Xiajou joint venture.
• In November, Air bp collaborated with Virgin Atlantic, Rolls
Royce, Boeing, and others, to fuel the first 100% sustainable aviation fuel
(SAF) transatlantic flight by a commercial airline. The SAF was a blend
derived from inputs supplied by Air bp and Virent. Together, this enabled up
to 70% lifecycle carbon emission savings compared to the conventional jet fuel
it replaces.
• In Castrol, our market leading position in advanced EV-fluids
was further strengthened, now three out of four of the world's major vehicle
manufacturers use Castrol ON products as part of their factory fill((d)). In
addition, Castrol has continued to grow its independent branded workshops,
adding around 4,500 workshops in 2023, compared to 2022, with workshops now
over 34,000 in total.
• In December, bp's Archaea Energy announced it had brought two
more renewable natural gas plants online, the Monty plant in Kentucky and the
Red Top plant in California.
(a) Nearest equivalent IFRS measure: Replacement cost profit
before interest and tax for the customers & products segment is -52% for
2023 compared with 2022.
(b) At constant foreign exchange - values are at end 2023 foreign
exchange rates, excluding TravelCenters of America and adjusted for other
portfolio changes.
(c) "fast charging" includes rapid charging ≥50kW and ultra-fast
charging ≥150kW.
(d) Based on GlobalData report for 2023 for top 20 selling global
OEMs (total new vehicles sales).
Top of page 12
customers & products (continued)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Profit (loss) before interest and tax (2,051) 3,143 (645) 2,993 10,235
Inventory holding (gains) losses* 1,497 (1,594) 1,416 1,237 (1,366)
RC profit (loss) before interest and tax (554) 1,549 771 4,230 8,869
Net (favourable) adverse impact of adjusting items 1,357 506 1,131 2,183 1,920
Underlying RC profit before interest and tax 803 2,055 1,902 6,413 10,789
Of which:((a))
customers - convenience & mobility 882 670 628 2,644 2,966
Castrol - included in customers 213 185 70 730 700
products - refining & trading (79) 1,385 1,274 3,769 7,823
Taxation on an underlying RC basis (239) (167) (400) (1,454) (2,308)
Underlying RC profit before interest 564 1,888 1,502 4,959 8,481
(a) A reconciliation to RC profit before interest and tax by
business is provided on page 31.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Adjusted EBITDA*((b))
customers - convenience & mobility 1,348 1,151 962 4,380 4,252
Castrol - included in customers 256 228 110 897 853
products - refining & trading 397 1,819 1,681 5,581 9,407
1,745 2,970 2,643 9,961 13,659
Depreciation, depletion and amortization
Total depreciation, depletion and amortization 942 915 741 3,548 2,870
Capital expenditure*
customers - convenience & mobility 790 435 694 3,135 1,779
Castrol - included in customers 90 60 98 262 235
products - refining & trading((c)) 813 367 3,455 2,118 4,473
Total capital expenditure 1,603 802 4,149 5,253 6,252
(b) A reconciliation to RC profit before interest and tax by business
is provided on page 31.
(c) Fourth quarter and full year 2022 include $3,030 million in
respect of the Archaea Energy acquisition.
Retail((d)) Fourth Third Fourth
quarter quarter quarter Year Year
2023 2023 2022 2023 2022
bp retail sites* - total (#) 21,100 21,150 20,650 21,100 20,650
Strategic convenience sites* 2,850 2,750 2,400 2,850 2,400
(d) Reported to the nearest 50.
Marketing sales of refined products (mb/d) Fourth Third Fourth
quarter quarter quarter Year Year
2023 2023 2022 2023 2022
US 1,205 1,280 1,126 1,210 1,136
Europe 1,037 1,093 1,069 1,040 1,021
Rest of World 465 474 461 468 456
2,707 2,847 2,656 2,718 2,613
Trading/supply sales of refined products 355 392 325 358 350
Total sales volume of refined products 3,062 3,239 2,981 3,076 2,963
Top of page 13
customers & products (continued)
Refining marker margin* Fourth Third Fourth
quarter quarter quarter Year Year
2023 2023 2022 2023 2022
bp average refining marker margin (RMM)((e)) ($/bbl) 18.5 31.8 32.2 25.8 33.1
(e) The RMM in the quarter is calculated based on bp's current
refinery portfolio. On a comparative basis, the fourth quarter and full year
2022 RMM would be $32.2/bbl and $33.1/bbl respectively.
Refinery throughputs (mb/d) Fourth Third Fourth
quarter quarter quarter Year Year
2023 2023 2022 2023 2022
US 634 690 615 662 678
Europe 678 760 763 749 804
Rest of World - - - - 22
Total refinery throughputs 1,312 1,450 1,378 1,411 1,504
bp-operated refining availability* (%) 96.1 96.3 95.0 96.1 94.5
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. It also includes Rosneft results up to 27 February 2022.
Financial results
• The replacement cost (RC) loss before interest and tax for the
fourth quarter and full year was $16 million and $903 million respectively,
compared with a profit of $103 million and a loss of $26,737 million for the
same periods in 2022. The fourth quarter and full year are adjusted by a
favourable impact of net adjusting items* of $81 million and an adverse impact
of $37 million respectively, compared with a favourable impact of net
adjusting items of $409 million and an adverse impact of $25,566 million for
the same periods in 2022. Adjusting items include impacts of fair value
accounting effects* which are a favourable impact of $579 million for the
quarter and a favourable impact of $630 million for the full year in 2023, and
a favourable impact of $515 million and an adverse impact of $1,381 million
for the same periods in 2022. Adjusting items also include impacts of
environmental charges which are an adverse impact of $565 million for the
quarter. The adjusting items for the full year in 2022 mainly relate to
Rosneft.
• After adjusting RC loss for net adjusting items, the underlying
RC loss before interest and tax* for the fourth quarter and full year was $97
million and $866 million respectively, compared with a loss of $306 million
and $1,171 million for the same periods in 2022, mainly reflecting foreign
exchange impacts for the fourth quarter and increased interest income for the
full year.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Profit (loss) before interest and tax (16) (500) 103 (903) (26,737)
Inventory holding (gains) losses* - - - - -
RC profit (loss) before interest and tax (16) (500) 103 (903) (26,737)
Net (favourable) adverse impact of adjusting items((a)) (81) 197 (409) 37 25,566
Underlying RC profit (loss) before interest and tax (97) (303) (306) (866) (1,171)
Taxation on an underlying RC basis 121 162 43 322 439
Underlying RC profit (loss) before interest 24 (141) (263) (544) (732)
(a) Includes fair value accounting effects relating to the hybrid
bonds that were issued on 17 June 2020. See page 35 for more information.
other businesses & corporate (excluding Rosneft)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Profit (loss) before interest and tax (16) (500) 103 (903) (2,704)
Inventory holding (gains) losses* - - - - -
RC profit (loss) before interest and tax (16) (500) 103 (903) (2,704)
Net (favourable) adverse impact of adjusting items (81) 197 (409) 37 1,533
Underlying RC profit (loss) before interest and tax (97) (303) (306) (866) (1,171)
Taxation on an underlying RC basis 121 162 43 322 439
Underlying RC profit (loss) before interest 24 (141) (263) (544) (732)
other businesses & corporate (Rosneft)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Profit (loss) before interest and tax - - - - (24,033)
Inventory holding (gains) losses* - - - - -
RC profit (loss) before interest and tax - - - - (24,033)
Net (favourable) adverse impact of adjusting items - - - - 24,033
Underlying RC profit (loss) before interest and tax - - - - -
Taxation on an underlying RC basis - - - - -
Underlying RC profit (loss) before interest - - - - -
Top of page 15
Financial statements
Group income statement
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Sales and other operating revenues (Note 5) 52,141 53,269 69,257 210,130 241,392
Earnings from joint ventures - after interest and tax (290) (198) 189 67 1,128
Earnings from associates - after interest and tax 156 271 129 831 1,402
Interest and other income 599 410 608 1,635 1,103
Gains on sale of businesses and fixed assets (20) 264 173 369 3,866
Total revenues and other income 52,586 54,016 70,356 213,032 248,891
Purchases 31,062 29,951 34,101 119,307 141,043
Production and manufacturing expenses 5,751 6,080 6,841 25,044 28,610
Production and similar taxes 445 456 557 1,779 2,325
Depreciation, depletion and amortization (Note 6) 4,060 4,145 3,714 15,928 14,318
Net impairment and losses on sale of businesses and fixed assets (Note 3) 3,958 542 3,629 5,857 30,522
Exploration expense 501 97 140 997 585
Distribution and administration expenses 4,733 4,458 3,654 16,772 13,449
Profit (loss) before interest and taxation 2,076 8,287 17,720 27,348 18,039
Finance costs 1,038 1,039 834 3,840 2,703
Net finance (income) expense relating to pensions and other post-retirement (61) (61) (16) (241) (69)
benefits
Profit (loss) before taxation 1,099 7,309 16,902 23,749 15,405
Taxation 663 2,240 5,741 7,869 16,762
Profit (loss) for the period 436 5,069 11,161 15,880 (1,357)
Attributable to
bp shareholders 371 4,858 10,803 15,239 (2,487)
Non-controlling interests 65 211 358 641 1,130
436 5,069 11,161 15,880 (1,357)
Earnings per share (Note 7)
Profit (loss) for the period attributable to bp shareholders
Per ordinary share (cents)
Basic 2.20 28.24 59.43 87.78 (13.10)
Diluted 2.15 27.59 58.36 85.85 (13.10)
Per ADS (dollars)
Basic 0.13 1.69 3.57 5.27 (0.79)
Diluted 0.13 1.66 3.50 5.15 (0.79)
Top of page 16
Condensed group statement of comprehensive income
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Profit (loss) for the period 436 5,069 11,161 15,880 (1,357)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency translation differences((a)) 711 (590) 2,142 585 (3,786)
Exchange (gains) losses on translation of foreign operations reclassified to - (2) (32) (2) 10,759
gain or loss on sale of businesses and fixed assets((b))
Cash flow hedges and costs of hedging 125 (56) 584 559 763
Share of items relating to equity-accounted entities, net of tax 13 25 392 (192) 402
Income tax relating to items that may be reclassified 64 (69) (108) (10) (334)
913 (692) 2,978 940 7,804
Items that will not be reclassified to profit or loss
Remeasurements of the net pension and other post-retirement benefit liability (1,209) (111) (1,508) (2,262) 340
or asset((c))
Remeasurements of equity investments 51 - - 51 -
Cash flow hedges that will subsequently be transferred to the balance sheet 16 (1) 1 15 (4)
Income tax relating to items that will not be reclassified 357 57 538 745 68
(785) (55) (969) (1,451) 404
Other comprehensive income 128 (747) 2,009 (511) 8,208
Total comprehensive income 564 4,322 13,170 15,369 6,851
Attributable to
bp shareholders 461 4,140 12,760 14,702 5,782
Non-controlling interests 103 182 410 667 1,069
564 4,322 13,170 15,369 6,851
(a) Fourth quarter 2022 is principally affected by movements in the
Pound Sterling against the US dollar. Full year 2022 is principally affected
by movements in the Russian rouble and Pound Sterling against the US dollar.
(b) Full year 2022 predominantly relates to the loss of significant
influence over Rosneft(.)
(c) See Note 1 Basis of preparation - Pensions and other
post-retirement benefits for further information.
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 2023 67,553 13,390 2,047 82,990
Total comprehensive income 14,702 586 81 15,369
Dividends (4,831) - (403) (5,234)
Cash flow hedges transferred to the balance sheet, net of tax (1) - - (1)
Repurchase of ordinary share capital (8,167) - - (8,167)
Share-based payments, net of tax 669 - - 669
Share of equity-accounted entities' changes in equity, net of tax 1 - - 1
Issue of perpetual hybrid bonds (1) 176 - 175
Payments on perpetual hybrid bonds (5) (586) - (591)
Transactions involving non-controlling interests, net of tax 363 - (81) 282
At 31 December 2023 70,283 13,566 1,644 85,493
bp shareholders' Non-controlling interests Total
$ million equity((a)) Hybrid bonds Other interest equity
At 1 January 2022 75,463 13,041 1,935 90,439
Total comprehensive income 5,782 519 550 6,851
Dividends (4,365) - (294) (4,659)
Cash flow hedges transferred to the balance sheet, net of tax 1 - - 1
Issue of ordinary share capital((b)) 820 - - 820
Repurchase of ordinary share capital (10,493) - - (10,493)
Share-based payments, net of tax 847 - - 847
Issue of perpetual hybrid bonds (4) 374 - 370
Payments on perpetual hybrid bonds 15 (544) - (529)
Transactions involving non-controlling interests, net of tax (513) - (144) (657)
At 31 December 2022 67,553 13,390 2,047 82,990
(a) In 2022 $9.2 billion of the opening foreign currency translation
reserve has been moved to the profit and loss account reserve as a result of
bp's decision to exit its shareholding in Rosneft and its other businesses
with Rosneft in Russia.
(b) Relates to ordinary shares issued as non-cash consideration for
the acquisition of the public units of BP Midstream Partners LP.
Top of page 18
Group balance sheet
31 December 31 December
$ million 2023 2022
Non-current assets
Property, plant and equipment 104,719 106,044
Goodwill 12,472 11,960
Intangible assets 9,991 10,200
Investments in joint ventures 12,435 12,400
Investments in associates 7,814 8,201
Other investments 2,189 2,670
Fixed assets 149,620 151,475
Loans 1,942 1,271
Trade and other receivables 1,767 1,092
Derivative financial instruments 9,980 12,841
Prepayments 623 576
Deferred tax assets 4,268 3,908
Defined benefit pension plan surpluses 7,948 9,269
176,148 180,432
Current assets
Loans 240 315
Inventories 22,819 28,081
Trade and other receivables 31,123 34,010
Derivative financial instruments 12,583 11,554
Prepayments 2,520 2,092
Current tax receivable 837 621
Other investments 843 578
Cash and cash equivalents 33,030 29,195
103,995 106,446
Assets classified as held for sale (Note 2) 151 1,242
104,146 107,688
Total assets 280,294 288,120
Current liabilities
Trade and other payables 61,155 63,984
Derivative financial instruments 5,250 12,618
Accruals 6,527 6,398
Lease liabilities 2,650 2,102
Finance debt 3,284 3,198
Current tax payable 2,732 4,065
Provisions 4,418 6,332
86,016 98,697
Liabilities directly associated with assets classified as held for sale (Note 62 321
2)
86,078 99,018
Non-current liabilities
Other payables 10,076 10,387
Derivative financial instruments 10,402 13,537
Accruals 1,310 1,233
Lease liabilities 8,471 6,447
Finance debt 48,670 43,746
Deferred tax liabilities 9,617 10,526
Provisions 14,721 14,992
Defined benefit pension plan and other post-retirement benefit plan deficits 5,456 5,244
108,723 106,112
Total liabilities 194,801 205,130
Net assets 85,493 82,990
Equity
bp shareholders' equity 70,283 67,553
Non-controlling interests 15,210 15,437
Total equity 85,493 82,990
Top of page 19
Condensed group cash flow statement
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Operating activities
Profit (loss) before taxation 1,099 7,309 16,902 23,749 15,405
Adjustments to reconcile profit (loss) before taxation to net cash provided by
operating activities
Depreciation, depletion and amortization and exploration expenditure written 4,441 4,219 3,781 16,674 14,703
off
Net impairment and (gain) loss on sale of businesses and fixed assets 3,978 278 3,456 5,488 26,656
Earnings from equity-accounted entities, less dividends received 803 421 582 1,194 (830)
Net charge for interest and other finance expense, less net interest paid 202 136 186 503 396
Share-based payments 97 298 166 616 795
Net operating charge for pensions and other post-retirement benefits, less (63) (40) (60) (193) (257)
contributions and benefit payments for unfunded plans
Net charge for provisions, less payments (819) (342) (1,013) (2,481) 440
Movements in inventories and other current and non-current assets and 1,942 (783) (6,847) (3,338) (6,270)
liabilities
Income taxes paid (2,303) (2,749) (3,582) (10,173) (10,106)
Net cash provided by operating activities 9,377 8,747 13,571 32,039 40,932
Investing activities
Expenditure on property, plant and equipment, intangible and other assets (4,247) (3,456) (3,696) (14,285) (12,069)
Acquisitions, net of cash acquired (38) (9) (3,522) (799) (3,530)
Investment in joint ventures (347) (102) (107) (1,039) (600)
Investment in associates (79) (36) (44) (130) (131)
Total cash capital expenditure (4,711) (3,603) (7,369) (16,253) (16,330)
Proceeds from disposal of fixed assets 31 59 27 133 709
Proceeds from disposal of businesses, net of cash disposed 269 79 587 1,193 1,841
Proceeds from loan repayments 16 12 7 55 67
Cash provided from investing activities 316 150 621 1,381 2,617
Net cash used in investing activities (4,395) (3,453) (6,748) (14,872) (13,713)
Financing activities
Net issue (repurchase) of shares (Note 7) (1,350) (2,047) (3,240) (7,918) (9,996)
Lease liability payments (722) (663) (513) (2,560) (1,961)
Proceeds from long-term financing 1,522 8 10 7,568 2,013
Repayments of long-term financing (11) (264) (2,197) (3,902) (11,697)
Net increase (decrease) in short-term debt 87 (71) 190 (861) (1,392)
Issue of perpetual hybrid bonds 13 30 48 175 370
Payments relating to perpetual hybrid bonds (264) (258) (219) (1,008) (708)
Payments relating to transactions involving non-controlling interests (Other (7) - (1) (187) (9)
interest)
Receipts relating to transactions involving non-controlling interests (Other 10 527 1 546 11
interest)
Dividends paid - bp shareholders (1,224) (1,249) (1,088) (4,809) (4,358)
- non-controlling interests (77) (191) (100) (403) (294)
Net cash provided by (used in) financing activities (2,023) (4,178) (7,109) (13,359) (28,021)
Currency translation differences relating to cash and cash equivalents 145 (104) 177 27 (684)
Increase (decrease) in cash and cash equivalents 3,104 1,012 (109) 3,835 (1,486)
Cash and cash equivalents at beginning of period 29,926 28,914 29,304 29,195 30,681
Cash and cash equivalents at end of period 33,030 29,926 29,195 33,030 29,195
Top of page 20
Notes
Note 1. Basis of preparation
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 2022
included in BP Annual Report and Form 20-F 2022.
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 2023 which are the same as those used
in preparing BP Annual Report and Form 20-F 2022.
In May 2023, the IASB issued International Tax Reform - Pillar Two Model Rules
- Amendments to IAS 12 Income Taxes to clarify the application of IAS 12 to
tax legislation enacted or substantively enacted to implement Pillar Two of
the Organisation for Economic Co-operation and Development's Base Erosion and
Profit Shifting project, which aims to address the tax challenges arising from
the digitalisation of the economy. The amendments include a mandatory
temporary exception from accounting for deferred tax on such tax law. In July
2023, the UK government enacted legislation to implement the Pillar Two rules.
The legislation is effective for bp from 1 January 2024 and includes an income
inclusion rule and a domestic minimum tax, which together are designed to
ensure a minimum effective tax rate of 15% in each country in which the group
operates. Similar legislation is being enacted by other governments around the
world. In line with the amendments to IAS 12, the exception from accounting
for deferred tax for the Pillar Two rules has been applied and there are no
impacts on the financial information for 2023. Based on an assessment of
historic data and forecasts for the year ending 31 December 2024, the Group
does not expect a material exposure to Pillar Two income taxes for the year
ending 31 December 2024.
There are no other new or amended standards or interpretations adopted from 1
January 2023 onwards, including IFRS 17 'Insurance Contracts,' 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 2022. These have been subsequently considered at
the end of each quarter to determine if any changes were required to those
judgements and estimates.
Impairment testing assumptions
The group's value-in-use impairment testing price assumptions for Brent oil
and Henry Hub gas were revised during the fourth quarter from those disclosed
in the BP Annual Report and Form 20-F 2022. Prices disclosed are in real 2022
terms. The near term Brent oil assumption was held constant at $70 per barrel
to reflect near term supply constraints before steadily declining after 2030
to $50 per barrel by 2050 continuing to reflect the assumption that as the
energy system decarbonises, falling oil demand will cause oil prices to
decline. The price assumptions for Henry Hub gas up to 2050 were held constant
at $4 per mmBtu reflecting an assumption that declining domestic demand in the
US is offset by higher LNG exports. A summary of the group's price assumptions
for value-in-use impairment testing, in real 2022 terms, is provided below:
2024 2025 2030 2040 2050
Brent oil ($/bbl) 70 70 70 63 50
Henry Hub gas ($/mmBtu) 4.00 4.00 4.00 4.00 4.00
The post-tax discount rate used for value-in-use impairment testing of assets
other than certain low carbon energy assets was increased to 8% (31 December
2022: 7%) reflecting higher costs of capital.
Provisions
The nominal risk-free discount rate applied to provisions is reviewed on a
quarterly basis. The discount rate applied to the group's provisions was
revised to 4.0% in the fourth quarter (31 December 2022 3.5%) to reflect
higher US Treasury yields. The principal impact of this rate increase was a
$0.9 billion decrease in the decommissioning provision with a corresponding
decrease in the carrying amount of property, plant and equipment of $0.7
billion in the fourth quarter.
Pensions and other post-retirement benefits
The group's defined benefit plans are reviewed quarterly to determine any
changes to the fair value of the plan assets or present value of the defined
benefit obligations. As a result of the review during the fourth quarter of
2023, the group's total net defined benefit plan surplus as at 31 December
2023 is $2.5 billion, compared to a surplus of $3.4 billion at 30 September
2023 and $4.0 billion at 31 December 2022. The movement for the year
principally reflects net actuarial losses reported in other comprehensive
income arising from decreases in the UK, US and Eurozone discount rates, UK
asset performance and an increase in Eurozone inflation. The current
environment is likely to continue to affect the values of the plan assets and
obligations resulting in potential volatility in the amount of the net defined
benefit pension plan surplus/deficit recognized.
Top of page 21
Deferred tax related to pensions and other post-retirement benefits
In November 2023 the UK Government announced a reduction in the authorised
surplus payments charge applicable to defined benefit pension schemes from 35%
to 25%. The legislation has not yet been enacted or substantively enacted, but
is expected to be effective from 6 April 2024. The change is expected to
reduce deferred tax liabilities by around $0.7 billion with the related gain
recognised in other comprehensive income when the legislation is substantively
enacted.
Investment in Rosneft
Since the first quarter 2022, bp accounts for its interest in Rosneft and its
other businesses with Rosneft within Russia, as financial assets measured at
fair value within 'Other investments'. It is considered by management that any
measure of fair value, other than nil, would be subject to such high
measurement uncertainty that no estimate would provide useful information even
if it were accompanied by a description of the estimate made in producing it
and an explanation of the uncertainties that affect the estimate. Accordingly,
it is not currently possible to estimate any carrying value other than zero
when determining the measurement of the interest in Rosneft and the other
businesses with Rosneft within Russia as at 31 December 2023.
Note 2. Non-current assets held for sale
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 December 2023 is $151 million, with associated liabilities of
$62 million. Cumulative foreign exchange losses within reserves of
approximately $850 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 fourth quarter and full year were $3,958 million and $5,857 million
respectively, compared with net charges of $3,629 million and
$30,522 million for the same periods in 2022 and include net impairment
charges for the fourth quarter and full year of $3,922 million and
$5,701 million respectively, compared with net impairment charges of
$3,564 million and $18,341 million for the same periods in 2022.
Gas & low carbon energy
Fourth quarter and full year 2023 impairments include a net impairment charge
of $928 million and $2,212 million respectively, compared with net reversals
of $1,111 million and $588 million for the same periods in 2022 in the gas
& low carbon energy segment. 2023 includes amounts in Trinidad and
Mauritania & Senegal. The recoverable amounts of the cash generating units
within these businesses were based on value-in-use calculations. In addition,
following the announcement on 25 January that bp and Equinor will restructure
their offshore US wind investments, a further $600 million pre-tax impairment
charge has been recognised in the fourth quarter 2023 (full year 2023 $1,140
million) through equity-accounted earnings.
Oil production & operations
Fourth quarter and full year 2023 impairments include a net impairment charge
of $1,636 million and $1,814 million respectively, compared with net charges
of $3,251 million and $3,587 million for the same periods in 2022 in the oil
production & operations segment. 2023 includes amounts in the North Sea
and BPX Energy. The recoverable amounts of the cash generating units within
these businesses were based on value-in-use calculations or, in the case of
expected portfolio changes, based on fair value less costs to sell.
Customers & products
Fourth quarter and full year 2023 impairments include a net impairment charge
of $1,367 million and $1,614 million respectively, compared with net charges
of $1,380 million and $1,806 million for the same periods in 2022 in the
customers & products segment. This principally arises from changes in
economic assumptions in the products business impacting the Gelsenkirchen
refinery. The recoverable amount of this cash generating unit was based on
value-in-use calculations.
The impairment charge and the loss on sale of businesses and fixed assets for
2022 mainly relates to bp's investment in Rosneft, which has been reported in
other businesses and corporate.
Top of page 22
Note 4. Analysis of replacement cost profit (loss) before interest and tax and
reconciliation to profit (loss) before taxation
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
gas & low carbon energy 2,169 2,275 16,439 14,080 14,696
oil production & operations 1,879 3,427 1,688 11,191 19,721
customers & products (554) 1,549 771 4,230 8,869
other businesses & corporate (16) (500) 103 (903) (26,737)
3,478 6,751 19,001 28,598 16,549
Consolidation adjustment - UPII* 95 (57) 147 (14) 139
RC profit (loss) before interest and tax 3,573 6,694 19,148 28,584 16,688
Inventory holding gains (losses)*
gas & low carbon energy - - (10) 1 (8)
oil production & operations - (1) (2) - (7)
customers & products (1,497) 1,594 (1,416) (1,237) 1,366
Profit (loss) before interest and tax 2,076 8,287 17,720 27,348 18,039
Finance costs 1,038 1,039 834 3,840 2,703
Net finance expense/(income) relating to pensions and other post-retirement (61) (61) (16) (241) (69)
benefits
Profit (loss) before taxation 1,099 7,309 16,902 23,749 15,405
RC profit (loss) before interest and tax*
US 1,154 1,467 1,404 7,940 10,957
Non-US 2,419 5,227 17,744 20,644 5,731
3,573 6,694 19,148 28,584 16,688
Top of page 23
Note 5. Sales and other operating revenues
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
By segment
gas & low carbon energy 11,670 10,313 26,793 50,297 56,255
oil production & operations 6,749 6,225 6,932 24,904 33,193
customers & products 40,374 42,908 43,072 160,215 188,623
other businesses & corporate 657 672 779 2,657 2,299
59,450 60,118 77,576 238,073 280,370
Less: sales and other operating revenues between segments
gas & low carbon energy 65 367 (441) 1,808 5,913
oil production & operations 6,464 5,747 6,916 23,708 30,294
customers & products (105) 508 610 367 1,418
other businesses & corporate 885 227 1,234 2,060 1,353
7,309 6,849 8,319 27,943 38,978
External sales and other operating revenues
gas & low carbon energy 11,605 9,946 27,234 48,489 50,342
oil production & operations 285 478 16 1,196 2,899
customers & products 40,479 42,400 42,462 159,848 187,205
other businesses & corporate (228) 445 (455) 597 946
Total sales and other operating revenues 52,141 53,269 69,257 210,130 241,392
By geographical area
US 20,920 22,032 18,563 82,177 87,497
Non-US 40,808 43,382 61,593 169,032 203,832
61,728 65,414 80,156 251,209 291,329
Less: sales and other operating revenues between areas 9,587 12,145 10,899 41,079 49,937
52,141 53,269 69,257 210,130 241,392
Revenues from contracts with customers
Sales and other operating revenues include the following in relation to
revenues from contracts with customers:
Crude oil 760 496 809 2,413 6,309
Oil products 32,124 35,486 34,800 128,969 149,854
Natural gas, LNG and NGLs 7,660 6,396 11,040 29,541 41,770
Non-oil products and other revenues from contracts with customers 2,911 2,765 1,459 10,298 7,896
Revenue from contracts with customers 43,455 45,143 48,108 171,221 205,829
Other operating revenues((a)) 8,686 8,126 21,149 38,909 35,563
Total sales and other operating revenues 52,141 53,269 69,257 210,130 241,392
(a) Principally relates to commodity derivative transactions
including sales of bp own production in trading books.
( )
Top of page 24
Note 6. Depreciation, depletion and amortization
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Total depreciation, depletion and amortization by segment
gas & low carbon energy 1,290 1,543 1,373 5,680 5,008
oil production & operations 1,563 1,432 1,383 5,692 5,564
customers & products 942 915 741 3,548 2,870
other businesses & corporate 265 255 217 1,008 876
4,060 4,145 3,714 15,928 14,318
Total depreciation, depletion and amortization by geographical area
US 1,547 1,479 1,202 5,618 4,624
Non-US 2,513 2,666 2,512 10,310 9,694
4,060 4,145 3,714 15,928 14,318
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 2022 annual general meeting,
217 million ordinary shares repurchased for cancellation were settled during
the fourth quarter 2023 for a total cost of $1,350 million. A further
128 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 $746 million. This amount has been accrued at 31 December
2023. 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.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Results for the period
Profit (loss) for the period attributable to bp shareholders 371 4,858 10,803 15,239 (2,487)
Less: preference dividend - - - 1 1
Profit (loss) attributable to bp ordinary shareholders 371 4,858 10,803 15,238 (2,488)
Number of shares (thousand)((a)(b))
Basic weighted average number of shares outstanding 16,834,354 17,204,488 18,178,821 17,360,288 18,987,936
ADS equivalent((c)) 2,805,725 2,867,414 3,029,803 2,893,381 3,164,656
Weighted average number of shares outstanding used to calculate diluted 17,269,574 17,609,601 18,509,421 17,750,078 18,987,936
earnings per share
ADS equivalent((c)) 2,878,262 2,934,933 3,084,903 2,958,346 3,164,656
Shares in issue at period-end 16,824,651 17,061,004 17,974,112 16,824,651 17,974,112
ADS equivalent((c)) 2,804,108 2,843,500 2,995,685 2,804,108 2,995,685
(a) Excludes treasury shares and includes certain shares that will
be issued in the future under employee share-based payment plans.
(b) If the inclusion of potentially issuable shares would decrease
loss per share, the potentially issuable shares are excluded from the weighted
average number of shares outstanding used to calculate diluted earnings per
share. The numbers of potentially issuable shares that have been excluded from
the calculation for the full year 2022 are 242,289 thousand (ADS equivalent
40,381 thousand).
(c) One ADS is equivalent to six ordinary shares.
Top of page 25
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 March 2024 to ordinary shareholders and American
Depositary Share (ADS) holders on the register on 16 February 2024. The
ex-dividend date will be 15 February 2024. The corresponding amount in
sterling is due to be announced on 12 March 2024, calculated based on the
average of the market exchange rates over three dealing days between 6 March
2024 and 8 March 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 fourth quarter 2023 dividend. Ordinary
shareholders and ADS holders (subject to certain exceptions) will be able to
participate in a dividend reinvestment programme. Details of the fourth
quarter dividend and timetable are available at bp.com/dividends and further
details of the dividend reinvestment programmes are available at bp.com/drip.
Fourth Third Fourth
quarter quarter quarter Year Year
2023 2023 2022 2023 2022
Dividends paid per ordinary share
cents 7.270 7.270 6.006 27.760 22.932
pence 5.737 5.732 4.940 22.328 18.624
Dividends paid per ADS (cents) 43.62 43.62 36.04 166.56 137.59
Note 9. Net debt
Net debt* 31 December 30 September 31 December
$ million 2023 2023 2022
Finance debt((a)) 51,954 48,810 46,944
Fair value (asset) liability of hedges related to finance debt((b)) 1,988 3,440 3,673
53,942 52,250 50,617
Less: cash and cash equivalents 33,030 29,926 29,195
Net debt((c)) 20,912 22,324 21,422
Total equity 85,493 87,676 82,990
Gearing* 19.7% 20.3% 20.5%
(a) The fair value of finance debt at 31 December 2023 was
$48,795 million (30 September 2023 $43,387 million, 31 December 2022 $42,590
million).
(b) Derivative financial instruments entered into for the purpose of
managing interest rate and foreign currency exchange risk associated with net
debt with a fair value liability position of $73 million at 31 December 2023
(third quarter 2023 liability of $102 million and fourth quarter 2022
liability of $91 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.
As part of actively managing its debt portfolio, year to date the group has
bought back a total of $1.7 billion equivalent of finance debt ($7.4 billion
for the comparative period in 2022). Derivatives associated with non-US dollar
debt bought back were also terminated. These transactions have no significant
impact on net debt or gearing.
Note 10. Statutory accounts
The financial information shown in this publication, which was approved by the
Board of Directors on 5 February 2024, is unaudited and does not constitute
statutory financial statements. Audited financial information will be
published in BP Annual Report and Form 20-F 2023. BP Annual Report and Form
20-F 2022 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 26
Additional information
Capital expenditure*
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Capital expenditure
Organic capital expenditure* 4,673 3,597 3,861 14,998 12,470
Inorganic capital expenditure*((a)) 38 6 3,508 1,255 3,860
4,711 3,603 7,369 16,253 16,330
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Capital expenditure by segment
gas & low carbon energy 1,326 1,055 1,609 4,281 4,251
oil production & operations 1,636 1,644 1,430 6,278 5,278
customers & products((a)) 1,603 802 4,149 5,253 6,252
other businesses & corporate 146 102 181 441 549
4,711 3,603 7,369 16,253 16,330
Capital expenditure by geographical area
US 2,164 1,583 4,929 8,105 8,656
Non-US 2,547 2,020 2,440 8,148 7,674
4,711 3,603 7,369 16,253 16,330
(a) Full year 2023 includes $1.1 billion, net of adjustments, in
respect of the TravelCenters of America acquisition. Fourth quarter and full
year 2022 include $3,030 million in respect of the Archaea Energy acquisition.
Top of page 27
Adjusting items*
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
gas & low carbon energy
Gains on sale of businesses and fixed assets 3 - 33 19 45
Net impairment and losses on sale of businesses and fixed assets((a)) (937) (224) 1,111 (2,221) 588
Environmental and other provisions - - - - -
Restructuring, integration and rationalization costs - (1) 3 - 8
Fair value accounting effects((b)(c)) 1,887 1,816 12,502 8,859 (1,811)
Other((d)) (561) (572) (358) (1,299) (197)
392 1,019 13,291 5,358 (1,367)
oil production & operations
Gains on sale of businesses and fixed assets((e)) (55) 246 68 297 3,446
Net impairment and losses on sale of businesses and fixed assets((a)) (1,635) (52) (3,246) (1,819) (4,508)
Environmental and other provisions 48 99 420 54 518
Restructuring, integration and rationalization costs - - 3 (1) (11)
Fair value accounting effects - - - - -
Other (28) (2) 15 (121) 52
(1,670) 291 (2,740) (1,590) (503)
customers & products
Gains on sale of businesses and fixed assets 23 18 72 44 374
Net impairment and losses on sale of businesses and fixed assets((a)) (1,396) (242) (1,451) (1,757) (1,983)
Environmental and other provisions (86) - (65) (97) (101)
Restructuring, integration and rationalization costs - 1 12 - 18
Fair value accounting effects((c)) 144 (198) 189 (86) (309)
Other (42) (85) 112 (287) 81
(1,357) (506) (1,131) (2,183) (1,920)
other businesses & corporate
Gains on sale of businesses and fixed assets 1 - 1 1 1
Net impairment and losses on sale of businesses and fixed assets 19 (23) (1) (41) (17)
Environmental and other provisions((f)) (565) (8) (67) (604) (92)
Restructuring, integration and rationalization costs 51 (3) 3 38 19
Fair value accounting effects((c)) 579 (146) 515 630 (1,381)
Rosneft - - - - (24,033)
Gulf of Mexico oil spill (11) (19) (23) (57) (84)
Other 7 2 (19) (4) 21
81 (197) 409 (37) (25,566)
Total before interest and taxation (2,554) 607 9,829 1,548 (29,356)
Finance costs((g)) (86) (96) (169) (405) (425)
Total before taxation (2,640) 511 9,660 1,143 (29,781)
Taxation on adjusting items((h)) 1,175 (158) (1,542) 972 456
Taxation - tax rate change effect of UK energy profits levy((i)) - - (1,056) 232 (1,834)
Total after taxation for period((j)) (1,465) 353 7,062 2,347 (31,159)
(a) See Note 3 for further information.
(b) 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.
(c) For further information, including the nature of fair value
accounting effects reported in each segment, see pages 3, 6 and 35.
(d) Fourth quarter and full year 2023 include $600 million and $1,140
million respectively of impairment charges recognized through equity-accounted
earnings relating to our US offshore wind projects.
(e) Full year 2022 includes a non-taxable gain of $1,951 million
arising from the contribution of bp's Angolan business to Azule Energy; gains
of $904 million related to the deemed disposal of 12% of the group's interest
in Aker BP, an associate of bp, following completion of Aker BP's acquisition
of Lundin Energy; and $361 million in relation to the disposal of the group's
interest in the Rumaila field in Iraq to Basra Energy Company, an associate of
bp.
(f) Fourth quarter and full year 2023 include charges related to
the control, abatement, clean-up or elimination of environmental pollution and
legal settlements.
(g) Includes the unwinding of discounting effects relating to Gulf
of Mexico oil spill payables, the income statement impact associated with
the buyback of finance debt (see Note 9 for further information) and temporary
valuation differences associated with the group's interest rate and foreign
currency exchange risk management of finance debt.
Top of page 28
(h) 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.
(i) Full year 2023 includes a revision to the deferred tax impact
of the introduction of the UK Energy Profits Levy (EPL) on temporary
differences existing at 31 December 2022 that are expected to unwind over the
period 1 January 2023 to 31 March 2028. Fourth quarter and full year 2022
includes the deferred tax impact of the introduction of the EPL. The EPL
increases the headline rate of tax to 75% and applies to taxable profits from
bp's North Sea business made from 1 January 2023 until 31 March 2028.
(j) Fourth quarter and full year 2023 include a $25-million charge
and a $146-million charge respectively for the EU Solidarity Contribution.
Fourth quarter and full year 2022 include a $505-million charge.
Net debt including leases
Net debt including leases* 31 December 30 September 31 December
$ million 2023 2023 2022
Net debt 20,912 22,324 21,422
Lease liabilities 11,121 10,879 8,549
Net partner (receivable) payable for leases entered into on behalf of joint (131) (124) 19
operations
Net debt including leases 31,902 33,079 29,990
Total equity 85,493 87,676 82,990
Gearing including leases* 27.2% 27.4% 26.5%
Gulf of Mexico oil spill
31 December 31 December
$ million 2023 2022
Gulf of Mexico oil spill payables and provisions (8,735) (9,566)
Of which - current (1,133) (1,216)
Deferred tax asset 1,320 1,444
During the second quarter pre-tax payments of $1,204 million were made
relating to the 2016 consent decree and settlement agreement with the United
States and the five Gulf coast states. 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 2022 - Financial statements -
Notes 7, 22, 23, 29, and 33.
Working capital* reconciliation
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Movements in inventories and other current and non-current assets and 1,942 (783) (6,847) (3,338) (6,270)
liabilities as per condensed group cash flow statement((a))
Adjusted for inventory holding gains (losses)* (Note 4) (1,497) 1,593 (1,428) (1,236) 1,351
Adjusted for fair value accounting effects relating to subsidiaries 2,610 1,443 13,288 9,348 (3,273)
Other adjusting items((b)) (966) (300) (815) (2,006) 1,279
Working capital release (build) after adjusting for net inventory gains 2,089 1,953 4,198 2,768 (6,913)
(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 $1,222 million in the full
year 2023 (fourth quarter 2023 nil). For the full year 2022 the amount was an
outflow of $1,286 million (fourth quarter 2022 $1 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 29
Surplus cash flow* reconciliation
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Sources:
Net cash provided by operating activities 9,377 8,747 13,571 32,039 40,932
Cash provided from investing activities 316 150 621 1,381 2,617
Other((a)) (78) 503 (94) 324 360
Cash inflow 9,615 9,400 14,098 33,744 43,909
Uses:
Lease liability payments (722) (663) (513) (2,560) (1,961)
Payments on perpetual hybrid bonds (264) (258) (219) (1,008) (708)
Dividends paid - BP shareholders (1,224) (1,249) (1,088) (4,809) (4,358)
- non-controlling interests (77) (191) (100) (403) (294)
Total capital expenditure* (4,711) (3,603) (7,369) (16,253) (16,330)
Net repurchase of shares relating to employee share schemes - (225) - (675) (500)
Payments relating to transactions involving non-controlling interests (7) - (1) (187) (9)
Currency translation differences relating to cash and cash equivalents 145 (104) 177 27 (684)
Cash outflow (6,860) (6,293) (9,113) (25,868) (24,844)
Surplus cash flow 2,755 3,107 4,985 7,876 19,065
(a) Other includes adjustments for net operating cash received or
paid which is held on behalf of third parties for medium-term deferred payment
and prior periods have been adjusted accordingly. Third quarter and full year
2023 include $517 million of proceeds from the sale of a 49% interest in a
controlled affiliate holding certain midstream assets onshore US. Other
proceeds for the year 2022 include $573 million of proceeds from the disposal
of a loan note related to the Alaska divestment. The cash was received in the
fourth quarter 2021, was reported as a financing cash flow and was not
included in other proceeds at the time due to potential recourse from the
counterparty. The proceeds were recognized as the potential recourse reduces
and by end second quarter 2022 all were recognized.
Top of page 30
Adjusted earnings before interest, taxation, depreciation and amortization
(adjusted EBITDA)*
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
Profit (loss) for the period 436 5,069 11,161 15,880 (1,357)
Finance costs 1,038 1,039 834 3,840 2,703
Net finance (income) expense relating to pensions and other post-retirement (61) (61) (16) (241) (69)
benefits
Taxation 663 2,240 5,741 7,869 16,762
Profit before interest and tax 2,076 8,287 17,720 27,348 18,039
Inventory holding (gains) losses*, before tax 1,497 (1,593) 1,428 1,236 (1,351)
RC profit (loss) before interest and tax 3,573 6,694 19,148 28,584 16,688
Net (favourable) adverse impact of adjusting items*, before interest and tax 2,554 (607) (9,829) (1,548) 29,356
Underlying RC profit before interest and tax 6,127 6,087 9,319 27,036 46,044
Add back:
Depreciation, depletion and amortization 4,060 4,145 3,714 15,928 14,318
Exploration expenditure written off 381 74 67 746 385
Adjusted EBITDA 10,568 10,306 13,100 43,710 60,747
Adjusted earnings before interest, depreciation and amortization (adjusted
EBIDA)*
Year Year
$ million 2023 2022
Profit (loss) for the period 15,880 (1,357)
Finance costs 3,840 2,703
Net finance (income) expense relating to pensions and other post-retirement (241) (69)
benefits
Taxation 7,869 16,762
Profit before interest and tax 27,348 18,039
Inventory holding (gains) losses*, before tax 1,236 (1,351)
RC profit before interest and tax 28,584 16,688
Net (favourable) adverse impact of adjusting items*, before interest and tax (1,548) 29,356
Underlying RC profit before interest and tax 27,036 46,044
Taxation on an underlying RC basis (9,365) (15,052)
17,671 30,992
Add back:
Depreciation, depletion and amortization 15,928 14,318
Exploration expenditure written off 746 385
Adjusted EBIDA 34,345 45,695
Top of page 31
Return on average capital employed (ROACE)*
Year Year
$ million 2023 2022
Profit (loss) for the year attributable to bp shareholders 15,239 (2,487)
Inventory holding (gains) losses*, net of tax 944 (1,019)
Net (favourable) adverse impact of adjusting items*, after taxation (2,347) 31,159
Underlying replacement cost (RC) profit* 13,836 27,653
Interest expense, net of tax((a)) 1,908 1,336
Non-controlling interests 641 1,130
Adjusted underlying RC profit 16,385 30,119
Total equity 85,493 82,990
Finance debt 51,954 46,944
Capital employed 137,447 129,934
Less: Goodwill 12,472 11,960
Cash and cash equivalents 33,030 29,195
91,945 88,779
Average capital employed (excluding goodwill and cash and cash equivalents) 90,362 98,670
ROACE 18.1% 30.5%
(a) Finance costs, as reported in the Group income statement, were
$3,840 million (2022 $2,703 million). Interest expense which totals $2,569
million (2022 $1,632 million) on a pre-tax basis is finance costs excluding
lease interest of $346 million (2022 $257 million), unwinding of discount on
provisions and other payables of $912 million (2022 $808 million) and other
adjusting items related to finance costs of $13 million (2022 $6 million).
Interest expense included above is calculated on a post-tax basis.
Reconciliation of customers & products RC profit before interest and tax
to underlying RC profit before interest and tax* to adjusted EBITDA* by
business
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2023 2023 2022 2023 2022
RC profit before interest and tax for customers & products (554) 1,549 771 4,230 8,869
Less: Adjusting items* gains (charges) (1,357) (506) (1,131) (2,183) (1,920)
Underlying RC profit before interest and tax for customers & products 803 2,055 1,902 6,413 10,789
By business:
customers - convenience & mobility 882 670 628 2,644 2,966
Castrol - included in customers 213 185 70 730 700
products - refining & trading (79) 1,385 1,274 3,769 7,823
Add back: Depreciation, depletion and amortization 942 915 741 3,548 2,870
By business:
customers - convenience & mobility 466 481 334 1,736 1,286
Castrol - included in customers 43 43 40 167 153
products - refining & trading 476 434 407 1,812 1,584
Adjusted EBITDA for customers & products 1,745 2,970 2,643 9,961 13,659
By business:
customers - convenience & mobility 1,348 1,151 962 4,380 4,252
Castrol - included in customers 256 228 110 897 853
products - refining & trading 397 1,819 1,681 5,581 9,407
Top of page 32
Reconciliation of customers & products RC profit before interest and tax
to convenience gross margin*
Year Year
$ million 2023 2022
RC profit (loss) before interest and tax for customers & products 4,230 8,869
Subtract RC profit (loss) before interest and tax for refining & trading 1,943 6,008
RC profit before interest and tax for convenience & mobility 2,287 2,861
Net (favourable) adverse impact of adjusting items for convenience & 357 105
mobility
Underlying RC profit before interest and tax for convenience & mobility 2,644 2,966
Subtract underlying RC profit before interest and tax for Castrol 730 700
Add back convenience & mobility (excluding Castrol) depreciation, 1,569 1,133
depletion and amortization
Subtract convenience & mobility (excluding Castrol) production and 1,363 1,655
manufacturing, distribution and administration expenses and adjusted for
retail fuels, EV charging, aviation, B2B and midstream gross margin((a))
Subtract earnings from equity-accounted entities in convenience & mobility 457 225
(excluding Castrol)
Convenience gross margin((b)) 1,663 1,519
Foreign exchange effects n/a 7
Convenience gross margin at constant foreign exchange((c)) 1,663 1,526
Convenience gross margin growth* (%) 9%
(a) Adjusted for TravelCenters of America and other portfolio
changes.
(b) Excluding TravelCenters of America and adjusted for other
portfolio changes.
(c) Values are at end 2023 foreign exchange rates. This requires a
calculation of the comparative convenience gross margin ($ million) at current
period foreign exchange rates (constant foreign exchange) to compare the
current period value with the restated comparative period value.
Top of page 33
Realizations* and marker prices
Fourth Third Fourth
quarter quarter quarter Year Year
2023 2023 2022 2023 2022
Average realizations((a))
Liquids* ($/bbl)
US 67.66 63.95 71.21 63.81 78.40
Europe 81.02 90.76 86.62 80.70 99.90
Rest of World 87.27 78.34 89.38 81.78 97.03
BP Average 76.50 71.85 80.44 72.69 89.65
Natural gas ($/mcf)
US 2.04 2.24 4.84 2.08 5.61
Europe 15.12 11.22 35.56 16.71 33.45
Rest of World 6.18 5.38 9.40 6.13 8.91
BP Average 5.45 4.88 9.59 5.60 9.29
Total hydrocarbons* ($/boe)
US 45.68 45.39 55.67 44.29 61.21
Europe 83.21 80.61 130.61 86.36 133.48
Rest of World 50.74 45.61 64.73 49.23 67.49
BP Average 50.90 47.28 66.18 49.84 69.95
Average oil marker prices ($/bbl)
Brent 84.34 86.75 88.87 82.64 101.32
West Texas Intermediate 78.60 82.54 82.82 77.67 94.58
Western Canadian Select 55.06 65.42 53.52 59.34 73.28
Alaska North Slope 84.23 87.95 87.89 82.36 98.76
Mars 78.35 82.99 78.81 77.19 91.74
Urals (NWE - cif) 72.48 73.62 61.04 61.79 74.16
Average natural gas marker prices
Henry Hub gas price((b)) ($/mmBtu) 2.88 2.54 6.26 2.74 6.65
UK Gas - National Balancing Point (p/therm) 98.68 82.04 166.54 98.93 203.81
(a) Based on sales of consolidated subsidiaries only - this excludes
equity-accounted entities.
(b) Henry Hub First of Month Index.
Exchange rates
Fourth Third Fourth
quarter quarter quarter Year Year
2023 2023 2022 2023 2022
$/£ average rate for the period 1.24 1.27 1.17 1.24 1.23
$/£ period-end rate 1.28 1.22 1.21 1.28 1.21
$/€ average rate for the period 1.07 1.09 1.02 1.08 1.05
$/€ period-end rate 1.11 1.06 1.07 1.11 1.07
$/AUD average rate for the period 0.65 0.65 0.66 0.66 0.69
$/AUD period-end rate 0.69 0.64 0.68 0.69 0.68
Top of page 34
Legal proceedings
For a full discussion of the group's material legal proceedings, see pages
258-259 of bp Annual Report and Form 20-F 2022 and page 35 of BP p.l.c. Group
results second quarter and half-year 2023 results announcement. The following
discussion sets out the material developments in the group's material legal
proceedings in the period following the second quarter and half-year 2023
results announcement.
Louisiana Coastal restoration
Six coastal parishes and the State of Louisiana have filed over 40 separate
lawsuits in state courts in Louisiana against various oil and gas companies
seeking damages for coastal erosion. bp entities were named defendants in 17
of these cases. The lawsuits allege that the defendants' historical operations
in oil and gas fields within the Louisiana onshore coastal zone failed to
comply with state permits and/or were conducted without the required coastal
use permits. The scope and scale of plaintiffs' damages demands are
significant and unprecedented, including substantial remediation costs and the
claimed costs for restoring coastal wetlands allegedly impacted by oil and gas
field operations.
Defendants removed all of these lawsuits to federal court and the removals
were contested by plaintiffs, eventually resulting in a decision from the US
Fifth Circuit Court of Appeals rejecting defendants' "federal officer"
jurisdiction removal grounds in one of two lead cases - Plaquemines Parish v.
Riverwood, et al. Defendants' petition for writ of certiorari to the US
Supreme Court seeking review of the US Fifth Circuit's Riverwood decision was
denied in early 2023. There is a small subset of the removed cases in which
the defendants continue to contest jurisdiction and await a final ruling from
the Fifth Circuit on a related "federal officer" removal jurisdiction theory.
Following remand, the state court in the other lead case of Cameron Parish v.
Auster et al., in which bp was the principal defendant, had established a
November 2023 trial date. Before trial commenced during the fourth quarter
2023, bp entered into a settlement agreement and release with the plaintiffs
in respect of all claims arising within Cameron Parish. The terms of the
settlement agreement and release are confidential and bp does not expect those
terms to have a significant effect on the company's financial position or
profitability.
In addition, four private landowners have filed separate claims in the state
courts in Jefferson and Plaquemines Parishes of Louisiana for restoration
damages related to alleged impacts to their marshlands associated with
historic oil field operations. bp entities are defendants in two of these
private landowner cases.
All of the other remanded cases remain at early stages in the litigation.
While it is not possible to predict the outcomes of these novel legal actions,
bp believes that it has valid defences, and it intends to defend such actions
vigorously.
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 EBIDA is a non-IFRS measure and 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 taxation on an underlying RC basis, and adding back
depreciation, depletion and amortization (pre-tax) and exploration expenditure
written-off (net of adjusting items, pre-tax). bp believes that adjusted EBIDA
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. The nearest equivalent measure on an IFRS basis is profit or loss for
the period. A reconciliation of profit or loss for the period to adjusted
EBIDA is provided on page 30.
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 31 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 30 for the
group.
Top of page 35
Glossary (continued)
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,
financial impacts relating to Rosneft for the 2022 financial reporting period
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 27.
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 $3/mmBtu in 2021 real terms.
Consolidation adjustment - UPII is unrealized profit in inventory arising on
inter-segment transactions.
Convenience gross margin is a non-IFRS measure. It is calculated as RC profit
before interest and tax for the customers & products segment, excluding RC
profit before interest and tax for the refining & trading business (a
non-IFRS measure), and adjusting items* (as defined above) for the convenience
& mobility business to derive underlying RC profit before interest and tax
for the convenience & mobility business; subtracting underlying RC profit
before interest and tax for the Castrol business; adding back depreciation,
depletion and amortization, production and manufacturing, distribution and
administration expenses for convenience & mobility (excluding Castrol);
subtracting earnings from equity-accounted entities in the convenience &
mobility business (excluding Castrol) and gross margin for the retail fuels,
EV charging, aviation, B2B and midstream businesses. bp believes it is helpful
because this measure may help investors to understand and evaluate, in the
same way as management, our progress against our strategic objectives of
convenience growth. The nearest IFRS measure is RC profit before interest and
tax for the customers & products segment. A reconciliation of RC profit
before interest and tax for the customers & products segment to
convenience gross margin is provided on page 32.
Convenience gross margin growth - convenience gross margin growth at constant
foreign exchange is a non-IFRS measure. This metric requires a calculation of
the comparative convenience gross margin ($ million) at current period foreign
exchange rates (constant foreign exchange) and compares the current period
value with the restated comparative period value, which results in the growth
% at constant foreign exchange rates. bp believes the convenience gross margin
growth at constant foreign exchange are useful measures because these measures
may help investors to understand and evaluate, in the same way as management,
our progress against our strategic objectives of redefining convenience. The
nearest IFRS measure to convenience gross margin is RC profit before interest
and tax for the customer & products segment.
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). If asset is subsequently sold bp will
continue to record capacity as developed to FID. If bp equity share increases
developed capacity to FID will increase proportionately to share increase for
any assets where bp held equity at the point of 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.
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.
Top of page 36
Glossary (continued)
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.
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
25.
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.
Top of page 37
Glossary (continued)
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 28.
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 26.
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:
a. 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
b. 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.
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 26.
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.
Top of page 38
Glossary (continued)
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.
Reserves replacement ratio - the extent to which the year's production has
been replaced by proved reserves added to our reserve base. The ratio is
expressed in oil-equivalent terms and includes changes resulting from
discoveries, improved recovery and extensions and revisions to previous
estimates, but excludes changes resulting from acquisitions and disposals.
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.
Return on average capital employed (ROACE) is a non-IFRS measure and is
defined as underlying replacement cost profit, which is defined as profit or
loss attributable to bp shareholders adjusted for inventory holding gains and
losses, adjusting items and related taxation on inventory holding gains and
losses and adjusting items total taxation, after adding back non-controlling
interest and interest expense net of tax, divided by the average of the
beginning and ending balances of total equity plus finance debt, excluding
cash and cash equivalents and goodwill as presented on the group balance sheet
over the periods presented. Interest expense before tax is finance costs as
presented on the group income statement, excluding lease interest, the
unwinding of the discount on provisions and other payables and other adjusting
items reported in finance costs. bp believes it is helpful to disclose the
ROACE because this measure gives an indication of the company's capital
efficiency. The nearest IFRS measures of the numerator and denominator are
profit or loss for the period attributable to bp shareholders and total equity
respectively. The reconciliation of the numerator and denominator is provided
on page 31.
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 39
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.
For the full year of 2022, the sources of cash includes other proceeds related
to the proceeds from the disposal of a loan note related to the Alaska
divestment. The cash was received in the fourth quarter 2021, was reported as
a financing cash flow and was not included in other proceeds at the time due
to potential recourse from the counterparty. The proceeds are being recognized
as the potential recourse reduces. See page 29 for the components of our
sources of cash and uses of cash.
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 engine(s) - means, as applicable, one or more of bp's five
transition growth engines which are bioenergy, convenience, EV charging,
hydrogen and renewables and power. Bioenergy, convenience and EV charging are
reported within the customers & products segment, and hydrogen and
renewables and power are reported within the gas & low carbon energy
segment.
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 - 2023 underlying production, when compared with 2022,
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 38) after excluding net adjusting items and related taxation. See page 27
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 40
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 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 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 and Thorntons
Top of page 41
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; expectations regarding
turnaround and maintenance activity; expectations regarding financial
performance, results of operations and cash flows; expectations regarding
future project start-ups; 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 with respect to the total depreciation, depletion and
amortization and the other businesses & corporate underlying annual charge
for 2024; plans and expectations regarding LNG sales; plans and expectations
regarding investments, collaborations and partnerships in electric vehicle
(EV) charging infrastructure and generative artificial intelligence; plans and
expectations related to bp's transition growth engines, including expected
capital expenditures; expectations relating to bp's development of its wind
pipeline, including pursuit of US offshore wind opportunities; 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 underlying effective tax rate for
2024, exposure to Pillar Two income taxes and the tax impacts of UK
regulations, including the UK Energy Profits Levy and the reduction in the
authorized surplus payments charge applicable to defined benefit pension
schemes; expectations regarding the timing and amount of future payments
relating to the Gulf of Mexico oil spill; plans and expectations regarding
capital expenditure for 2024; expectations regarding greenhouse gas emissions;
expectations regarding legal proceedings, including those related to the
Louisiana coastal restoration and climate change; plans and expectations
regarding bp-operated projects and ventures, and its projects, joint ventures,
partnerships and agreements with commercial entities and other third party
partners, including expectations related to the restructuring of the Atlantic
LNG joint venture.
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 competent
authorities or any other relevant persons may impact bp's ability to sell its
interests in Rosneft, or the price for which it 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 "Principal risks and uncertainties" in bp's Report on Form 6-K regarding
results for the six-month period ended 30 June 2023 as filed with the US
Securities and Exchange Commission (the "SEC") as well as those factors
discussed under "Risk factors" in bp's Annual Report and Form 20-F for fiscal
year 2022 as filed with the SEC.
This announcement contains inside information. The person responsible for
arranging the release of this announcement on behalf of BP p.l.c. is Ben
Mathews, Company Secretary.
Top of page 42
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
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR BCGDDLXGDGSURecent news on BP
See all newsREG - BP PLC - Transaction in Own Shares
AnnouncementREG - BP PLC - Total Voting Rights
AnnouncementREG - BP PLC - Transaction in Own Shares
AnnouncementREG - BP PLC - Transaction in Own Shares
AnnouncementREG - BP PLC - Transaction in Own Shares
Announcement