BP p.l.c. (BP) on Q4 2021 Results - Earnings Call Transcript

Craig Marshall: Well good morning, everyone. I'm Craig Marshall, BP's Head of Investor Relations and thanks for joining us today. I've got Bernard, Murray and obviously myself here today. We've got a slightly extended presentation. In a moment I'll hand over to Bernard to introduce and cover the full-year highlights. And then to Murray he'll take you through our fourth quarter results. Then we'll turn to strategy. And Bernard and Murray will update you on the progress and financial frame. And then following that, we'll make sure we've got plenty of time for the questions, which I'm sure you'll all have. Before we began, as usual, I'd like to draw your attention to the cautionary statement, which is included in the presentation slide deck. During today's presentation, we will make forward-looking statements, including those that refer to our estimates, plans, targets, aims and expectations, actual results and outcomes could differ materially due to these factors. And those noted in our cautionary statement, as well as in our U.K. and SEC filings. Please refer to those filings which are available on our website for more details. On that note, over to you, Bernard. Bernard Looney: Great. Well, thanks, Craig. And good morning to everyone joining us on the phone and on the web. And of course, I'm also delighted that we're able to host a small audience here in-person in St. James this morning. And that includes my leadership team, with the exception of Anja, who will join us on the 1st of March, which we're all very excited about and have to say. We do have Joaquin here, Joaquin stand up for a moment, Joaquin runs our Gas and Low Carbon business in the meantime, until Anja arise. Also want to introduce and is doing a brilliant job by the way. I wanted to introduce two new members of the team. Leigh-Ann Russell, who takes over from David Eyton, who is leaving the company after 40 years, and Dominic and Emeka, where is Emeka. Emeka, who takes over from Dominic Emery, who's also leaving the company after close to 40 years. And all of those moves take effect on March the 1st. And for those of you who are on the web, you can see the team on the slide here. Murray, I think that's a very smiley photograph of you, that's full on smile, that one. The last time we held an in-person event was two years ago. And actually, I was just remarking this morning, this is actually my first time doing a results call in-person in my new role. So it's amazing how time has passed. And it's hopefully a sign of progress and a sign of confidence in the future. And I promise it won't take as long as we did at BP week. So we will come back to that later. Now in the two years since laying out our ambition, our new ambition, we've been through obviously a period of significant change. And at the same time, the world around us has changed as well. COVID, volatility in the energy markets, and of course, the accelerating energy transition. And with this backdrop, it felt like it would be a good time to pause just for a moment and reflect on the journey so far. And the BP that we see today is a company that has successfully we would argue completed a period of significant change, one that sees clear and compelling growth opportunities presented by the transition, and one that is 100% focused on delivering the plan that we have laid out and what you know by now we call performing, while transforming. Before we get started, we love a video or two. We're going to show a short video just to share some of the highlights with you. So over to the video. So I think it's pretty cool in my language to see what we've delivered. And it's the team around BP that has delivered it. And to think that that was done virtually most of it. And during a pandemic, is I think it's extraordinary. And I hope it gives you a little confidence, some confidence in our ability to get stuff done. So let's get into that in a bit more detail. Starting with the full-year results for 2021. We delivered underlying replacement cost profit of $12.8 billion. We delivered operating cash flow of $23.6 billion, including a working capital build of $5.3 billion, and we delivered return on average capital employed of 13.3% the highest level for a decade. In addition, we delivered our target of $2.5 billion a cash cost savings on a run rate basis relative to 2019 ahead of schedule six months ahead. We reduced our net debt by over $8 billion seven quarters in a row of net debt reduction. We raised our dividend for ordinary share in the second quarter by 4%, including the 1.5 billion share buyback that we've announced today. We will have delivered share buybacks from 2021 surplus cash flow, totaling $4.15 billion. Next to our progress in transforming BP. Since we announced the strategy to become an integrated energy company, we've been building momentum across each of our three strategic focus areas. In resilient hydrocarbons, we started up 11 major projects since the start of 2020, thereby delivering our 2016 target some of you will remember us talking about this with Gordon in Baku actually in 2016. Our target then was to bring on 900,000 barrels a day of new high margin production. In convenience and mobility, we've grown margin share from convenience and electrification by 4% since 2019, demonstrating the strength of our customer offers and increase the number of EV charge points to over 13,000 across the U.K., Europe, India and China. And finally, in low carbon energy, we have entered offshore wind with a pipeline of 5.2 gigawatts net to BP today. Following the recent Scotwind lease option award. We built a renewables pipeline, which at the end of 2021, stood at 23 gigawatts net, a four-fold increase since the end of '19. And we've made exciting progress in hydrogen, having grown a hopper of between 0.7 and 1.3 mtpa. Progress like this, as well as the pace at which the world is moving, leads us to believe that we can accelerate our plans in some areas, and reinforces our confidence in delivering our 2025 targets. But before we get into the detail around that, let's bring in Murray, who is chomping at the bit over there to go through our fourth quarter results. Murray over to you. Murray Auchincloss: Great, thanks. Thanks Bernard and good morning everyone. Nice to see all of you in-person finally. As usual, I'll start with the macro-environment. During the fourth quarter, Brent rose by 8% to average $80 per barrel, its highest level in seven years. To-date in 2022, Brent has moved above $90 with supply disruptions, easing concerns around Omicron and the expectation of continued declines in inventories. Looking ahead, we expect supply and demand to move back towards balance through 2022. However, with lower levels of spare capacity, price volatility is likely. Turning to gas, during the quarter seasonal demand saw Henry Hub rise by 10% to an average of $4.70. International prices rose sharply with NBP and JKM around 90% higher than in the third quarter. This was caused by low inventory levels and concerns about the availability of supply during the winter months. With ongoing geopolitical uncertainty and low storage levels, we see the potential for continued price volatility. Turning to refining, industry margins remain broadly flat compared to the third quarter and we expect them to remain at similar levels during the first quarter. Local margins may and are being impacted by lockdowns. Moving to our results. In the fourth quarter we reported an underlying replacement cost profit of $4.1 billion, compared to $3.3 billion last quarter. Compared to the third quarter, and gas and low carbon energy the result benefited from higher gas realizations and higher production due to major project ramp up. After an exceptional first nine months, it was an average quarter for gas marketing and trading. In oil production and operations, the result reflects higher liquids and gas realizations. This includes the benefit of very strong NBP prices. The result also reflects higher production including a recovery in the Gulf of Mexico from the impact of Hurricane Ida. And in customer and products, the products result was impacted by significantly lower oil trading results and higher energy costs. The customers result reflects resilient retail and convenience performance despite seasonality and COVID-19 impacts. In Castrol volumes were higher, although results continued to be impacted by higher base oil prices and additive shortages. For the fourth quarter BP has announced a dividend of $5.46 per ordinary share payable in the first quarter. Turning to cash flow. Operating cash flow was $6.1 billion in the fourth quarter. This included a working capital build of $2.2 billion. Capital expenditure was $3.6 billion for the fourth quarter, and disposal proceeds were $2.3 billion. This includes $1.5 billion related to the sale of our Alaska business to heel court in 2020. With proceeds of $7.6 billion received during 2021. We have received $12.8 billion of proceeds against a target of $25 billion by 2025. Strong cash flow generation enabled us to deliver surplus cash flow of $3 billion in the quarter and $6.3 billion for the full-year. This underpinned a further reduction in net debt and supports our continued share buybacks. During the quarter net debt fell for the seventh consecutive quarter to reach $30.6 billion at year end, a share buyback of $1.752 billion was executed. This included the $1.25 billion announced with third quarter results and $475 million to complete the program announced with second quarter results. And we intend to execute a further $1.5 billion share buyback prior to announcing first quarter 2022 results. Now let me summarize the progress made during 2021 against our frame. We have a clear set of priorities. First, a resilient dividend. We announced a 4% increase in the dividend per share with second quarter 2021 results. Second, a strong investment-grade credit rating. During 2021, we achieved our $35 billion net debt target around a year earlier than expected and reduced net debt by over $8 billion. Third, disciplined investment allocation. 2021 capital expenditure was $12.8 billion, including in organics in line with guidance of around $13 billion. And fourth, share buybacks. For the year, we announced $4.15 billion of buybacks from surplus cash flow. That takes us to total amount shareholder distributions of $8.4 billion for the year around the level of the annual dividend distributions in 2019. I'll update you on our 2022 plans shortly. But for now, back to Bernard. Bernard Looney: Okay. Thanks, Murray. I'm going to speak for about half an hour to go through a strategy update. So just getting you situated in your seats. Before handing back to Murray. And he'll cover the financial frame for about five, six minutes. And then I'll close and then we'll move to Q&A. So let me turn to our strategic progress. And we now have two years, believe it or not under our belt. And we've made progress on our 2025 targets. And we are increasingly confident not just in those targets, but in the opportunities presented by the energy transition. And before we get into the detail, let me remind you of that strategy, which I would add remains unchanged. It is importantly, a three part strategy. Part one is resilient hydrocarbons. Part two is convenience and mobility. Part three is low carbon energy. Embedded across these is our sustainability framework, which sets out our aims for getting to net zero. Improving people's lives and caring for our planet. And binding it all together is integration, harnessing our collective capabilities as the energy system transitions to help more and more customers get the clean, reliable and affordable energy that they want. And in doing so, create value for our shareholders. And we sum all of this up as BP transforming from an international oil company to an integrated energy company. And I would say, I think we have already made significant progress on this transformation. It's important to set this in context. So if we look back year one, we set out a new direction, a new purpose, a new ambition, a new strategy, a new financial framework, a new sustainability framework, and a new leadership team. That's done. That is now done. Year two 2021 was about change, and the largest restructuring in our company's history. So that we are organized to deliver that is now done, completed. With all of this now behind us, the decks are clear. Year three, and every year from now on is focused on one thing, and one thing only, delivery, the safe, efficient and disciplined delivery of the plans that we have laid out. And maybe our biggest takeaway from our experience thus far, that as we transform, we must perform. Our shareholders expect and deserve nothing less. And I hope our results show that we are doing just that. Now, I'll be emphasizing six points today. And that was point number one, the direction is set, the change is done. It's behind us. And we're focused on one thing, and that's delivery. And we will cover these points throughout the presentation. But let me briefly summarize them. Point number two is that we have confidence in delivering our 2025 financial targets. This is underpinned by resilient hydrocarbons, where we expect to sustain EBITDA through '25 at around $33 billion. Convenience and mobility where we expect ratable EBITDA growth to around $7 billion. And our discipline financial frame, including annual capital expenditure unchanged at $14 billion to $16 billion with at least 40% to be invested in the transition by 2025. A commitment to return at least 60% surplus cash through share buybacks subject to maintaining a strong investment-grade credit rating and a resilient and growing dividend. And as a result, we remain on track to deliver what we said. A 7% to 9% EBITDA per share CAGR. 12% to 14% ROACE and at least 20% of capital employed in the transition. Additionally, we aim to continue to grow EBITDA to 2030 and we plan to do this by sustaining EBITDA from resilient hydrocarbons, continuing ratable growth in convenience and mobility and aiming to deliver $2 billion to $3 billion contribution from low carbon energy. So turning next to point three. We aim to sustain EBITDA from our hydrocarbons business through 2030. We will do this by high grading our oil and gas portfolio growing the underlying contribution from refining and deepening our investment in bio energy. Point number four. We aim to deliver between $ 9 billion and $10 billion of EBITDA from transition growth businesses by 2030. That's up from about a billion dollars today. And that will be driven by five transition growth engines. Bioenergy, convenience, EV charging, renewables and hydrogen. And you can think of them as non-fossil and in high growth sectors. In each of these areas, and this is what I am increasingly excited about. But in each of these areas, our experience, our skills, our networks, our brand, our assets, gives us real competitive advantage. Capital expenditure invested in the transition is as I said expected to be over 40% of total spend by 2025, rising to around 50% by 2030. And this leads to capital employed in transition rising from over 20% at 2025 to around 40% by 2030. And then on the chart, you can see the returns that we expect from each of the growth engines. All of this within our existing $14 billion to $16 billion frame. Point number five, we're now aiming for net zero emissions across operations, productions and sales by 2050 or sooner. Sales will now include traded and marketed energy products. Finally, point number six, we will remain focused on the disciplined application of our financial frame, providing compelling shareholder distributions while continuing to strengthen the balance sheet and remaining disciplined in our capital expenditure. The framework is unchanged, and Murray will come back to it later. So with these six points as context, let me turn then to progress across our strategic themes and starting with number one, which is resilient hydrocarbons. Here, we plan to high grade our portfolio, lower our emissions and drive higher returns. We will do this through three focus areas oil and gas, refining and bioenergy. And before I turn to each, let me take you through some of the strategic highlights to date. As I said, since the start of 2020, we've delivered 11 major projects, bringing the total to 35 since 2016 executed on average, on schedule and around 15% under budget from that target, we set back in Baku, and there is more to come with four startups expected during 2022. Through 2021, we have driven competitiveness through portfolio decisions. We've maintained reliability and availability in the face of what I think Gordon would describe a challenging operating environment. We've reduced the non-productive time in our drilling and completion operations by 20% over that time period, and we have embedded our single operating model with around 7,500 people now deployed in agile structures fundamentally changing how we work. For example, this single operating model helped with our approach to planned turnarounds. In 2021, the first year that these were managed globally across oil, gas and refining, we deliver 26 planned turnarounds, on average under budget and with a production impact lower than planned and we're in action on emissions, for example, further reducing our Permian methane flaring intensity to a record low of around 0.6% in December, that's down 95% from when we acquired the assets in 2018. We expect to sustain EBITDA from resilient hydrocarbons at around $33 billion through 2025 and thereafter, we now aim to maintain EBITDA in a range of $30 billion to $35 billion until 2030. Now with our nominal -- with our 2030 nominal oil price assumption broadly flat versus 2021 $71, this is driven by three factors. We aim to grow underlying EBITDA from oil and gas, we aim to grow the underlying contribution from refining, and we aim to deepen our investment in bio energy. So let me take each in turn. In oil and gas, we have continued to have a deep and high quality resource base of 30 billion barrels of oil equivalent and that allows us to choose the best investments, we have a disciplined capital frame for oil and gas of around $7.5 billion per annum through to the middle of the decade. In allocating this capital, we look for paybacks of less than 10 years for oil, 15 years for gas, so that we can select the highest quality options as we focus on cycle time. And we are confident in the value and the resilience of this investment plans for the following reasons. It leverages existing assets around 70% of the spend will be on existing hubs typically lower risk and higher quality, higher returns. It holds managed based decline in a range of 3% to 5%. It is capital efficient, with an average point forward development costs of around $9 a barrel compared to a 2021 unit DD&A of $15 a barrel. We aim to manage our R/P ratio down to around eight years by 2030 and it is focused with 80% of the capital spent in just six regions. This investment plan holds underlying production broadly flat through 2030. Now the depth of our resource base provides flexibility by 2030, we aim to high grade over the next nine years high grade around 700,000 barrels a day of oil equivalent per day relative to 2021 and the margin on these barrels is lower at an average actually less than $20 per barrel. And this has expected us to allow realized additional value through the divestment of those assets, which I would add we are not in a rush and we plan to continue to drive cost efficiency while maintaining safety and operational Integrity, realizing synergies through the single operating model that I discussed, our relentless focus on digital and our adoption of agile work structures that Gordon is leading, we plan to drive unit production costs to around $6 per barrel by 2025 and we aim to hold them at this level through to 2030. And this is expected to result in a high quality, highly focused portfolio with 90% of the EBITDA in 2030 coming from six regions, and an improvement in unit margins relative to 2021 of more than 20% improvement in unit margin by 2030 relative to '21. In refining, we aim to deliver around $2 billion of EBITDA, underlying EBITDA growth by 2030 relative to '21, this is excluding bio fuels, which I will come to. Of this around half is expected to come as demand recovers with COVID impacts easing, supporting an increase in realized refining margins, and the remainder is expected to be delivered by our business improvement plans focused on three areas. First availability, we're on track to deliver over 96% Solomon availability. Our turnaround improvement plans have already delivered improvements and we expect the impact of the higher maintenance and activity in 2021 to reduce over time. Second, cost efficiencies we plan to deliver Solomon second quartile or better non-energy costs, which is a competitive position given our refinery configurations, while all the time keeping a rigorous focus on safety and operational integrity. And third flexibility in yield improvements, for example, when I was there last year through investments in Cherry Point Hydrocracker improvement project, and other investments in the U.S. Midwest. In addition, we remain focused on high grading the portfolio through either conversion, consolidation of less advantaged units, or indeed divesting where it makes sense. And together these points, underpin our target of delivering top quartile Solomon net cash margin by 2025. Turning to bio energy, this is the first now of our transition growth engines. The market backdrop is strong, BP's Energy Outlook, our rapid transition scenario shows biofuels growing by an average of 6% per annum to 2030 with sustainable aviation fuels SAF and biogas growing significantly faster. We aim to deliver around $2 billion of EBITDA by 2030, around half driven by the production of biofuels from feedstocks that meet applicable sustainability standards, and around half driven by biogas and other trading opportunities. Let me start with biofuels. Our refineries operate in regions where we expect to see strong growth in demand and our manufacturing processes are well positioned to adapt to this, we already produced more than 5,000 barrels per day of biofuels at three of our refineries through bio co-processing, and we aim to triple that production by 2030. across these sites. We plan to invest in five major biofuels projects, including three adjacent to existing refineries, and we aim to convert up to two of our refineries to bio refineries. This focus on leveraging existing infrastructure, logistics, scale and customer relationships is expected to create real capital efficient growth. Turning to biogas, this is a sector that we're increasingly excited about. It is capital light. It is highly modular and capable of rapid growth, it can achieve very low carbon intensities. It creates value for BP through strong integration and trading, and it delivers high returns and very fast paybacks through our co-marketing agreement with Clean Energy Fuels. In the U.S., we're already the largest supplier of biogas in the U.S. to heavy duty fleet customers and we recently here in the U.K. acquired a 29% stake in Gasrec, and they're a major provider of biogas to heavy goods vehicles here. And we plan to retain our leadership position in the U.S., expand in the fast growing European market and we aim to scale equity production around 20 fold to over 10,000 barrels a day by 2030 and through additional offtake we expect further margin capture. That was resilient hydrocarbons. Strategic theme number two is convenience and mobility. Now, Emma has got this business. Here our aim is to double EBITDA by 2030, while sustaining returns of between 15% and 20% and it's all through a focus on customers. And our growth is driven by the following, is driven by our differentiated convenience and fuels offers and selective growth market expansion, is driven by the acceleration of our EV charging ambition across key markets, and is driven by the contribution from Castrol, aviation, B2B and midstream. And since we outlined our strategy, our capital allocation plans have changed in two areas. First, we are tightening our expansion in growth markets and second, we are accelerating our EV charging ambition. This slide shows just some of the examples of the progress that we have made, which I will highlight when I cover these businesses and it is this strong delivery I think that gives us confidence in the future. Now as a reminder, we expect to deliver around $7 billion of EBITDA by 2025 and we aim for around between $9 billion and $10 billion by 2030 with returns of 15% to 20%. The businesses have remained resilient, very resilient during the pandemic and we expect COVID impacts of more than $600 million in 2021 to reverse over the coming years and we expect EBITDA growth to 2030 to be split across the three businesses shown on the chart. Our convenience and fuels business along with Castrol are ratable and they drive most of the growth through 2025 and then it's EV charging that drives more of the growth in the second half of the decade. So let me outline our plans in each of our business areas. And I'll start with convenience and fuels retail. Convenience is the second of our transition growth engines. It is a material business, and in 2021 delivered a record 1.5, a record $1.5 billion gross margin more than 20% growth in just two years through the pandemic. And we aim to continue to grow at around 7% per annum. We're confident in this growth, because we aim to further expand our convenience, our strategic convenience network to around 3,500 sites by 2030, it was 3,000 having already added 500 sites since 2019. We continue to see increased basket sizes which does as it says on the tin. And we have taken full ownership of Thorntons in the U.S. and we have extended our partnership with Marks & Spencer in the U.K. through the end of the decade. And our convenience offer builds on a strong and material retails fuels business. We have a great network of sites in established markets, which generally sell more fuel than the industry average with strong trusted brands like Amoco and Aral, we have premium fuels that generate around double the margin of our regular fuels in many markets. And we have differentiated digital offers and loyalty schemes. For example, our BPme app customers have grown threefold over the last two years since 2019 and these customers typically spend twice as much as another customer. We now aim to expand our presence, expand our presence in growth markets to over 6,000 sites by 2030 which will be primarily driven now by our successful Jio-bp joint venture in India. So turning to EV charging, the third of our transition growth engines and we aim for this business, very exciting business I have to say. We aim for this business to deliver more than a third of our overall EBITDA growth from convenience and mobility to 2030. We're accelerating our EV charging ambition that's what we're seeing today across key growth markets through a focus on on-the-go charging and fleets. For on-the-go charging, Murray I think we're getting to be experts at this stage Murray almost, almost customers want fast, convenient, reliable and seamless charging, integrated with leading convenience offers and services. And we're confident that we can succeed in this space for three reasons. First, we have an advantage retail and convenience network in our key focus markets. In the U.K. and Germany, for example, we have established a leading presence with more than 90% of the population live within a 20 minute drive of our stores. In fact, 550 million customers live within 20 minutes of a BP store today. Second, we're focused on rapid and ultra fast charging, and that drives higher utilization and therefore drives higher margins. And third, we expect to invest in digital technology and the strategic partnerships we expect that to drive up utilization and increase the footfall at our convenience stores while you're getting a charge. And overall, we aim to grow our network now to more than over 100,000 EV charge points and to increase our energy sales, this will become a key metric for those sites by more than 100 fold by 2030. Our second focus area is fleets and we think this has enormous growth potential for BP. We have a material fleet business with customers who we aim to support as they want to transition, all these fleets want to transition and they want someone to help them. We can do that. We already provide dedicated fleet solutions, which includes hardware, software and other services. And our acquisition of AMPLY Power has accelerated our entry into the U.S. which is one of the fastest growing fleet charging markets in the world. Now taken together, these plans give us confidence in aiming to deliver 50% margin share from convenience and electrification by 2030 that's up from 30% today. Turning finally to Castrol, aviation, B2B and midstream. Here the three drivers of growth are as follows. First, we aim to grow Castrol revenues to more than $8 billion by 2030. And we'll do that through expansion and growth market, including in India, where Castrol is the number one brand, extending our Castrol branded service and maintenance offers globally and providing market leading offers in EV fluids, more than two-thirds if you can believe it, more than two-thirds of major OEMs have approved Castrol on as part of their factory fuel. Second improving Castrol profitability through a focus on cost, cost efficiency, simplification, digitization and optimization of its manufacturing footprint. Third, growing aviation, B2B and midstream by leveraging our strategic relationships with major airlines and airports, established position in SAF where we aim to be a sector leader with 20% share of supply and continued growth in our bio brownfields business. Summing up these steps give us the confidence in our ability and our aim to deliver $9 billion to $10 billion of EBITDA from convenience and mobility by 2030. Hope you're all still with me. Strategic theme number three is low carbon energy. Our focus on returns and building scale with capital discipline is unchanged. We're aiming to create integrated low carbon energy hubs enabled by our last two transition growth engines. First, renewables we aim to build a leadership position in offshore wind and accelerate our solar growth through Lightsource BP and BP's U.S. solar pipeline and we remain confident in achieving 8% to 10% returns that are levered. Second is hydrogen. Here we aim to leverage BP's existing refinery demand to build regional supply positions and as hydrogen markets develop, we aim to create a portfolio of globally advantage supply hubs and we aim to capture a 10% share of core markets by 2030. Over the past two years, we've made real progress in offshore wind we grew our pipeline from zero to over five gigawatts net in two core markets through our partnership with Equinor in the U.S. and EnBW in the U.K., in solar, Lightsource BP has increased its pipeline from 1.6 gigawatts when we did the investment in 2017 to 20.6 gigawatts and they've progressed 53 projects to FID at a weighted average expected returns of 8% to 10% prior the firm. And we are achieving significant milestones in building our hydrogen and CCS businesses, we successfully increased the size of our renewables project pipeline to 23 gigawatts net to BP and we've got a material hopper of early stage renewables and hydrogen projects. Our capital investment in these businesses is growing, we spent $1.6 billion here in 2021 and we expect to between three -- to invest between $3 billion and $5 billion per annum by 2025, rising to $4 billion to $6 billion per annum by 2030. We're rigorous in evaluating opportunities, rejecting a lot, Murray, and selecting only what we see as the very best projects. And this momentum, and this discipline gives us confidence in the quality of the business we are building. And by 2030, we aim for this business to deliver between $2 billion and $3 billion of EBITDA. And as this slide shows, we now have a global portfolio of projects. We're trying to recreate the sort of oil and gas major project list, right, that's what we're doing here. You see it in offshore wind, you see it in hydrogen, and it gives us the confidence and it gives us a platform to develop those future low carbon energy hubs. Turning to hydrogen, where we have conviction and our ability to create differentiation and build a material business. We now have a hopper, a 0.7 mtpa, of which half has been announced, including H2Teesside here in the U.K., Lingen in Germany, and Oman. And this hopper has the potential to grow to up to 1.3 mtpa, as we continue to activate demand and scale up production. And we're focused on growing scale in key regionally integrated markets such as the U.K., Europe and U.S. And we're playing to our strengths here. We're leveraging our technical capabilities. We're leveraging our existing demand, at our refineries to be that anchor for those first projects. We're building on our experience of delivering and operating complex projects. Remember those 35 projects delivered on-time under budget. We're creating value through integration of marketing, trading and shipping Carol's business, for example, with power customers in Asia, just like we've done for decades in LNG. And we're deepening our partnerships, creating integrated low carbon energy hub opportunities through long standing relationships, many times built through our oil and gas businesses, such as with Abu Dhabi, such as in Oman, and with companies such as Daimler, and NYK group. And we're confident and energized by the potential of this business. And Anja, when she arise, we'll get into this, and she will discuss this with you all the broader low carbon business at a session that we will do with you later this year. And I'm excited to introduce her formally to you. Turning to integration. Let me spend a few minutes explaining why we see a role and I would say, indeed, a need for an IEC such as BP. One of the few companies, we believe, and I don't say this in a boastful way, but one of the few companies who have the scale and the expertise and the experience to navigate complex markets, and who can help manage increasingly interconnected energy systems, the importance of which I think have been highlighted in only the past few months. For over 100 years, we have been in it's before your time Murray we've been in the business of integrated energy value chains based on hydrocarbons as the energy source. We get oil and gas out of the ground as the upstream business. We transform the hydrocarbons into marketable products. That's the refining business, and we sell those hydrocarbon based products in our marketing business. We've created a portfolio which gives us a global presence across that hydrocarbon value chain. And of course, we have our trading organization to optimize the flows and to provide an uplift to group returns of at least 2% in addition to what each standalone business can do on its own. As we move from an IOC to an IEC and decarbonize our portfolio, we plan to replicate this model of integrated energy value chains, combining hydrocarbons, now with electrons and hydrogen. We're moving into renewables, solar and wind. That's where we generate the electrons. It's a new upstream business. We transform those electrons into hydrogen, it's a new downstream business, and we'll sell the products, we'll sell the electrons, we'll sell the hydrogen to customers, a new marketing business, and this creates an electron and a hydrogen energy value chain with upstream, downstream marketing businesses that will complement our existing hydrocarbons value chain. And at the heart of our integrated value chains is our world class it's for you Carol trading business. It has been decades in the making with a presence in 140 countries and over 2,000 employees. And through it, we can leverage our global asset portfolio to provide a consistently reliable supply. We've expertise in managing risk in volatile markets with high commercial, and regulatory complexity. We have deep analytics and technology expertise, and we can create integrated bespoke energy solutions for our customers. All of these are transferable allowing us to grow in new products and markets, including for example, biogas and low carbon products. And together we believe this capability can allow BP to offer customers a one stop shop for their energy needs. And U.K., where we are today is an example of how these integrated hydrocarbon electron and hydrogen value chains can come together in one region. We've been present across the hydrocarbon value chain in the U.K. for over 50 years. We produce oil and gas in the North Sea. We sell oil and gas to customers and gasoline and coffee to consumers. We're bringing gas into the U.K. from overseas to the oil of green terminal as well as shipping products from European refineries. We're now in action to create electron and hydrogen energy value chains in the U.K. We intend to produce electrons through offshore wind farms in Scotland, and in the Irish Sea. And through our Lightsource BP joint venture. We plan to construct hydrogen CCS and biogas plants. We plan to scale up our EV charging, and customer offers. Using our extensive physical retail network, our brand and our convenience offer. We'll be able to link gas and electrons to help create reliable power. And as mentioned earlier, the returns from each of these hydrocarbon electron and hydrogen businesses can be further enhanced by integration through our trading organization. And it's this ability to leverage existing infrastructures, existing capabilities, and relationships, and integrate across offshore wind, hydrogen, and EV charging supported our recent successful bid in the Scotwind leasing ramp. And we're already working to replicate this model in other countries. Equally crucial to our transformation to an IEC is having the right capability to enable our success. And here we're in a good position. We have great incumbent capabilities skills that we can leverage that we can increasingly leverage across our three strategic themes. Our 120 strong extended leadership team is representative of our broader workforce bringing together a broad and diverse set of expertise, views and perspectives, and is made up around 40% female and around 25% global minority. And from next month, I look forward to having a gender balanced leadership team reporting to me. And on the right of the slide, you will see what we that where we feel we need different skills. We're hiring, bringing in high caliber specialized talent, often from other industries. Over the past 18 months alone, we have hired 38 senior executives from outside BP. And that's a marked change with our history. And for me personally, it's the most and carry does this work. It's hugely encouraging to see the interest in our strategy and in our direction. Turning then to sustainability. In 2020, we announced two years ago, our ambition to be a net zero company by 2050 or sooner and to help the world get to net zero. Two years on we continue to believe our ambition is good business. And we continue to believe it supports society's drive towards the Paris climate goals. We're in action, and we're on track for our 2025 targets. As we progress, we continue to learn. We have growing confidence in the opportunities especially over the longer-term in building, participating in, and integrating along and across net zero value chains. And this has enabled us to make some changes in this works been led by Giulia. For aim one which encompasses our scope one and two emissions from our operations. We're accelerating our 2030 aim from 30% to 35% to 50%. Today, for aim three today, which includes the life cycle emissions from the products we sell. We're increasing our 2050 or sooner aim from a 50% reduction in carbon intensity to a net zero ambition. And we're updating our 2030 aim to 15% to 20% and we're expanding aim three scope to now include physically traded sales of energy products. Delivering of our 2030 aims will be driven by execution of our strategy first and foremost. For aim one this includes improvements from reduced flaring, energy efficiency, electrification, and the use of low carbon electricity as well as the contribution from base decline and divestments. For aim three, this is driven by our evolving portfolio, including investment in EV charging, bioenergy, renewables, hydrogen, as well as an energy product trading mix in Carol's organization that reflects decarbonization of global energy and BP's activities over time. Our other aims remain as is including those on methane and Net Zero production. So on aiming for Net Zero across our operations, across our production and across our sales by 2050 or sooner, we believe that our ambition supports the global push to meet the Paris goals, including helping the world pursue efforts to limit temperature rise to 1.5 degrees above pre-industrial levels. And we intend to provide shareholders with the opportunity of an advisory vote on our Net Zero ambition at our 2022 AGM and we're grateful for the continued engagement in the challenge, and especially support from our investors, including CA 100+. Turning finally to Rosneft to also continue to make significant progress on their sustainability agenda. We welcome their New 2030 strategy, which incorporates a target to be Net Zero by 2050 for Scope 1 and 2 operational emissions, their ambitions are leading among large Russian energy companies, they are supported by interim targets on absolute emissions, on methane and on flaring. And this builds upon Rosneft's commitment to improving environmental performance with a strong focus on energy efficiency and carbon and methane intensity. And we're almost to the day one year into BP's and Rosneft's strategic collaboration agreement on carbon management and sustainability. And through sharing perspectives and exploring emissions reductions opportunities, the agreement supports both companies decarboniztion journeys. I don't know how I did for time. But let me now hand back to Murray to update you on our financial framework, Murray? Murray Auchincloss: Thanks, Bernard. I'll try to be at. Bernard Looney: How did I do? Murray Auchincloss: You did great. I'll try to be a bit more succinct for those of you who know me. So thanks, Bernard. The detail we provided today links the delivery of our strategy, drive 2025 financial targets. It also shows how we aim to transition the cash flows of the company to 2030 based on our plans. Let me briefly recap. First, we have a high quality resilient hydrocarbons business that we expect to sustain EBITDA around 2021 levels through 2025 and we aim to hold around this level through 2030 at broadly constant price assumptions, with returns of 12% to 15%. Second from 2021, we aim to more than double EBITDA from convenience and mobility to around $9 billion to $10 billion by 2030 while generating returns of at least 15% to 20%. Our customer businesses are ratable and drive growth to 2025 with EV charging driving growth in the second half of the decade. And third and low carbon we aim to grow EBITDA in the second half of the decade, reaching $2 billion to $3 billion by 2030 as our renewables and hydrogen businesses come on line, this is all underpinned by continued relentless focus on cost efficiency, investment in digital and agile ways of working. We continue to expect to deliver cash cost savings from Reinvent BP of $3 billion to $4 billion by 2023 relative to 2019. Taken together, this underpins our confidence in the guidance we gave you in August 2020. We expect to deliver 7% to 9% EBITDA per share CAGR between 2H'19, 1H'20 and 2025. Yes, that's a mouthful, and ROACE of 12% to 14%. This assumes oil price of 50 to 60 per barrel in 2020 real terms. And looking further ahead as the businesses transition, we aim to continue to grow EBITDA to 2030 while sustaining overall returns of 12% to 14%. Within this we're increasing our exposure to businesses which are expected to see rapid growth through the energy transition. As Bernard mentioned, this is driven by five transition growth engines, bioenergy, convenience, EV charging, renewables and hydrogen. These businesses contribute about $1.5 billion of our EBITDA today, but we are deepening our investment here. In 2021, they represent more than 15% of our CapEx, by '25 we expect this to be greater than 40% and by 2030, around 50% Capital employed will follow while modest today it is expected to reach over 20% by 2025 and close to 40% by 2030. And in the second half of the decade, we aim to deliver double-digit EBITDA growth from these businesses as the capital we are investing matures. Together these transition businesses underpinned by these five growth engines aim to deliver around $9 billion to $10 billion of EBITDA by 2030. Our confidence in this potential reflects the progress made in building strong foundations in each of these businesses. And as a result, a clear set of operational milestones from which you can start tracking our progress. As Bernard has highlighted, in bioenergy our plans are underpinned by five major projects, including three adjacent to existing refineries. Additionally, we will continue to rapidly expand our arrangements with biogas companies with further offtake and equity positions. In convenience, we have grown our network of strategic convenience sites by around 30% in the last two years, with clear line of sight to our upgraded targets in 2025. We are rapidly building a network of EV charge points to underpin our focus on fleet and on-the-go fast charging in our core markets. We have established a 5.2 gigawatt pipeline in offshore wind this includes Empire Wind and Beacon Wind in the U.S., Mona and Morgan in the Irish Sea and our new Scotwind venture in Morgan. We expect the first projects due online before the end of the decade and our first green hydrogen projects are scheduled to start up from 2024. As we invest to drive this growth, we are committed to the disciplined allocation of capital. We expect to maintain a discipline capital frame of $14 billion to $16 billion per annum through 2025 and we aim to sustain this level through 2030. In resilient hydrocarbons, we expect to invest $9 billion to $10 billion per annum between 2023 and '25. With our plan to invest around $7.5 billion per annum in oil and gas through 2025 unchanged, the range reflects our plans to deepen in biotechnology. In convenience and mobility, we expect to invest between $2 billion to $3 billion per annum. This underpins our convenient strategy and our plans to accelerate in EV charging. And in low carbon energy, we expect to invest $3 billion to $5 billion per annum between 2023 and 2025, rising to $4 billion to $6 billion per annum in the second half of the decade as we build out positions in renewables and hydrogen. We have a standardized approach to investment allocation, balancing investment economics, volatility and ratability, optionality and integration, strategic alignment, safety and risks, and sustainability and we have stringent investment hurdles. These include payback periods of less than 10 years for oil and refining, and less than 15 years for gas and we also have returns expectations for low carbon energy, as well as the transition growth engines Bernard mentioned earlier. This capital frame is also underpinned by a strong balance sheet. I like this one, we remain focused on maintaining a strong investment grade credit rating, and have made strong progress. I've already outlined the strong progress we made in reducing net debt by over $8 billion in 2021. In addition, we remain focused on maintaining an efficient balance sheet. Since the end of 2019, we've repurchased around $15 billion in short dated bonds, in addition to over $11 billion of bonds with a duration of 20 years or longer, more than doubling the duration of our debt book to over nine years, and increasing our exposure to fixed rates at attractive coupons. That's looking like pretty good timing right now. Looking ahead and subject to maintaining an investment grade credit rating in 2022, we plan to allocate 40% of surplus cash flow to further strengthen the balance sheet, and to manage the business with a conservative cash balance point of around $40 per barrel on average through 2025. Our financial frame enables us to reward shareholders today through committed distributions, subject to board discretion and at around $60 per barrel, we expect to have the capacity for an annual increase in the dividend per ordinary share of around 4% through 2025 and we remain strong investment grade credit rating. On average, at around $60 per barrel, we expect to be able to deliver buybacks of around $4 billion per annum through 2025 with upside at higher prices, as you can see here. Finally, this slides provides a summary of what you can expect from us in 2020. The continued discipline and execution of our financial frame. With that, I'll hand back to Bernard to conclude today's presentation. Thank you. Bernard Looney: Very good, that word more succinct. Yes, great. So this is one to two minutes, and then we'll go to questions. So in summary, it says you have heard a lot today, I agree on our strategic progress towards transitioning into an integrated energy company. And at the end of the day, it all comes together in our investor proposition, Craig's favorite slide, and we've shown that. It is a simple but we believe compelling proposition that combines the following. Number one, committed distributions, generating competitive cash returns today, as we transform the company. Number two, profitable growth, growing EBITDA per share, and growing returns and number three, sustainable value as we invest with discipline in the five transition growth engines, and lower our emissions, all of this in-service of delivering long-term shareholder value. So thanks, again, for listening this morning. Now, it's over to you, Murray and I will be delighted that says we will try anyway to take your questions from the room and online. We've got all the technology that we need to do that. May we ask you to keep them to two points, only please, at most, and to frame them as briefly as you can. This is all Craig's language, if you want to blame anybody, so that we can get through as many questions as possible. And it will also be helpful if you will just state your name for those people who are online. And I guess we'll start here. Murray in in the room. So who wants to lead off? We'll go to the back here. Go ahead. Q - Michele Della Vigna: Hi, thank you very much for the presentation. I wanted to ask you two questions. Bernard Looney: Just remind people where you're from and just sort of people know. Michele Della Vigna: Perfect. It's Michele Della Vigna from Goldman Sachs. And two questions, if I may. The first one relates to your buyback program. I was wondering, under what circumstances you'd go above the 60% pay out of the free cash flow. I was wondering if perhaps, at higher oil prices, it makes sense to dedicate more to buybacks? And whether there is a hard limit to how much you can do, how much more than let's say $2 billion per quarter? Can you actually execute on the market, given the daily liquidity and the amount of shares you want to buyback in a year? And then my second question relates to the EU green taxonomy. A lot of companies are starting to work to think about what is the percentage of revenues and investment that is consistent with it? I was wondering when I look at your numbers on the green transition, should we just effectively take it ex convenience, which doesn't fit into the EU green taxonomy and think that that could be a good approximation of where you could end up when you start to report those numbers in the next 12 months? Thank you. Bernard Looney: Very good. Excellent. On buybacks, Murray will speak to limits and his own views on things. Michele you know, as well as I do. It's -- there are many debates about what is the right use of surplus cash. And I think from day one, I think we've learned outlined a very clear financial framework that takes each of those potential uses of cash in order starting with the first column cash being the dividend, then we want to strengthen that balance sheet. And we have done a lot. I think we had our largest reported debt was $51 billion net debt that was at the end of a quarter, it might have been different in the middle of a quarter. And we're now down at $30.6 billion. I think we're in a much better place with our rating agencies. We're now stable outlook, with S&P, having been upgraded from a negative outlook. And we'll continue to want to put that 40% on the balance sheet through this year. We then want to invest in our hydrocarbons business in our growth engines. And if there's any leftover the fifth and final point is for buybacks. So the board keeps this under constant review. We've been very clear in terms of buybacks for this year, what you can expect, and it's not at least 60%. It is 60% for 2022 with the 40% going to the balance sheet, and we'll update our views on that again, at the same time next year. And obviously, the dividend is kept under review by the board on a quarterly basis. But we've laid out our expectations around that. Anything you'd add and anything around limits to what we can do. Murray Auchincloss: Yes, I think it's just important given the uncertainty in the world that we continue to dedicate money to strengthen the balance sheet. I feel that's very important. Another shot can happen at any moment in time on Omicron or the next wave. And so I think it's better to posture in a conservative space, to be honest. So that's why we're continuing to dedicate cash to the balance sheet. I don't think there's any way we regret that. As far as limitations on share buybacks, there will be market limitations. We're still learning about that about what's possible. Of course, it depends on how fast the share price appreciates, as well, that creates limitations in itself. We feel -- we've already done half a billion dollars of buybacks this quarter for employee offsets in January. So that's behind us. We'll do a billion and a half by the results date. That's carefully worded, because sometimes it's a little bit tricky to do it inside the quarter. So there are days where we're buffeting up against that, but liquidity in the shares is high. We just have to watch a rising share price that it's difficult to continue to buyback with that rise in share price. So, so far, so good. But probably another half a billion in the quarter is getting tight, depending on what happens with share price. But that's a nice problem to have Michele. Bernard Looney: Yes, you're not saying that's a bad thing. Murray Auchincloss: That's a great thing. Yes. Bernard Looney: Okay. Got it. On EU taxonomy. Look, I think it's a moving space. The proposals being issued, I think a big question you'll have to ask yourself Michele is what to do with natural gas, which is in the current proposal, albeit a decarbonized version of natural gas. Let's see how that survives. Convenience is in our transition growth engines, because it's the non-fuel element of our convenience business, which in the U.K. today, I don't know what the numbers are. But more than half 60%, 70% potentially of people who visit a BP petrol station don't buy any fuel. So it's a convenience offer for a convenience reason, it's an incredibly fast growing business. I've looked at the U.K. market, it's expected to grow at 12.5% per annum over the next five years. So it's a transit -- it's a growth business. It's in transition, because it's non-fossil, it's that aspect of the business that's in there. The trick will be what happens with natural gas. And that could obviously spring your numbers up and down. The others are clearly very much part of the taxonomy. So hopefully that helps. Great questions. Thank you. We'll go here next. It's like everybody's is going to ask a question. Gordon Gray: Gordon Gray, HSBC. Just one on the mobility, and particularly EV charging. You've got very ambitious targets for growing EV charge points. Some of that obviously is going to cannibalize your conventional fuel sales. Can just give us a feel what you're seeing on the ground today, about the margin you get from EV charging in a typical fuel station relative to historic conventional fuel margins? Bernard Looney: I think that's the most we've said so far. It's what Emma said in an interview recently that we're at the point where the margins are broadly equivalent. So we're at the stage where the margins are equivalent. We probably think that they can get better. If you look at our Hammersmith EV charging station, our utilization rate in Hammersmith is 67% today. 67% that's on a time basis. Many of the assumptions that people have in their plans are around single-digit utilization rates. When you look at the residence time of a charging customer, probably a little bit longer than that of a petrol customer. We see enormous opportunity on the convenience side. In fact, we see that with our station here in the car park underneath Hyde Park in London, where the convenience offer is also a big draw. So we see opportunity there. So we're very excited about this business. We're opening 115 charge points a week. Now we're adding 115 charge points a week in the fourth quarter. We sold more power in December in China than we did in the entire 2020 year. This is a business that's growing exponentially. And when you talk about the role of a company like ours in the transition, and people question it. Why wouldn't we want to absolutely take on that market? Look at the starting position we have, 550 million customers within 20 minutes of a BP site. Look at the brand that we have. Look at the convenience offer that we have. in Germany, Albert Heine, in the Netherlands, AMPM in America, huge. We would be fools not to embrace this opportunity that is being presented to us. So we see massive opportunity. That's why since last year, that plan has accelerated more capital is being deployed. And we're very excited about the long-term potential fleets. Hugely interesting. Between 6% and 8% of the power that we discharged through our charging network in the U.K. in 2021 was to Uber. So fleets will become important. Fleets that's where we're concentrating in America. So 4.5x more electricity, more power sold in 2021 than in 2020. And we are targeting a 100 fold increase by the end of the decade. All about undergo fast charging, ultrafast charging. It's a very different business, but it ones that plays enormously to our strengths. You love it, what have I missed. Murray Auchincloss: The growth and fleets in the U.S. was pretty surprising. 10x growth over the decade. So 254,000 electric vehicles now in fleets 10x growth through the end of the decade is the most conservative estimate we see. That's why we went into ample power to really get a leapfrog ahead on their customer book, and then their digital offer. They have a great digital stack. It allows you to help manage a business on their behalf the overall fleet and you can charge on a fleet on a service basis. So we're bringing that back to the U.K. as well. We've got deals with Royal Mail, fire brigade, police just customer after customer after customer. And if we can link together the offshore energy, the onshore hydrogen with these fleet and on fast on the go charging, you've recreated the upstream in about a decade's time. So it's just a fabulous, fabulous opportunity ahead of us with very high returns, Bernard Looney: And if you're charging geek like we obviously are, check out the blogs on Blazon Blogger in Germany, who compares reliability of charging networks all across Germany, and AROU, which is our brand in Germany is number one with 1% downtime. So anyway, fun space who next Lucas? And then we'll start heading over to the side of the room here shortly. Lucas Herrmann: It's Lucas Herrmann from Exane. Two questions a little more here. And now perhaps the first is you must have very good visibility on the LNG trading business into Q1. Given I suspect, Carol would have set most of your positions for you. I wonder whether you can make any commentary on how you expect trading in that quarter, or the next quarter to go relative to, shall we say the last two? And the second just goes back to balance sheet, Murray. And maybe it ties in with trading to some degree as well. But just the mix of cash in debt, it's very visible, the Europeans carry a lot of cash relative to the U.S. It's also very apparent that you trade a lot more than the U.S., but the level of cash carried on balance sheet now. Is it really appropriate? Or should you be thinking about bringing that down and suffering less of an interest hit through differentials? What was that? Bernard Looney: Thanks Lucas. Murray, I'll let you take both. Murray Auchincloss: Sure. Starting with balance sheet, my favorite thing Lucas. $39 billion of cash at the end of last year down to $30 billion in cash. And you saw the statistics on debt buybacks, we'll continue to do that, as long as it economically make sense to continue to buyback debt. Depends on what happens with interest rates. But for now, we think that continues to be a sensible thing to do. We do have to carry high levels of cash though, as a trading organization, in order to trade on exchanges. You have to have cash buffers for initial margin and variation margin. And that's why we can drive the returns that we drive through having that cash. I think that's an effective use, the returns are pretty darn high on a cash basis much better than you can get into depository bank or anything else. So I think we will run a little bit higher cash position, especially as we go through the volatile times we're in right now. Exchanges are demanding more margin call these days, given the volatility and until while this deficit and energy supply last, we'll just need to run our cash balances. So I don't think that's a bad thing. I think it's a good thing, Lucas, because it enables Carol's profits. As far as speculating about how Carol will do in the first quarter. I think I'll hold fire. The gas markets are pretty volatile right now predicting is gas price going to go up as bad gas price is going to go down as tricky right now. We obviously have a large LNG traded book, there'll be doing a lot of cargo deliveries into Europe. I think we did 35 into Europe over the past year seven and seven here into the U.K. to try to help with gas supply. But there's a large position that will be delivered and they find, oh, Carol, she'll do pretty well. So let's see Lucas. Bernard Looney: And on LNG cargo I've learned provides enough heat for 100,000 homes for a year. So 35 cargoes into Europe last year seven cargoes into the U.K. over the winter, which is double our normal capacity. Chris. Chris Kuplent: Thanks so much. Chris Kuplent from Bank of America. Murray fully endorse your message on the balance sheet if I may. Can you remind us of your sensitivity away from net debt in your provisions and lease books to rising interest rates, which I guess we have to prepare for? And my second question, if I may 2021 is a special year because I remember well, 2016 and '17 Investor Day is targeting 2021. And you've made it not exactly easy to compare with targets that were set at the time, but I would argue downstream as the one that let you down. Of course, we're in COVID times downstream was particularly hit during 2021. You highlighted $600 million, Bernard on COVID impact pet cams gone. But you're using again, convenience and mobility as a target to get excited about earnings growth. And I can't see much earnings growth over the last four years that we talked about in there. So how can you maybe convince us that this time is different? Bernard Looney: Very good, very balance sheet. Murray Auchincloss: Yes, sensitivity to interest rates. As I mentioned in the speech, an awful lot of the debt book that we've gone with recently on the debt races is fixed. So we've taken advantage of the low rates in 20s, and 30s. And fixed most of our balance sheet, pretty low rates. We won't retrieve those. So those should carry most of the debt book fixed for the next few decades. I think that'll turn out to be fortunate timing, but two or three CFOs down the road will actually tell us what happens. As far as the rest of the leases aren't sensitive to interest rate moves. So that's not a risk. And of course, the Macondo pay down remains out there as well on a gross basis. And that's not subject to interest rate volatility as well. So I think, as I came into the job, there were a lot of people asking me about the strength of the balance sheet, the nature of our debt book, I think, Kate and Navneet have done a fabulous job of fixing it, lengthening it and decreasing the risk profile the business significantly. So I think that concern is large
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BP’s Q4 Profit Plunges, but Shareholder Payouts Stay Intact

BP (NYSE:BP) reported a sharp decline in fourth-quarter profit as weaker refining margins, lower energy prices, and rising costs weighed on earnings. Despite the downturn, the company reaffirmed its commitment to shareholder returns with a dividend payout and a fresh buyback program.

For the final quarter of 2024, BP posted an underlying replacement cost (RC) profit of $1.2 billion, a steep drop from the $3 billion reported in the same period a year ago. The company also recorded a reported net loss of $2.0 billion, a significant swing from the $0.2 billion profit in Q3 2024.

Multiple factors contributed to the weak performance, including lower refining margins, sluggish fuel sales, and scheduled maintenance activity at refineries. While BP’s gas and low-carbon energy division saw an improvement from the prior quarter with $2.0 billion in underlying RC profit, earnings remained below year-ago levels. Meanwhile, the oil production and operations segment reported $2.9 billion in profit, supported by lower exploration write-offs but hampered by weaker realized prices.

Notably, BP’s customers and products division posted a $0.3 billion loss, as lower fuel margins and seasonal demand softness dragged on performance.

Despite the earnings slump, BP maintained its 8-cent-per-share dividend and announced a $1.75 billion share buyback for Q1 2025, underscoring its focus on returning capital to investors even in a challenging environment.

BP's Q4 Earnings Analysis: A Mixed Financial Health Amid Strategic Overhauls

  • BP's earnings per share (EPS) missed estimates, coming in at $0.44 against the expected $0.56, while revenue slightly exceeded expectations.
  • The company's underlying replacement cost profit fell sharply to $1.169 billion, the lowest in four years, due to weak margins in its refining business.
  • Financial ratios such as the price-to-earnings (P/E) ratio and debt-to-equity ratio indicate a mixed financial health, with strategic changes planned to improve future growth.

BP (NYSE:BP), a leading player in the global oil and gas industry, recently reported its earnings for the fourth quarter of 2025. The company, known for its extensive operations in energy production and refining, faces competition from other major oil companies like Shell and ExxonMobil. BP's earnings per share (EPS) came in at $0.44, missing the estimated $0.56, while revenue slightly exceeded expectations at $45.75 billion against the forecasted $45.65 billion.

The company's underlying replacement cost profit, a key measure of net profit, fell sharply to $1.169 billion from $2.99 billion in the same period last year. This decline was slightly below the analyst forecast of $1.2 billion, as highlighted by Reuters. The drop in profit, the lowest in four years, is attributed to weak margins in BP's refining business. This has raised concerns among investors, especially with activist investor Elliott Investment Management reportedly building a stake in the company.

BP's financial health shows a mixed picture. The company's net debt increased by 10% year-on-year, reaching nearly $23 billion. Despite this, BP's capital expenditure for the quarter decreased to $3.7 billion from $4.7 billion the previous year. CEO Murray Auchincloss has announced plans to reset the company's strategy, focusing on cost-cutting and strategic overhauls to improve cash flow and returns.

BP's financial ratios provide further insight into its current standing. The price-to-earnings (P/E) ratio is approximately 34.54, indicating the price investors are willing to pay for each dollar of earnings. The price-to-sales ratio is about 0.46, suggesting investors pay 46 cents for every dollar of BP's sales. The enterprise value to sales ratio stands at around 0.63, reflecting the company's total valuation relative to its sales.

The company's debt-to-equity ratio is approximately 1.06, showing a balanced use of debt and equity to finance its assets. BP's current ratio is around 1.22, indicating its ability to cover short-term liabilities with short-term assets. Despite the challenges, BP's earnings yield of about 2.90% represents a return on investment for shareholders, highlighting the company's potential for future growth amidst strategic changes.

BP p.l.c. (NYSE:BP): A Glimpse into the Future of Global Energy

  • The consensus price target for BP p.l.c. (NYSE:BP) has increased from $46.38 to $50 over the past year, indicating a more optimistic outlook from analysts.
  • Despite a weak Q4 earnings report, BP's investments in renewable energy and digital transformation are seen as key drivers for its future growth.
  • BP trades at 3.1 times EBITDA and offers an approximately 15% free cash flow yield, positioning it as an attractive investment in the energy sector.

BP p.l.c. (NYSE:BP) is a global energy company with a wide-ranging portfolio that spans natural gas production, biofuels, wind and solar power, and de-carbonization solutions. The company also plays a significant role in the convenience and mobility sector, providing fuels, lubricants, and electric vehicle charging facilities. BP's operations cover both upstream and downstream activities, and it is actively investing in alternative energy and digital transformation to stay competitive in the evolving energy landscape.

Over the past year, there has been a noticeable change in the consensus price target for BP's stock. A year ago, the average price target was $46.38, but it has since increased to $50 and remained steady over the past month. This upward trend suggests a more optimistic outlook from analysts regarding BP's stock performance. Despite BP's recent weak quarter, with Q4 earnings being the lowest since late 2020, the company is still seen as a primary value opportunity among global majors.

BP's strategic investments in low carbon and renewable energy solutions, along with its efforts in digital transformation and advanced mobility, may be contributing to the increased confidence reflected in the stock's target price. Despite underperforming compared to its European and US peers since 2021, BP trades at 3.1 times EBITDA and offers an approximately 15% free cash flow yield. This positions BP as an attractive investment option for those seeking value in the energy sector.

The company's upcoming investor day in February is highly anticipated, with expectations that management will maintain a cautiously optimistic outlook, similar to Shell's approach. Analyst John Freeman from Raymond James has reiterated an Overweight rating for BP, with a price target of $36. This indicates that while there is optimism, there are also cautious considerations regarding BP's future performance.

BP's Earnings Beat Sparks Investor Optimism

  • BP (NYSE:BP) announced earnings that exceeded market expectations.
  • The company faces challenges such as weaker refining margins and the impact of lower oil prices.

BP, a leading global energy company, announced earnings that exceeded market expectations. BP operates in a highly competitive sector, facing rivals like ExxonMobil and Chevron, making its earnings beat a significant achievement.

Despite the upbeat news on earnings, BP has expressed concerns over weaker refining margins and the impact of lower oil prices compared to previous years. Refining margins are crucial for energy companies as they measure the profit made from refining crude oil into usable products like gasoline. A decrease in these margins can significantly affect a company's profitability. Similarly, lower oil prices reduce the revenue generated from selling crude oil, which is a primary income source for companies like BP.

The company's caution stems from the volatile nature of the energy market, where prices and margins can fluctuate widely due to geopolitical events, changes in supply and demand, and other economic factors. These challenges underscore the importance of BP's ability to exceed earnings expectations despite facing headwinds that could dampen profitability. This could make investors more optimistic and lead to short-term price gains in the coming days.

BP Soars on Strong Q2 Earnings and Debt Reduction

BP Soars on Strong Q2 Earnings and Debt Reduction 

Great news for BP investors! The stock price surged after the company reported impressive second-quarter results and significant debt reduction. Here's a closer look:

BP's Winning Formula:

  • Strong Financial Performance: BP exceeded analyst expectations with robust operating cash flow and a healthy net income for Q2 2024.
  • Debt Reduction Focus: The company made significant progress in reducing its net debt, further strengthening its financial position.
  • Dividend Increase and Share Buybacks: BP announced a 10% increase in its dividend and confirmed its commitment to ongoing share buybacks, demonstrating confidence in its future.

What Does This Mean for BP Stock?

The positive earnings report and debt reduction efforts are driving investor optimism for BP. While past performance doesn't guarantee future results, this news could be a positive sign for the stock price in the long run.

Should You Invest in BP?

Before making any investment decisions, it's crucial to conduct thorough research:

  • Company Analysis: Deep dive into BP's financial statements, business model, and future growth prospects.
  • Energy Market Outlook: Consider the overall energy market conditions and potential risks or opportunities specific to the oil and gas sector.
  • Portfolio Diversification: Ensure your portfolio is diversified across sectors and asset classes to mitigate risk.

FMP Company Rating API: Empower Your Investment Decisions

Enhance your BP investment analysis with FMP's Company Rating API:

  • Data-Driven Insights: Get an objective rating for BP based on its financial statements, discounted cash flow analysis, and key metrics.
  • Beyond the Headlines: Uncover the deeper story behind BP's financial health, growth potential, and risk profile.
  • Informed Investment Strategy: Utilize the API's data to make well-informed investment decisions regarding BP or any other company you're considering.

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While BP's Q2 results are positive, remember that the market is dynamic. By conducting thorough research, utilizing FMP's Company Rating API, and considering your investment goals, you can make informed investment decisions regarding BP or any other company.

BP Shares Gain 5% Following Q4 Beat and Accelerated Share Buyback Announcement

BP (NYSE:BP) shares climbed more than 5% pre-market today as the oil and gas giant exceeded Q4 profit expectations and announced an increase in share buybacks.

The company reported an adjusted EPS of 17.77 cents for the fourth quarter, a decline from 26.44 cents the previous year but above the 16.27 cents consensus estimate. Its adjusted net income fell 38% year-over-year to $2.99 billion, surpassing the anticipated $2.76 billion.

For the entire year, BP's underlying replacement cost profit was $13.8 billion, a sharp drop from the previous year's record $27.7 billion, slightly below the forecasted $13.9 billion.

BP set its total capital expenditure target at around $16 billion for the current fiscal year. The company also increased its quarterly dividend to 7.27 cents per ordinary share for Q4 2023, up 10% from the previous year.

Moreover, BP is speeding up its share repurchase program, planning to buy back $1.75 billion in shares before its Q1 earnings release, with a total of $3.5 billion in buybacks targeted for the first half of the year.