TIDMBP.
RNS Number : 9813X
BP PLC
02 May 2023
Top of page 1
FOR IMMEDIATE RELEASE
London 2 May 2023
BP p.l.c. Group results
First quarter 2023
-----------------------
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Performing while transforming
Financial summary First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
------------------------------------------------------------- ------- ------- --------
Profit (loss) for the period attributable to bp shareholders 8,218 10,803 (20,384)
Inventory holding (gains) losses*, net of tax 452 1,066 (2,664)
-------------------------------------------------------------- ------- ------- --------
Replacement cost (RC) profit (loss)* 8,670 11,869 (23,048)
Net (favourable) adverse impact of adjusting items*,
net of tax (3,707) (7,062) 29,293
-------------------------------------------------------------- ------- ------- --------
Underlying RC profit* 4,963 4,807 6,245
-------------------------------------------------------------- ------- ------- --------
Operating cash flow* 7,622 13,571 8,210
Capital expenditure* (3,625) (7,369) (2,929)
-------------------------------------------------------------- ------- ------- --------
Divestment and other proceeds(a) 800 614 1,181
-------------------------------------------------------------- ------- ------- --------
Surplus cash flow* 2,283 4,985 4,037
-------------------------------------------------------------- ------- ------- --------
Net issue (repurchase) of shares (2,448) (3,240) (1,592)
-------------------------------------------------------------- ------- ------- --------
Net debt*(b) 21,232 21,422 27,457
Announced dividend per ordinary share (cents per share) 6.610 6.610 5.460
Underlying RC profit per ordinary share* (cents) 27.74 26.44 32.00
-------------------------------------------------------------- ------- ------- --------
Underlying RC profit per ADS* (dollars) 1.66 1.59 1.92
-------------------------------------------------------------- ------- ------- --------
-- Underlying RC -- Further $1.75bn -- Delivering resilient -- Continued progress
profit $5.0bn; share buyback announced hydrocarbons - advancing in transformation
Net debt reduced two major projects*; to an IEC - agreement
to $21.2bn intention to form to acquire TravelCenters
JV with ADNOC of America; advancing
EV charging strategy
This has been a quarter of strong performance and strategic delivery
as we continue to focus on safe and reliable operations. Momentum continues
to build across our integrated energy company strategy, with the start-up
of Mad Dog Phase 2, our agreement to acquire TravelCenters of America
and progress towards hydrogen and CCS projects in the UK. And importantly
we continue to deliver for shareholders, through disciplined investment,
lowering net debt and growing distributions.
Bernard Looney
Chief executive officer
(a) Divestment proceeds are disposal proceeds as per the
condensed group cash flow statement. See page 3 for more
information on divestment and other proceeds.
(b) See Note 9 for more information.
RC profit (loss), underlying RC profit (loss), surplus cash
flow, net debt, underlying RC profit per ordinary share and
underlying RC profit per ADS are non-IFRS measures. Inventory
holding (gains) losses and adjusting items are non-IFRS
adjustments.
* For items marked with an asterisk throughout this document,
definitions are provided in the Glossary on page 30 .
Top of page 2
Highlights
Underlying replacement cost profit* $5.0 billion
* Underlying replacement cost profit for the quarter
was $5.0 billion, compared with $4.8 billion for the
previous quarter. Compared to the fourth quarter
2022, the result reflects an exceptional gas
marketing and trading result, a lower level of
refinery turnaround activity and a very strong oil
trading result, partly offset by lower liquids and
gas realizations and lower refining margins.
* Reported profit for the quarter was $8.2 billion,
compared with $10.8 billion for the fourth quarter
2022. The reported result for the first quarter is
adjusted for inventory holding losses* of $0.5
billion (net of tax) and a net favourable impact of
adjusting items* of $3.7 billion (net of tax) to
derive the underlying replacement cost profit.
Adjusting items include favourable fair value
accounting effects* of $4.3 billion, primarily
resulting from the decline in the forward price of
LNG compared to the end of the fourth quarter.
Net debt* reduced to $21.2 billion; further $1.75 billion share
buyback announced
* Operating cash flow* in the quarter was $7.6 billion
including a working capital* build (after adjusting
for inventory holding losses, fair value accounting
effects and other adjusting items) of $1.4 billion
(see page 27).
* Capital expenditure* in the first quarter was $3.6
billion. bp continues to expect capital expenditure,
including inorganic capital expenditure*, of $16-18
billion in 2023.
* During the first quarter, bp completed $2.2 billion
of share buybacks from surplus cash flow*. The $2.75
billion share buyback programme announced with the
fourth quarter results was completed on 28 April
2023.
* During the first quarter, bp also completed share
buybacks of $225 million as part of the $675 million
programme announced on 7 February 2023 to offset the
expected full-year dilution from the vesting of
awards under employee share schemes in 2023.
* In the first quarter, bp generated surplus cash flow
of $2.3 billion and intends to execute a $1.75
billion share buyback from surplus cash flow prior to
announcing its second quarter 2023 results.
* bp remains committed to using 60% of 2023 surplus
cash flow for share buybacks, subject to maintaining
a strong investment grade credit rating.
* Based on bp's current forecasts, at around $60 per
barrel Brent and subject to the board's discretion
each quarter, bp expects to be able to deliver share
buybacks of around $4.0 billion per annum, at the
lower end of its $14-18 billion capital expenditure
range, and have capacity for an annual increase in
the dividend per ordinary share of around 4%.
* Net debt fell to $21.2 billion at the end of the
first quarter.
Continued progress in transformation to an Integrated Energy Company
* In resilient hydrocarbons, bp has announced the safe
delivery of its Mad Dog Phase 2 project in the Gulf
of Mexico. In addition, the KGD6-MJ project offshore
India is in the final stages of commissioning with
two wells opened to flow gas and full start-up
expected during the second quarter. bp intends to
form a new joint venture with ADNOC that will be
focused on gas development, together making a
non-binding offer for a 50% interest in NewMed Energy
as a significant first step. bp is moving forward
with concept selection for Kaskida in the Gulf of
Mexico and bp and partners have confirmed they will
progress evaluation of development concept for the
bp-operated Greater Tortue Ahmeyim Phase 2 project.
During the quarter, bp completed the divestment of
its interest in the Toledo refinery and its Algerian
upstream assets.
* In convenience and mobility, bp is advancing its
strategy - agreeing to acquire TravelCenters of
America, one of the biggest networks of highway
travel centres in the US. bp has also continued to
progress its EV charging strategy - signing a
strategic collaboration agreement with Iberdrola in
Spain and Portugal and signing a global mobility
agreement with Uber.
* In low carbon energy, bp has signed an agreement to
take a 40% stake in the Viking carbon capture and
storage (CCS) project in the North Sea; three bp-led
hydrogen and CCS projects in the north-east England
have been chosen by the UK government to progress to
the next stage of development; and bp has launched
plans for a low-carbon green energy cluster in
Spain's Valencia region to include world-scale green
hydrogen* production at bp's Castellón refinery
with up to 2GW of electrolysis capacity by 2030.
In the first quarter, bp delivered resilient earnings and continues to
execute against its unchanged financial frame. We are strengthening the
balance sheet, investing with discipline to advance our strategy, and
are committed to returning 60% of 2023 surplus cash flow through share
buybacks with a further $1.75 billion announced for the first quarter.
Murray Auchincloss
Chief financial officer
(a) "fast charging" includes rapid charging >=50kW and ultra-fast charging >=150kW.
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 36.
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Top of page 3
Financial results
In addition to the highlights on page 2:
-- Profit attributable to bp shareholders in the first quarter
was $8.2 billion, compared with a loss of $20.4 billion in the same
period of 2022.
- After adjusting profit attributable to bp shareholders for
inventory holding losses* and net favourable impact of adjusting
items*, underlying replacement cost profit* for the first quarter
was $5.0 billion, compared with $6.2 billion for the same period of
2022. This reduction in underlying replacement cost profit reflects
lower oil and gas realizations, portfolio changes and lower oil
trading contribution, partly offset by higher refining margins and
an exceptional gas marketing and trading result.
- Adjusting items in the first quarter had a net favourable
pre-tax impact of $3.9 billion, compared with an adverse pre-tax
impact of $30.8 billion in the same period of 2022.
- Adjusting items for the first quarter of 2023 include a
favourable impact of pre-tax fair value accounting effects*,
relative to management's internal measure of performance, of $4.3
billion, compared with an adverse pre-tax impact of $5.8 billion in
the same period of 2022. This is primarily due to a decline in the
forward price of LNG compared to the fourth quarter of 2022, but an
increase in the comparative period. 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 first quarter of 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
first quarter was 29%, compared with -8% for the same period in
2022. Excluding adjusting items, the underlying ETR* for the first
quarter was 39%, compared with 33% for the same period a year ago.
The higher underlying ETR for the first quarter reflects the UK
Energy Profits Levy on North Sea profits and other items. ETR on RC
profit or loss and underlying ETR are non-IFRS measures.
-- Operating cash flow* for the first quarter was $7.6 billion,
compared with $8.2 billion for the same period in 2022.
-- Capital expenditure* in the first quarter was $3.6 billion,
compared with $2.9 billion in the same period of 2022.
-- Total divestment and other proceeds for the first quarter
were $0.8 billion, compared with $1.2 billion for the same period
in 2022. There were no other proceeds for the first quarter of
2023. Other proceeds for the first quarter of 2022 consist of $0.2
billion of proceeds from the disposal of a loan note related to the
Alaska divestment.
-- At the end of the first quarter, net debt* was $21.2 billion,
compared with $21.4 billion at the end of the fourth quarter 2022
and $27.5 billion at the end of the first quarter 2022.
Top of page 4
Analysis of RC profit (loss) before interest and tax and
reconciliation to profit (loss) for the period
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
-------------------------------------------------------------- ------- ------- --------
RC profit (loss) before interest and tax
gas & low carbon energy 7,347 16,439 (1,524)
oil production & operations 3,317 1,688 3,831
customers & products 2,680 771 1,981
other businesses & corporate (90) 103 (24,719)
Of which:
other businesses & corporate excluding Rosneft (90) 103 (686)
Rosneft - - (24,033)
Consolidation adjustment - UPII* (22) 147 34
-------------------------------------------------------------- ------- ------- --------
RC profit (loss) before interest and tax 13,232 19,148 (20,397)
Finance costs and net finance expense relating to
pensions and other post-retirement benefits (785) (818) (644)
Taxation on a RC basis (3,573) (6,103) (1,693)
Non-controlling interests (204) (358) (314)
-------------------------------------------------------------- ------- ------- --------
RC profit (loss) attributable to bp shareholders* 8,670 11,869 (23,048)
Inventory holding gains (losses)* (600) (1,428) 3,501
Taxation (charge) credit on inventory holding gains
and losses 148 362 (837)
-------------------------------------------------------------- ------- ------- --------
Profit (loss) for the period attributable to bp shareholders 8,218 10,803 (20,384)
-------------------------------------------------------------- ------- ------- --------
Analysis of underlying RC profit (loss) before interest and
tax
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
------------------------------------------------------- ------- ------- -------
Underlying RC profit (loss) before interest and tax
gas & low carbon energy 3,456 3,148 3,595
oil production & operations 3,319 4,428 4,683
customers & products 2,759 1,902 2,156
other businesses & corporate (296) (306) (259)
Of which:
other businesses & corporate excluding Rosneft (296) (306) (259)
Rosneft - - -
Consolidation adjustment - UPII (22) 147 34
------------------------------------------------------- ------- ------- -------
Underlying RC profit before interest and tax 9,216 9,319 10,209
Finance costs and net finance expense relating to
pensions and other post-retirement benefits (681) (649) (486)
Taxation on an underlying RC basis (3,368) (3,505) (3,164)
Non-controlling interests (204) (358) (314)
------------------------------------------------------- ------- ------- -------
Underlying RC profit attributable to bp shareholders* 4,963 4,807 6,245
------------------------------------------------------- ------- ------- -------
Reconciliations of underlying RC profit attributable to bp
shareholders to the nearest equivalent IFRS measure are provided on
page 1 for the group and on pages 6-14 for the segments.
Operating Metrics
Operating metrics First quarter vs First
2023 quarter
2022
------------------------------------------- ------------- --------
Tier 1 and tier 2 process safety events* 8 -4
Reported recordable injury frequency* 0.195 +27.0%
upstream* production(a) (mboe/d) 2,330 +3.4%
upstream unit production costs*(b) ($/boe) 5.73 -12.1%
bp-operated upstream plant reliability* 95.5% -0.6
bp-operated refining availability*(a) 96.1% 1.1
-------------------------------------------- ------------- --------
(a) See Operational updates on pages 6, 9 and 11. Because of
rounding, upstream production may not agree exactly with the sum of
gas & low carbon energy and oil production &
operations.
(b) Mainly reflecting impact of portfolio changes.
Top of page 5
Outlook & Guidance
Macro outlook
-- For the second quarter, bp expects oil prices to remain
elevated as the recent decision by OPEC+ to restrict production,
combined with strengthening Chinese demand, tightens supply/demand
balances.
-- During the second quarter, bp expects European gas and Asian
LNG prices to be supported by recovering Chinese gas demand,
re-stocking of European storage capacity and coal-to-gas switching.
In the US, Henry Hub gas prices are also expected to find support
from coal-to-gas switching in the power sector.
-- In the second quarter, bp expects industry refining margins
to be lower than the first quarter due to weaker middle distillate
margins.
2Q23 guidance
-- Looking ahead, bp expects second-quarter 2023 reported
upstream* production to be lower compared to first quarter 2023, in
both oil production & operations and gas & low carbon
energy, including the effects of seasonal maintenance, with the
impact predominantly in higher margin regions.
-- In its customers business, bp expects higher marketing
margins and seasonally higher volumes compared to the first
quarter. In refining, bp expects realized margins to be lower
compared to the first quarter, mainly driven by weaker middle
distillate margins and narrower North American heavy oil crude
differentials. In addition, bp expects a higher level of turnaround
activity compared to the first quarter.
2023 guidance
In addition to the guidance on page 2:
-- bp continues to expect both reported and underlying upstream
production to be broadly flat compared with 2022. Within this, bp
expects underlying production* from oil production & operations
to be slightly higher and production from gas & low carbon
energy to be lower.
-- bp continues to expect the other businesses & corporate
underlying annual charge to be in a range of $1.1-1.3 billion for
2023. The charge may vary from quarter to quarter.
-- bp continues to expect the depreciation, depletion and
amortization to be slightly above 2022.
-- bp continues to expect the underlying ETR* for 2023 to be
around 40% but is sensitive to the impact that volatility in the
current price environment may have on the geographical mix of the
group's profits and losses.
-- Having realized $16.7 billion of divestment and other
proceeds since the second quarter of 2020, bp continues to expect
divestment and other proceeds of $2-3 billion in 2023 and continues
to expect to reach $25 billion of divestment and other proceeds
between the second half of 2020 and 2025.
-- bp continues to expect Gulf of Mexico oil spill payments for
the year to be around $1.3 billion pre-tax including $1.2 billion
pre-tax to be paid during the second quarter.
-- bp continues to expect capital expenditure* of $16-18 billion
in 2023 including inorganic capital expenditure*.
-- bp is committed to maintaining a strong investment grade
credit rating, targeting further progress within an 'A' grade
credit rating. For 2023 bp continues to intend to allocate 40% of
surplus cash flow to further strengthening the balance sheet.
-- For 2023 and subject to maintaining a strong investment grade
credit rating, bp remains committed to using 60% of surplus cash
flow for share buybacks.
-- Based on bp's current forecasts, at around $60 per barrel
Brent and subject to the board's discretion each quarter, bp
continues to expect to be able to deliver share buybacks of around
$4.0 billion per annum, at the lower end of its $14-18 billion
capital expenditure range, and have capacity for an annual increase
in the dividend per ordinary share of around 4%.
-- In setting the dividend per ordinary share and buyback each
quarter, the board will continue to take into account factors
including the cumulative level of and outlook for surplus cash
flow*, the cash balance point* and the maintenance of a strong
investment grade credit rating.
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 36.
----------------------------------------------------------------------
Top of page 6
gas & low carbon energy*
Financial results
-- The replacement cost (RC) profit before interest and tax for
the first quarter was $7,347 million, compared with a loss of
$1,524 million for the same period in 2022. The first quarter is
adjusted by a favourable impact of net adjusting items* of $3,891
million, compared with an adverse impact of net adjusting items of
$5,119 million for the same period 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
$3,934 million for the quarter and an adverse impact of $5,015
million for the same period in 2022. Under IFRS, reported earnings
include the mark-to-market value of the hedges used to risk-manage
LNG contracts, but not of the LNG contracts themselves. The
underlying result includes the mark-to-market value of the hedges
but also recognizes changes in value of the LNG contracts being
risk managed, which decreased as forward prices fell during the
first quarter.
-- After adjusting RC profit before interest and tax for
adjusting items, the underlying RC profit before interest and tax*
for the first quarter was $3,456 million, compared with $3,595
million for the same period in 2022.
-- The underlying RC profit for the first quarter, compared with
the same period in 2022, reflects lower realizations and a higher
depreciation, depletion and amortization charge, offset by an
exceptional gas marketing and trading result.
Operational update
-- Reported production for the quarter was 969mboe/d, 0.4%
higher than the same period in 2022. Underlying production* was
1.1% lower, mainly due to unplanned outages offset by lower
seasonal maintenance.
-- Renewables pipeline* at the end of the quarter was 38.8GW (bp
net), including 15.5GW bp net share of Lightsource bp's (LSbp's)
pipeline. The renewables pipeline increased by 1.6GW during the
quarter due to additions to LSbp's portfolio. In addition, there is
19.8GW (9.9GW bp net) of early stage opportunities in LSbp's
hopper.
Strategic progress
gas
-- The KGD6-MJ project offshore India is in the final stages of
commissioning (Reliance 66.67% operator, bp 33.33%). Two wells have
been opened to flow gas through the integrated production system.
Full start-up is expected later in the second quarter.
-- On 28 April bp signed an agreement with Shell to purchase
Shell's 27% interest in the Browse project, offshore Australia. The
transaction is subject to regulatory and partner approvals and on
completion would increase bp's interest to 44.33%.
-- On 27 February bp and its partners confirmed the development
concept for the second phase of the bp-operated Greater Tortue
Ahmeyim (GTA) liquefied natural gas project, with total capacity of
between 2.5-3.0 million tonnes per annum, that they will take
forward to the next stage of evaluation.
-- On 29 March bp and our co-venturers in the Shah Deniz
Consortium have secured additional capacity in the Trans Adriatic
Pipeline (TAP).
-- On 28 February bp announced that it had completed the sale of
its upstream business in Algeria to Eni after successfully securing
the required approvals.
-- On 28 March bp confirmed that, together with ADNOC, it has
made a non-binding offer to take NewMed Energy private through an
acquisition of the free float and a partial acquisition of Delek's
stake, which would result in bp and ADNOC holding 50% of NewMed
Energy. bp and ADNOC intend to form a new joint venture that will
be focused on gas development in international areas of mutual
interest including the East Mediterranean. The proposed transaction
with NewMed Energy would be a significant first step in
establishing this joint venture.
low carbon energy
-- Hydrogen and CCS
On 30 March it was announced that three bp-led hydrogen and CCS
projects in north-east England - Net Zero Teesside Power gas-fired
power station and CCS, H2Teesside blue hydrogen* and HyGreen
Teesside green hydrogen* - have been chosen by the UK government to
go to the next stage of development.
On 11 April bp signed an agreement with Harbour Energy to take a
40% stake in the Viking carbon capture and storage (CCS) project in
the North Sea.
On 28 February bp launched plans for low-carbon green hydrogen
cluster in Spain's Valencia region. The cluster is intended to
include hydrogen production at bp's Castellón refinery of up to 2GW
of electrolysis capacity by 2030.
-- Offshore wind
On 24 March bp announced a successful bid in the Innovation and
Targeted Oil and Gas (INTOG) Scottish offshore wind leasing round,
bp's first step in floating offshore wind.
On 15 February bp and Deep Wind Offshore announced the formation
of a joint venture to develop offshore wind opportunities in South
Korea, which includes four projects across the Korean peninsula
with a potential generating capacity of up to 6GW.
-- Onshore renewables
On 1 March Lightsource bp announced that it had obtained
environmental approval for 19 solar projects in four provinces in
Spain for a total 1.6GW and investment of $1.3 billion by 2025.
Top of page 7
gas & low carbon energy (continued)
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
---------------------------------------------------- ------- -------- -------
Profit (loss) before interest and tax 7,348 16,429 (1,499)
Inventory holding (gains) losses* (1) 10 (25)
---------------------------------------------------- ------- -------- -------
RC profit (loss) before interest and tax 7,347 16,439 (1,524)
Net (favourable) adverse impact of adjusting items (3,891) (13,291) 5,119
---------------------------------------------------- ------- -------- -------
Underlying RC profit before interest and tax 3,456 3,148 3,595
Taxation on an underlying RC basis (961) (1,163) (1,009)
---------------------------------------------------- ------- -------- -------
Underlying RC profit before interest 2,495 1,985 2,586
---------------------------------------------------- ------- -------- -------
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
------------------------------------------------ ------- ------- -------
Depreciation, depletion and amortization
Total depreciation, depletion and amortization 1,440 1,373 1,255
------------------------------------------------ ------- ------- -------
Exploration write-offs
----------------------------------------------- ------- ------- -------
Exploration write-offs (1) (6) (2)
------------------------------------------------ ------- ------- -------
Adjusted EBITDA*
----------------------------------------------- ------- ------- -------
Total adjusted EBITDA 4,895 4,515 4,848
------------------------------------------------ ------- ------- -------
Capital expenditure*
gas 647 1,032 642
low carbon energy(a) 366 577 219
------------------------------------------------ ------- ------- -------
Total capital expenditure 1,013 1,609 861
------------------------------------------------ ------- ------- -------
(a) Fourth quarter 2022 include $504 million in respect of the
acquisition of EDF Energy Services. Power trading is reported under
low carbon energy.
First Fourth First
quarter quarter quarter
2023 2022 2022
------- ------- -------
Production (net of royalties)(b)
Liquids* (mb/d) 114 121 121
Natural gas (mmcf/d) 4,962 4,844 4,897
Total hydrocarbons* (mboe/d) 969 956 966
---------------------------------- ------- ------- -------
Average realizations* (c)
Liquids ($/bbl) 73.59 80.50 86.09
Natural gas ($/mcf) 7.41 9.40 7.88
Total hydrocarbons* ($/boe) 46.55 57.60 50.91
---------------------------------- ------- ------- -------
(b) Includes bp's share of production of equity-accounted
entities in the gas & low carbon energy segment.
(c) Realizations are based on sales by consolidated subsidiaries
only - this excludes equity-accounted entities.
Top of page 8
gas & low carbon energy (continued)
31 March 31 December 31 March
low carbon energy(d) 2023 2022 2022
Renewables (bp net, GW)
Installed renewables capacity* 2.2 2.2 1.9
-------------------------------------------------- -------- ----------- --------
Developed renewables to FID* 5.9 5.8 4.4
Renewables pipeline 38.8 37.2 24.9
of which by geographical area:
================================================= -------- ----------- --------
Renewables pipeline - Americas 17.5 17.0 16.3
Renewables pipeline - Asia Pacific(e) 12.2 11.8 1.4
Renewables pipeline - Europe 8.9 8.3 7.0
Renewables pipeline - Other 0.1 0.1 0.2
================================================== -------- ----------- --------
of which by technology:
================================================= -------- ----------- --------
Renewables pipeline - offshore wind 5.3 5.2 5.2
Renewables pipeline - onshore wind 6.3 6.3 -
Renewables pipeline - solar 27.2 25.7 19.7
================================================== -------- ----------- --------
Total Developed renewables to FID and Renewables
pipeline 44.7 43.0 29.2
-------------------------------------------------- -------- ----------- --------
(d) Because of rounding, some totals may not agree exactly with
the sum of their component parts.
(e) 31 March 2023 and 31 December 2022 include 10.3GW of onshore
wind and solar pipeline in support of hydrogen.
Top of page 9
oil production & operations
Financial results
-- The replacement cost (RC) profit before interest and tax for
the first quarter was $3,317 million, compared with $3,831 million
for the same period in 2022. The first quarter is adjusted by an
adverse impact of net adjusting items* of $2 million, compared with
an adverse impact of net adjusting items of $852 million for the
same period in 2022.
-- After adjusting items, the underlying RC profit before
interest and tax* for the first quarter was $3,319 million,
compared with $4,683 million for the same period in 2022.
-- The underlying RC profit for the first quarter compared to
the same quarter in 2022, reflects lower oil and gas realizations
and portfolio changes partly offset by higher production.
Operational update
-- Reported production for the quarter was 1,360mboe/d, 5.8%
higher than the first quarter of 2022. Underlying production* for
the quarter was 6.1% higher compared with the first quarter of 2022
reflecting bpx energy performance and improved base
performance.
Strategic Progress
-- bp was the apparent high bidder on 37 lease blocks in the
Gulf of Mexico lease sale 259 held on 29 March 2023.
-- The Canadian regulator has issued a licence to Equinor for
the 385 million-barrel Cappahayden K-67 discovery east of St
John's, Newfoundland and Labrador (Equinor 60% operator, bp
40%).
-- Azule Energy (bp and Eni's 50:50 joint venture in Angola) has
taken the final investment decision for the Agogo Integrated West
Hub Development oil project.
-- MiQ, the non-profit global leader in methane certification,
announced that it has independently audited and certified bp as the
first energy major in the US to verify the methane intensity of its
entire US onshore portfolio of natural gas.
-- On 13 April bp announced start-up of the Mad Dog Phase 2
Argos platform. bp expects to safely and systematically ramp up
production through 2023 (bp 60.5% operator, Woodside Energy 23.9%
and Union Oil Company of California, an affiliate of Chevron U.S.A.
Inc. 15.6%).
-- Moving forward with concept selection for a bp-operated
Kaskida development project in the Gulf of Mexico.
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
---------------------------------------------------- ------- ------- -------
Profit before interest and tax 3,318 1,686 3,832
Inventory holding (gains) losses* (1) 2 (1)
---------------------------------------------------- ------- ------- -------
RC profit before interest and tax 3,317 1,688 3,831
Net (favourable) adverse impact of adjusting items 2 2,740 852
---------------------------------------------------- ------- ------- -------
Underlying RC profit before interest and tax 3,319 4,428 4,683
Taxation on an underlying RC basis (1,766) (2,015) (1,912)
---------------------------------------------------- ------- ------- -------
Underlying RC profit before interest 1,553 2,413 2,771
---------------------------------------------------- ------- ------- -------
Top of page 10
oil production & operations (continued)
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
------------------------------------------------ ------- ------- -------
Depreciation, depletion and amortization
----------------------------------------------- ------- ------- -------
Total depreciation, depletion and amortization 1,327 1,383 1,429
------------------------------------------------ ------- ------- -------
Exploration write-offs
----------------------------------------------- ------- ------- -------
Exploration write-offs 51 73 51
------------------------------------------------ ------- ------- -------
Adjusted EBITDA*
----------------------------------------------- ------- ------- -------
Total adjusted EBITDA 4,697 5,884 6,163
------------------------------------------------ ------- ------- -------
Capital expenditure*
----------------------------------------------- ------- ------- -------
Total capital expenditure 1,520 1,430 1,254
------------------------------------------------ ------- ------- -------
First Fourth First
quarter quarter quarter
2023 2022 2022
------- ------- -------
Production (net of royalties)(a)
Liquids* (mb/d) 1,005 966 948
Natural gas (mmcf/d) 2,060 1,989 1,964
Total hydrocarbons* (mboe/d) 1,360 1,309 1,286
---------------------------------- ------- ------- -------
Average realizations* (b)
Liquids ($/bbl) 71.63 80.43 83.47
Natural gas(c) ($/mcf) 6.57 10.20 9.55
Total hydrocarbons*(c) ($/boe) 62.36 74.60 76.85
---------------------------------- ------- ------- -------
(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.
(c) Realizations calculation methodology has been changed to
reflect gas price fluctuations within the North Sea region. First
quarter 2022 was restated. There is no impact on financial
results.
Top of page 11
customers & products
Financial results
-- The replacement cost (RC) profit before interest and tax for
the first quarter was $2,680 million, compared with $1,981 million
for the same period in 2022. The first quarter is adjusted by an
adverse impact of net adjusting items* of $79 million, compared
with an adverse impact of net adjusting items of $175 million for
the same period 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 $77
million for the quarter and an adverse impact of $377 million for
the same period in 2022.
-- After adjusting items, the underlying RC profit before
interest and tax* for the first quarter was $2,759 million,
compared with $2,156 million for the same period in 2022.
-- The customers & products result for the first quarter was
higher than the same period in 2022, primarily reflecting a higher
refining performance.
-- customers - the convenience and mobility result, excluding
Castrol, for the first quarter was lower than the same period in
2022. Stronger performance in biofuels, aviation and convenience
was offset by higher costs, which included expenditure in our
transition growth engines and the impact of inflation.
Castrol result for the first quarter was lower than the same
period in 2022, primarily due to higher costs, including employee
costs, partially offset by higher margins.
-- products - the products result for the first quarter was
higher compared with the same period in 2022, primarily due to
higher realized refining margins, which included the benefit of
wider North American heavy crude differentials. The quarter also
benefited from a very strong contribution from oil trading, however
this was lower than the same period last year which benefited from
an exceptional performance.
Operational update
-- bp-operated refining availability* for the first quarter was
96.1%, higher compared with 95.0% for the same period in 2022.
Utilization was lower than the same period in 2022, primarily due
to the Toledo refinery shutdown.
Strategic progress
-- In February, bp announced an agreement to purchase
TravelCenters of America, one of the biggest networks of highway
travel centres in the US. The deal is expected to add around 280
sites to our retail network and nearly double our convenience gross
margin*. The deal is expected to close in the second quarter,
subject to shareholder approval.
-- In March, bp signed a new agreement with Rontec, one of the
UK's largest roadside retail networks, to supply around two billion
litres of fuel over the next five years to more than 60 of Rontec's
sites. The two companies will also explore opportunities to deploy
bp pulse electric vehicle (EV) charging infrastructure to Rontec's
forecourts.
-- In March, bp pulse:
signed a strategic collaboration agreement with Iberdrola to
accelerate EV charging infrastructure roll-out in Spain and
Portugal. bp and Iberdrola intend to form a joint venture with
plans to invest up to EUR1 billion and install 5,000 fast(a) EV
charge points* by 2025 and around 11,000 by 2030. The formation of
the joint venture is subject to regulatory approval.
announced a new global mobility agreement with Uber, which will
see the companies work together to help accelerate Uber's
commitment to become a global zero-tailpipe emissions mobility
platform by 2040.
-- In March, Air bp announced the first sale of International
Sustainability and Carbon Certification (ISCC) EU sustainable
aviation fuel produced at bp's Castellon refinery in Spain, to the
LATAM Group, one of Latin America's largest airlines.
-- In April, bp's Rotterdam refinery in the Netherlands, became
the first bp refinery to co-process Nuseed Carinta Oil as part of
our partnership with Nuseed. Nuseed Carinata Oil is a sustainable
low-carbon biofuel feedstock which we plan to use in our
refineries, as well as onward marketing.
-- In February, bp and BHP, one of the world's largest iron ore
producers, announced a partnership to trial the use of blended
diesel with hydrogenated vegetable oil (HVO) to assist BHP to
reduce carbon emissions from its iron ore operations in Western
Australia.
-- On 28 February 2023, bp completed the sale of its 50%
interest in the bp-Husky Toledo refinery in Ohio, US, to Cenovus
Energy, its partner in the facility.
(a) "fast charging" includes rapid charging >=50kW and ultra-fast charging >=150kW.
Top of page 12
customers & products (continued)
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
---------------------------------------------------- ------- ------- -------
Profit (loss) before interest and tax 2,078 (645) 5,456
Inventory holding (gains) losses* 602 1,416 (3,475)
---------------------------------------------------- ------- ------- -------
RC profit (loss) before interest and tax 2,680 771 1,981
Net (favourable) adverse impact of adjusting items 79 1,131 175
---------------------------------------------------- ------- ------- -------
Underlying RC profit before interest and tax 2,759 1,902 2,156
Of which:(a)
customers - convenience & mobility 391 628 522
Castrol - included in customers 161 70 256
products - refining & trading 2,368 1,274 1,634
Taxation on an underlying RC basis (777) (400) (400)
---------------------------------------------------- ------- ------- -------
Underlying RC profit before interest 1,982 1,502 1,756
---------------------------------------------------- ------- ------- -------
(a) A reconciliation to RC profit before interest and tax by business is provided on page 28.
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
------------------------------------------------ ------- ------- -------
Adjusted EBITDA*(b)
customers - convenience & mobility 732 962 848
Castrol - included in customers 200 110 295
products - refining & trading 2,824 1,681 2,025
3,556 2,643 2,873
------- ------- -------
Depreciation, depletion and amortization
----------------------------------------------- ------- ------- -------
Total depreciation, depletion and amortization 797 741 717
------------------------------------------------ ------- ------- -------
Capital expenditure*
customers - convenience & mobility 458 694 347
Castrol - included in customers 68 98 52
products - refining & trading(c) 532 3,455 368
Total capital expenditure 990 4,149 715
------------------------------------------------ ------- ------- -------
(b) A reconciliation to RC profit before interest and tax by business is provided on page 28.
(c) Fourth quarter 2022 includes $3,030 million in respect of the Archaea Energy acquisition.
Retail(d) First Fourth First
quarter quarter quarter
2023 2022 2022
------- ------- -------
bp retail sites* - total (#) 20,700 20,650 20,550
Strategic convenience sites* 2,450 2,400 2,150
-------------------------------- ------- ------- -------
(d) Reported to the nearest 50.
Marketing sales of refined products (mb/d) First Fourth First
quarter quarter quarter
2023 2022 2022
------- ------- -------
US 1,078 1,126 1,113
Europe 973 1,069 883
Rest of World 462 461 471
-------------------------------------------- ------- ------- -------
2,513 2,656 2,467
Trading/supply sales of refined products 333 325 352
-------------------------------------------- ------- ------- -------
Total sales volume of refined products 2,846 2,981 2,819
-------------------------------------------- ------- ------- -------
Top of page 13
customers & products (continued)
Refining marker margin* First Fourth First
quarter quarter quarter
2023 2022 2022
------- ------- -------
bp average refining marker margin (RMM)(e) ($/bbl) 28.1 32.2 18.9
---------------------------------------------------- ------- ------- -------
(e) The RMM in the quarter is calculated based on bp's current
refinery portfolio. On a comparative basis, the fourth quarter and
first quarter 2022 RMM would be $32.2/bbl and $19.3/bbl
respectively.
Refinery throughputs (mb/d) First Fourth First
quarter quarter quarter
2023 2022 2022
------- ------- -------
US 686 615 758
Europe 832 763 807
Rest of World - - 85
---------------------------------------- ------- ------- -------
Total refinery throughputs 1,518 1,378 1,650
---------------------------------------- ------- ------- -------
bp-operated refining availability* (%) 96.1 95.0 95.0
---------------------------------------- ------- ------- -------
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 first quarter was $90 million, compared with $24,719 million
for the same period in 2022. The first quarter is adjusted by a
favourable impact of net adjusting items* of $206 million, compared
with an adverse impact of net adjusting items of $24,460 million
for the same period in 2022. Adjusting items include impacts of
fair value accounting effects* which are a favourable impact of
$245 million for the quarter and an adverse impact of $425 million
for the same period in 2022. The adjusting items for the first
quarter of 2022 mainly relate to Rosneft.
-- After adjusting RC loss for net adjusting items, the
underlying RC loss before interest and tax* for the first quarter
was $296 million, compared with $259 million for the same period in
2022.
Strategic progress
-- In April, bp ventures invested $11 million in Magenta
Mobility, one of India's largest providers of electric mobility for
last-mile delivery, the journey from hub to customer.
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
------------------------------------------------------- ------- ------- --------
Profit (loss) before interest and tax (90) 103 (24,719)
Inventory holding (gains) losses* - - -
------------------------------------------------------ ------- ------- --------
RC profit (loss) before interest and tax (90) 103 (24,719)
Net (favourable) adverse impact of adjusting items(a) (206) (409) 24,460
------------------------------------------------------- ------- ------- --------
Underlying RC profit (loss) before interest and tax (296) (306) (259)
Taxation on an underlying RC basis 29 43 23
------------------------------------------------------- ------- ------- --------
Underlying RC profit (loss) before interest (267) (263) (236)
------------------------------------------------------- ------- ------- --------
(a) Includes fair value accounting effects relating to the
hybrid bonds that were issued on 17 June 2020. See page 31 for more
information.
other businesses & corporate (excluding Rosneft)
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
----------------------------------------------------- ------- ------- -------
Profit (loss) before interest and tax (90) 103 (686)
Inventory holding (gains) losses* - - -
---------------------------------------------------- ------- ------- -------
RC profit (loss) before interest and tax (90) 103 (686)
Net (favourable) adverse impact of adjusting items (206) (409) 427
----------------------------------------------------- ------- ------- -------
Underlying RC profit (loss) before interest and tax (296) (306) (259)
Taxation on an underlying RC basis 29 43 23
----------------------------------------------------- ------- ------- -------
Underlying RC profit (loss) before interest (267) (263) (236)
----------------------------------------------------- ------- ------- -------
other businesses & corporate (Rosneft)
First Fourth First
quarter quarter quarter
$ million 2023 2022 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
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
-------------------------------------------------------------- ------- ------- --------
Sales and other operating revenues (Note 5) 56,182 69,257 49,258
Earnings from joint ventures - after interest and tax 195 189 379
Earnings from associates - after interest and tax 173 129 871
Interest and other income 248 608 194
Gains on sale of businesses and fixed assets 153 173 518
-------------------------------------------------------------- ------- ------- --------
Total revenues and other income 56,951 70,356 51,220
Purchases 29,122 34,101 27,808
Production and manufacturing expenses 6,982 6,841 6,975
Production and similar taxes 474 557 505
Depreciation, depletion and amortization (Note 6) 3,800 3,714 3,625
Net impairment and losses on sale of businesses and fixed
assets (Note 3) 88 3,629 26,031
Exploration expense 106 140 92
Distribution and administration expenses 3,747 3,654 3,080
-------------------------------------------------------------- ------- ------- --------
Profit (loss) before interest and taxation 12,632 17,720 (16,896)
Finance costs 843 834 664
Net finance (income) expense relating to pensions and
other post-retirement benefits (58) (16) (20)
-------------------------------------------------------------- ------- ------- --------
Profit (loss) before taxation 11,847 16,902 (17,540)
Taxation 3,425 5,741 2,530
-------------------------------------------------------------- ------- ------- --------
Profit (loss) for the period 8,422 11,161 (20,070)
-------------------------------------------------------------- ------- ------- --------
Attributable to
bp shareholders 8,218 10,803 (20,384)
Non-controlling interests 204 358 314
-------------------------------------------------------------- ------- ------- --------
8,422 11,161 (20,070)
------- ------- --------
Earnings per share (Note 7)
Profit (loss) for the period attributable to bp shareholders
Per ordinary share (cents)
Basic 45.93 59.43 (104.46)
Diluted 45.06 58.36 (104.46)
Per ADS (dollars)
Basic 2.76 3.57 (6.27)
Diluted 2.70 3.50 (6.27)
-------------------------------------------------------------- ------- ------- --------
Top of page 16
Condensed group statement of comprehensive income
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
--------------------------------------------------------------- ------- ------- --------
Profit (loss) for the period 8,422 11,161 (20,070)
--------------------------------------------------------------- ------- ------- --------
Other comprehensive income
Items that may be reclassified subsequently to profit
or loss
Currency translation differences(a) 453 2,142 (1,749)
Exchange (gains) losses on translation of foreign
operations reclassified to gain or loss on sale of
businesses and fixed assets(b) - (32) 10,791
Cash flow hedges and costs of hedging 546 584 222
Share of items relating to equity-accounted entities,
net of tax (203) 392 85
Income tax relating to items that may be reclassified (76) (108) (102)
--------------------------------------------------------------- ------- ------- --------
720 2,978 9,247
------- ------- --------
Items that will not be reclassified to profit or loss
Remeasurements of the net pension and other post-retirement
benefit liability or asset (87) (1,508) 2,128
Cash flow hedges that will subsequently be transferred
to the balance sheet - 1 (1)
Income tax relating to items that will not be reclassified 23 538 (668)
--------------------------------------------------------------- ------- ------- --------
(64) (969) 1,459
------- ------- --------
Other comprehensive income 656 2,009 10,706
--------------------------------------------------------------- ------- ------- --------
Total comprehensive income 9,078 13,170 (9,364)
--------------------------------------------------------------- ------- ------- --------
Attributable to
bp shareholders 8,861 12,760 (9,678)
Non-controlling interests 217 410 314
--------------------------------------------------------------- ------- ------- --------
9,078 13,170 (9,364)
------- ------- --------
(a) Fourth quarter 2022 is principally affected by movements in
the Pound Sterling against the US dollar. First quarter 2022
principally affected by movements in the Russian rouble against the
US dollar.
(b) First quarter 2022 predominantly relates to the loss of significant influence over Rosneft.
Top of page 17
Condensed group statement of changes in equity
bp shareholders' Non-controlling interests Total
Hybrid
$ million equity bonds Other interest equity
--------------------------------------- ---------------- -------- ----------------- -------
At 1 January 2023 67,553 13,390 2,047 82,990
Total comprehensive income 8,861 142 75 9,078
Dividends (1,189) - (68) (1,257)
Repurchase of ordinary share
capital (3,421) - - (3,421)
Share-based payments, net of
tax (29) - - (29)
Issue of perpetual hybrid bonds - 45 - 45
Payments on perpetual hybrid
bonds - (80) - (80)
Transactions involving non-controlling
interests, net of tax - - (145) (145)
---------------------------------------- ---------------- -------- ----------------- -------
At 31 March 2023 71,775 13,497 1,909 87,181
---------------------------------------- ---------------- -------- ----------------- -------
bp shareholders' Non-controlling interests Total
Hybrid
$ million equity(a) bonds Other interest equity
--------------------------------------- ---------------- -------- ----------------- -------
At 1 January 2022 75,463 13,041 1,935 90,439
Total comprehensive income (9,678) 127 187 (9,364)
Dividends (1,069) - (65) (1,134)
Cash flow hedges transferred
to the balance sheet, net of
tax (1) - - (1)
Repurchase of ordinary share
capital (1,592) - - (1,592)
Share-based payments, net of
tax 175 - - 175
Issue of perpetual hybrid bonds (1) 67 - 66
Payments on perpetual hybrid
bonds - (72) - (72)
Transactions involving non-controlling
interests, net of tax 2 - - 2
---------------------------------------- ---------------- -------- ----------------- -------
At 31 March 2022 63,299 13,163 2,057 78,519
---------------------------------------- ---------------- -------- ----------------- -------
(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.
Top of page 18
Group balance sheet
31 March 31 December
$ million 2023 2022
-------------------------------------------------------- -------- -----------
Non-current assets
Property, plant and equipment 105,744 106,044
Goodwill 12,003 11,960
Intangible assets 10,295 10,200
Investments in joint ventures 13,030 12,400
Investments in associates 8,101 8,201
Other investments 2,656 2,670
-------------------------------------------------------- -------- -----------
Fixed assets 151,829 151,475
Loans 1,238 1,271
Trade and other receivables 1,131 1,092
Derivative financial instruments 11,575 12,841
Prepayments 698 576
Deferred tax assets 3,401 3,908
Defined benefit pension plan surpluses 9,531 9,269
-------------------------------------------------------- -------- -----------
179,403 180,432
-------- -----------
Current assets
Loans 369 315
Inventories 23,905 28,081
Trade and other receivables 29,426 34,010
Derivative financial instruments 12,247 11,554
Prepayments 1,791 2,092
Current tax receivable 637 621
Other investments 450 578
Cash and cash equivalents 30,433 29,195
-------------------------------------------------------- -------- -----------
99,258 106,446
Assets classified as held for sale (Note 2) - 1,242
-------------------------------------------------------- -------- -----------
99,258 107,688
-------- -----------
Total assets 278,661 288,120
-------------------------------------------------------- -------- -----------
Current liabilities
Trade and other payables 57,854 63,984
Derivative financial instruments 7,560 12,618
Accruals 5,829 6,398
Lease liabilities 2,160 2,102
Finance debt 2,499 3,198
Current tax payable 3,583 4,065
Provisions 5,102 6,332
-------------------------------------------------------- -------- -----------
84,587 98,697
Liabilities directly associated with assets classified
as held for sale (Note 2) - 321
-------------------------------------------------------- -------- -----------
84,587 99,018
-------- -----------
Non-current liabilities
Other payables 10,181 10,387
Derivative financial instruments 11,412 13,537
Accruals 1,307 1,233
Lease liabilities 6,445 6,447
Finance debt 46,096 43,746
Deferred tax liabilities 10,886 10,526
Provisions 15,214 14,992
Defined benefit pension plan and other post-retirement
benefit plan deficits 5,352 5,244
-------------------------------------------------------- -------- -----------
106,893 106,112
-------- -----------
Total liabilities 191,480 205,130
-------------------------------------------------------- -------- -----------
Net assets 87,181 82,990
-------------------------------------------------------- -------- -----------
Equity
bp shareholders' equity 71,775 67,553
Non-controlling interests 15,406 15,437
-------------------------------------------------------- -------- -----------
Total equity 87,181 82,990
-------------------------------------------------------- -------- -----------
Top of page 19
Condensed group cash flow statement
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
---------------------------------------------------------------- ------- ------- --------
Operating activities
Profit (loss) before taxation 11,847 16,902 (17,540)
Adjustments to reconcile profit (loss) before taxation
to net cash provided by operating activities
Depreciation, depletion and amortization and exploration
expenditure written off 3,850 3,781 3,674
Net impairment and (gain) loss on sale of businesses
and fixed assets (65) 3,456 25,513
Earnings from equity-accounted entities, less dividends
received 1 582 (1,093)
Net charge for interest and other finance expense, less
net interest paid 63 186 184
Share-based payments (22) 166 170
Net operating charge for pensions and other post-retirement
benefits, less contributions and benefit payments for
unfunded plans (43) (60) (146)
Net charge for provisions, less payments (1,099) (1,013) 484
Movements in inventories and other current and non-current
assets and liabilities (3,755) (6,847) (1,771)
Income taxes paid (3,155) (3,582) (1,265)
---------------------------------------------------------------- ------- ------- --------
Net cash provided by operating activities 7,622 13,571 8,210
---------------------------------------------------------------- ------- ------- --------
Investing activities
Expenditure on property, plant and equipment, intangible
and other assets (3,129) (3,696) (2,602)
Acquisitions, net of cash acquired 52 (3,522) (8)
Investment in joint ventures (540) (107) (294)
Investment in associates (8) (44) (25)
---------------------------------------------------------------- ------- ------- --------
Total cash capital expenditure (3,625) (7,369) (2,929)
Proceeds from disposal of fixed assets 15 27 468
Proceeds from disposal of businesses, net of cash disposed 785 587 549
Proceeds from loan repayments 6 7 29
================================================================ ======= ======= ========
Cash provided from investing activities 806 621 1,046
---------------------------------------------------------------- ------- ------- --------
Net cash used in investing activities (2,819) (6,748) (1,883)
---------------------------------------------------------------- ------- ------- --------
Financing activities
Net issue (repurchase) of shares (Note 7) (2,448) (3,240) (1,592)
Lease liability payments (555) (513) (498)
Proceeds from long-term financing 2,395 10 2,002
Repayments of long-term financing (799) (2,197) (892)
Net increase (decrease) in short-term debt (529) 190 (276)
Issue of perpetual hybrid bonds 45 48 66
Payments relating to perpetual hybrid bonds (236) (219) (148)
Payments relating to transactions involving non-controlling
interests (Other interest) (180) (1) (5)
Receipts relating to transactions involving non-controlling
interests (Other interest) 7 1 7
Dividends paid - bp shareholders (1,183) (1,088) (1,068)
- non-controlling interests (68) (100) (65)
---------------------------------------------------------------- ------- ------- --------
Net cash provided by (used in) financing activities (3,551) (7,109) (2,469)
---------------------------------------------------------------- ------- ------- --------
Currency translation differences relating to cash and
cash equivalents (14) 177 (125)
---------------------------------------------------------------- ------- ------- --------
Increase (decrease) in cash and cash equivalents 1,238 (109) 3,733
---------------------------------------------------------------- ------- ------- --------
Cash and cash equivalents at beginning of period 29,195 29,304 30,681
Cash and cash equivalents at end of period 30,433 29,195 34,414
---------------------------------------------------------------- ------- ------- --------
Top of page 20
Notes
Note 1. Basis of preparation
The interim financial information included in this report has
been prepared in accordance with IAS 34 'Interim Financial
Reporting'.
The results for the interim periods are unaudited and, in the
opinion of management, include all adjustments necessary for a fair
presentation of the results for each period. All such adjustments
are of a normal recurring nature. This report should be read in
conjunction with the consolidated financial statements and related
notes for the year ended 31 December 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. There
are no 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 this quarter to determine if
any changes were required to those judgements and estimates. No
significant changes were identified.
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 March 2023.
Top of page 21
Note 2. Non-current assets held for sale
There were no assets or liabilities classified as held for sale
at 31 March 2023.
Transactions that were classified as held for sale at the end of
2022, but completed during the first quarter of 2023, are described
below.
On 7 September 2022, bp announced that it had agreed to sell its
upstream business in Algeria to Eni. The transaction closed on 28
February 2023.
On 8 August 2022, bp announced an agreement to sell its 50%
interest in the bp-Husky Toledo refinery in Ohio US, to Cenovus
Energy, its partner in the facility. The transaction closed on 28
February 2023.
Note 3. Impairment and losses on sale of businesses and fixed
assets
Net impairment charges and losses on sale of businesses and
fixed assets for the first quarter were $88 million, compared with
net charges of $26,031 million for the same period in 2022 and
include net impairment reversals for the first quarter of $41
million, compared with net charges of $14,386 million for the same
period in 2022.
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.
Note 4. Analysis of replacement cost profit (loss) before
interest and tax and reconciliation to profit (loss) before
taxation
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
--------------------------------------------------- ------- ------- --------
gas & low carbon energy 7,347 16,439 (1,524)
oil production & operations 3,317 1,688 3,831
customers & products 2,680 771 1,981
other businesses & corporate (90) 103 (24,719)
--------------------------------------------------- ------- ------- --------
13,254 19,001 (20,431)
Consolidation adjustment - UPII* (22) 147 34
--------------------------------------------------- ------- ------- --------
RC profit (loss) before interest and tax 13,232 19,148 (20,397)
Inventory holding gains (losses)*
gas & low carbon energy 1 (10) 25
oil production & operations 1 (2) 1
customers & products (602) (1,416) 3,475
Profit (loss) before interest and tax 12,632 17,720 (16,896)
Finance costs 843 834 664
Net finance expense/(income) relating to pensions
and other post-retirement benefits (58) (16) (20)
--------------------------------------------------- ------- ------- --------
Profit (loss) before taxation 11,847 16,902 (17,540)
--------------------------------------------------- ------- ------- --------
RC profit (loss) before interest and tax*
US 3,075 1,404 2,277
Non-US 10,157 17,744 (22,674)
--------------------------------------------------- ------- ------- --------
13,232 19,148 (20,397)
------- ------- --------
Top of page 22
Note 5. Sales and other operating revenues
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
----------------------------------------------------------- ------- ------- -------
By segment
gas & low carbon energy 17,886 26,793 8,166
oil production & operations 6,153 6,932 8,158
customers & products 38,882 43,072 42,163
other businesses & corporate 738 779 452
----------------------------------------------------------- ------- ------- -------
63,659 77,576 58,939
------- ------- -------
Less: sales and other operating revenues between segments
gas & low carbon energy 536 (441) 1,948
oil production & operations 6,261 6,916 7,036
customers & products 144 610 692
other businesses & corporate 536 1,234 5
----------------------------------------------------------- ------- ------- -------
7,477 8,319 9,681
------- ------- -------
External sales and other operating revenues
gas & low carbon energy 17,350 27,234 6,218
oil production & operations (108) 16 1,122
customers & products 38,738 42,462 41,471
other businesses & corporate 202 (455) 447
----------------------------------------------------------- ------- ------- -------
Total sales and other operating revenues 56,182 69,257 49,258
----------------------------------------------------------- ------- ------- -------
By geographical area
US 19,160 18,563 19,152
Non-US 46,350 61,593 42,797
----------------------------------------------------------- ------- ------- -------
65,510 80,156 61,949
Less: sales and other operating revenues between areas 9,328 10,899 12,691
----------------------------------------------------------- ------- ------- -------
56,182 69,257 49,258
------- ------- -------
Revenues from contracts with customers
Sales and other operating revenues include the following
in relation to revenues from contracts with customers:
Crude oil 637 809 2,144
Oil products 30,141 34,800 31,751
Natural gas, LNG and NGLs 9,644 11,040 10,680
Non-oil products and other revenues from contracts with
customers 1,872 1,459 2,345
----------------------------------------------------------- ------- ------- -------
Revenue from contracts with customers 42,294 48,108 46,920
----------------------------------------------------------- ------- ------- -------
Other operating revenues(a) 13,888 21,149 2,338
----------------------------------------------------------- ------- ------- -------
Total sales and other operating revenues 56,182 69,257 49,258
----------------------------------------------------------- ------- ------- -------
(a) Principally relates to commodity derivative transactions
including sales of bp own production in trading books.
Top of page 23
Note 6. Depreciation, depletion and amortization
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
--------------------------------------------------- ------- ------- -------
Total depreciation, depletion and amortization by
segment
gas & low carbon energy 1,440 1,373 1,255
oil production & operations 1,327 1,383 1,429
customers & products 797 741 717
other businesses & corporate 236 217 224
--------------------------------------------------- ------- ------- -------
3,800 3,714 3,625
------- ------- -------
Total depreciation, depletion and amortization by
geographical area
US 1,254 1,202 1,083
Non-US 2,546 2,512 2,542
--------------------------------------------------- ------- ------- -------
3,800 3,714 3,625
------- ------- -------
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, 385 million ordinary shares
repurchased for cancellation were settled during the first quarter
2023 for a total cost of $2,448 million. A further 154 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 $1,023 million. This amount, plus a
further $447 million, has been accrued at 31 March 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.
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
-------------------------------------------------------- ---------- ---------- ----------
Results for the period
Profit (loss) for the period attributable to bp
shareholders 8,218 10,803 (20,384)
Less: preference dividend - - -
------------------------------------------------------- ---------- ---------- ----------
Profit (loss) attributable to bp ordinary shareholders 8,218 10,803 (20,384)
-------------------------------------------------------- ---------- ---------- ----------
Number of shares (thousand) (a)(b)
Basic weighted average number of shares outstanding 17,891,455 18,178,821 19,514,477
ADS equivalent(c) 2,981,909 3,029,803 3,252,412
-------------------------------------------------------- ---------- ---------- ----------
Weighted average number of shares outstanding
used to calculate diluted earnings per share 18,238,522 18,509,421 19,514,477
ADS equivalent(c) 3,039,753 3,084,903 3,252,412
-------------------------------------------------------- ---------- ---------- ----------
Shares in issue at period-end 17,703,285 17,974,112 19,409,157
ADS equivalent(c) 2,950,547 2,995,685 3,234,859
-------------------------------------------------------- ---------- ---------- ----------
(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 first quarter 2022 are 179,226 thousand (ADS
equivalent 29,871 thousand).
(c) One ADS is equivalent to six ordinary shares.
Top of page 24
Note 8. Dividends
Dividends payable
BP today announced an interim dividend of 6.610 cents per
ordinary share which is expected to be paid on 23 June 2023 to
ordinary shareholders and American Depositary Share (ADS) holders
on the register on 12 May 2023. The ex-dividend date will be 11 May
2023. The corresponding amount in sterling is due to be announced
on 6 June 2023, calculated based on the average of the market
exchange rates over three dealing days between 31 May 2023 and 2
June 2023. Holders of ADSs are expected to receive $0.39660 per ADS
(less applicable fees). The board has decided not to offer a scrip
dividend alternative in respect of the first 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 first quarter dividend and timetable are
available at bp.com/dividends and further details of the dividend
reinvestment programmes are available at bp.com/drip.
First Fourth First
quarter quarter quarter
2023 2022 2022
------- ------- -------
Dividends paid per ordinary share
cents 6.610 6.006 5.460
pence 5.551 4.940 4.160
Dividends paid per ADS (cents) 39.66 36.04 32.76
----------------------------------- ------- ------- -------
Note 9. Net debt
Net debt* First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
--------------------------------------------------- -------- -------- --------
Finance debt(a) 48,595 46,944 60,606
Fair value (asset) liability of hedges related to
finance debt(b) 3,070 3,673 1,265
--------------------------------------------------- -------- -------- --------
51,665 50,617 61,871
Less: cash and cash equivalents 30,433 29,195 34,414
--------------------------------------------------- -------- -------- --------
Net debt(c) 21,232 21,422 27,457
--------------------------------------------------- -------- -------- --------
Total equity 87,181 82,990 78,519
Gearing* 19.6% 20.5% 25.9%
--------------------------------------------------- -------- -------- --------
(a) The fair value of finance debt at 31 March 2023 was $45,071
million (31 December 2022 $42,590 million, 31 March 2022 $59,601
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 $97 million at 31 March 2023 (fourth quarter 2022 liability of
$91 million and first quarter 2022 liability of $173 million) are
not included in the calculation of net debt shown above as hedge
accounting is not applied for these instruments.
(c) Net debt does not include accrued interest, which is
reported within other receivables and other payables on the balance
sheet and for which the associated cash flows are presented as
operating cash flows in the group cash flow statement.
Note 10. Statutory accounts
The financial information shown in this publication, which was
approved by the Board of Directors on 1 May 2023, 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 25
Additional information
Capital expenditure*
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
----------------------------------- ------- ------- -------
Capital expenditure
Organic capital expenditure* 3,495 3,861 2,573
Inorganic capital expenditure*(a) 130 3,508 356
----------------------------------- ------- ------- -------
3,625 7,369 2,929
------- ------- -------
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
------------------------------------------ ------- ------- -------
Capital expenditure by segment
gas & low carbon energy 1,013 1,609 861
oil production & operations 1,520 1,430 1,254
customers & products(a) 990 4,149 715
other businesses & corporate 102 181 99
------- ------- -------
3,625 7,369 2,929
------- ------- -------
Capital expenditure by geographical area
US 1,697 4,929 1,097
Non-US 1,928 2,440 1,832
------------------------------------------ ------- ------- -------
3,625 7,369 2,929
------- ------- -------
(a) Fourth quarter 2022 includes $3,030 million in respect of the Archaea Energy acquisition.
Top of page 26
Adjusting items*
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
-------------------------------------------------------- ------- ------- --------
gas & low carbon energy
Gains on sale of businesses and fixed assets 15 33 9
Net impairment and losses on sale of businesses and
fixed assets (2) 1,111 (252)
Environmental and other provisions - - -
Restructuring, integration and rationalization costs - 3 4
Fair value accounting effects(a)(b) 3,934 12,502 (5,015)
Other (56) (358) 135
-------------------------------------------------------- ------- ------- --------
3,891 13,291 (5,119)
------- ------- --------
oil production & operations
Gains on sale of businesses and fixed assets 137 68 249
Net impairment and losses on sale of businesses and
fixed assets 8 (3,246) (1,204)
Environmental and other provisions(c) (49) 420 58
Restructuring, integration and rationalization costs - 3 (10)
Fair value accounting effects - - -
Other (98) 15 55
-------------------------------------------------------- ------- ------- --------
(2) (2,740) (852)
------- ------- --------
customers & products
Gains on sale of businesses and fixed assets 1 72 261
Net impairment and losses on sale of businesses and
fixed assets (83) (1,451) (13)
Environmental and other provisions (10) (65) -
Restructuring, integration and rationalization costs (2) 12 1
Fair value accounting effects(b) 77 189 (377)
Other (62) 112 (47)
-------------------------------------------------------- ------- ------- --------
(79) (1,131) (175)
------- ------- --------
other businesses & corporate
Gains on sale of businesses and fixed assets - 1 (1)
Net impairment and losses on sale of businesses and
fixed assets (6) (1) (1)
Environmental and other provisions (14) (67) (3)
Restructuring, integration and rationalization costs (10) 3 13
Fair value accounting effects(b) 245 515 (425)
Rosneft - - (24,033)
Gulf of Mexico oil spill (9) (23) (19)
Other - (19) 9
-------------------------------------------------------- ------- ------- --------
206 409 (24,460)
Total before interest and taxation 4,016 9,829 (30,606)
Finance costs(d) (104) (169) (158)
-------------------------------------------------------- ------- ------- --------
Total before taxation 3,912 9,660 (30,764)
Taxation on adjusting items(e) (205) (1,542) 1,471
Taxation - tax rate change effect of UK energy profits
levy(f) - (1,056) -
-------------------------------------------------------- ------- ------- --------
Total after taxation for period(g) 3,707 7,062 (29,293)
-------------------------------------------------------- ------- ------- --------
(a) Under IFRS bp marks-to-market the value of the hedges used
to risk-manage LNG contracts, but not the contracts themselves,
resulting in a mismatch in accounting treatment. The fair value
accounting effect includes the change in value of LNG contracts
that are being risk managed, and the underlying result reflects how
bp risk-manages its LNG contracts.
(b) For further information, including the nature of fair value
accounting effects reported in each segment, see pages 3, 6 and
31.
(c) Comparatives include provision reversals relating to the
change in discount rate on retained decommissioning provisions.
(d) Includes the unwinding of discounting effects relating to
Gulf of Mexico oil spill payables and the income statement impact
of temporary valuation differences associated with the group's
interest rate and foreign currency exchange risk management of
finance debt.
(e) 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.
(f) Fourth quarter 2022 includes the deferred tax impact of the
UK Energy Profits Levy (EPL) on existing temporary differences
unwinding over the period 1 January 2023 to 31 March 2028. The
revised EPL substantively enacted in the fourth quarter 2022
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.
(g) First quarter 2023 includes a $44-million charge in respect
of the EU Solidarity Contribution, the fourth quarter 2022 includes
a $505-million charge.
Top of page 27
Net debt including leases
Net debt including leases* First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
----------------------------------------------------- -------- -------- --------
Net debt 21,232 21,422 27,457
Lease liabilities 8,605 8,549 8,466
Net partner (receivable) payable for leases entered
into on behalf of joint operations 19 19 206
Net debt including leases 29,856 29,990 36,129
----------------------------------------------------- -------- -------- --------
Total equity 87,181 82,990 78,519
Gearing including leases* 25.5% 26.5% 31.5%
----------------------------------------------------- -------- -------- --------
Gulf of Mexico oil spill
31 March 31 December
$ million 2023 2022
Gulf of Mexico oil spill payables and provisions (9,659) (9,566)
-------------------------------------------------- -------- -----------
Of which - current (1,220) (1,216)
Deferred tax asset 1,455 1,444
-------------------------------------------------- -------- -----------
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
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
------------------------------------------------------------ ------- ------- -------
Movements in inventories and other current and non-current
assets and liabilities as per condensed group cash
flow statement(a) (3,755) (6,847) (1,771)
Adjusted for inventory holding gains (losses)* (Note
4) (600) (1,428) 3,501
Adjusted for fair value accounting effects relating
to subsidiaries 4,242 13,288 (5,817)
Other adjusting items(b) (1,298) (815) 438
------------------------------------------------------------ ------- ------- -------
Working capital release (build) after adjusting for
net inventory gains (losses), fair value accounting
effects and other adjusting items (1,411) 4,198 (3,649)
------------------------------------------------------------ ------- ------- -------
(a) The movement in working capital includes outflows relating
to the Gulf of Mexico oil spill on a pre-tax basis of $12 million
in the first quarter 2023, $1 million in the fourth quarter 2022
and $47 million in the first quarter 2022.
(b) Other adjusting items relate to the non-cash movement of US
emissions obligations carried as a provision that will be settled
by allowances held as inventory.
Top of page 28
Surplus cash flow* reconciliation
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
------------------------------------------------------------- ------- ------- -------
Sources:
Net cash provided by operating activities 7,622 13,571 8,210
Cash provided from investing activities 806 621 1,046
Other(a) (59) (94) 119
Cash inflow 8,369 14,098 9,375
------------------------------------------------------------- ------- ------- -------
Uses:
Lease liability payments (555) (513) (498)
Payments on perpetual hybrid bonds (236) (219) (148)
Dividends paid - BP shareholders (1,183) (1,088) (1,068)
- non-controlling interests (68) (100) (65)
Total capital expenditure* (3,625) (7,369) (2,929)
Net repurchase of shares relating to employee share
schemes (225) - (500)
Payments relating to transactions involving non-controlling
interests (180) (1) (5)
Currency translation differences relating to cash
and cash equivalents (14) 177 (125)
------------------------------------------------------------- ------- ------- -------
Cash outflow (6,086) (9,113) (5,338)
------------------------------------------------------------- ------- ------- -------
Surplus cash flow 2,283 4,985 4,037
------------------------------------------------------------- ------- ------- -------
(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.
First quarter 2022 includes $164 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.
Reconciliation of customers & products RC profit before
interest and tax to underlying RC profit before interest and tax*
to adjusted EBITDA* by business
First Fourth First
quarter quarter quarter
$ million 2023 2022 2022
------------------------------------------------------------ ------- ------- -------
RC profit before interest and tax for customers &
products 2,680 771 1,981
Less: Adjusting items* gains (charges) (79) (1,131) (175)
Underlying RC profit before interest and tax for customers
& products 2,759 1,902 2,156
By business:
customers - convenience & mobility 391 628 522
Castrol - included in customers 161 70 256
products - refining & trading 2,368 1,274 1,634
Add back: Depreciation, depletion and amortization 797 741 717
By business:
customers - convenience & mobility 341 334 326
Castrol - included in customers 39 40 39
products - refining & trading 456 407 391
Adjusted EBITDA for customers & products 3,556 2,643 2,873
By business:
customers - convenience & mobility 732 962 848
Castrol - included in customers 200 110 295
products - refining & trading 2,824 1,681 2,025
------------------------------------------------------------ ------- ------- -------
Top of page 29
Realizations* and marker prices
First Fourth First
quarter quarter quarter
2023 2022 2022
------- ------- -------
Average realizations (a)
Liquids* ($/bbl)
US 62.66 71.21 70.34
Europe 79.26 86.62 104.41
Rest of World 80.67 89.38 88.84
BP Average 71.89 80.44 83.80
--------------------------------------------- ------- ------- -------
Natural gas ($/mcf)
US 2.47 4.84 3.90
Europe(b) 26.83 35.56 34.58
Rest of World 7.41 9.40 7.88
BP Average(b) 7.20 9.59 8.28
--------------------------------------------- ------- ------- -------
Total hydrocarbons* ($/boe)
US 45.00 55.67 52.17
Europe(b) 107.07 130.61 136.17
Rest of World 54.26 64.73 62.38
BP Average(b) 54.74 66.18 64.81
--------------------------------------------- ------- ------- -------
Average oil marker prices ($/bbl)
Brent 81.17 88.87 102.23
West Texas Intermediate 75.97 82.82 95.22
Western Canadian Select 56.67 53.52 79.90
Alaska North Slope 79.02 87.89 96.13
Mars 74.24 78.81 93.43
Urals (NWE - cif) 46.19 61.04 87.26
--------------------------------------------- ------- ------- -------
Average natural gas marker prices
Henry Hub gas price(c) ($/mmBtu) 3.44 6.26 4.96
UK Gas - National Balancing Point (p/therm) 130.81 166.54 232.84
--------------------------------------------- ------- ------- -------
(a) Based on sales of consolidated subsidiaries only - this
excludes equity-accounted entities.
(b) Realizations calculation methodology has been changed to
reflect gas price fluctuations within the North Sea region. First
quarter 2022 was restated. There is no impact on financial
results.
(c) Henry Hub First of Month Index.
Exchange rates
First Fourth First
quarter quarter quarter
2023 2022 2022
------- ------- -------
$/GBP average rate for the period 1.21 1.17 1.34
$/GBP period-end rate 1.24 1.21 1.32
$/EUR average rate for the period 1.07 1.02 1.12
$/EUR period-end rate 1.09 1.07 1.12
$/AUD average rate for the period 0.68 0.66 0.72
$/AUD period-end rate 0.67 0.68 0.75
Top of page 30
Legal proceedings
The following discussion sets out the material developments in
the group's material legal proceedings during the recent period.
For a full discussion of the group's material legal proceedings,
see pages 258-259 of bp Annual Report and Form 20-F 2022.
Other legal proceedings
Climate change BP p.l.c., BP America Inc. and BP Products North
America Inc. are co-defendants with other oil and gas companies in
over 20 lawsuits brought in various state and federal courts on
behalf of various governmental and private parties. The lawsuits
generally assert claims under a variety of legal theories seeking
to hold the defendant companies responsible for impacts allegedly
caused by and/or relating to climate change. Underlying many of the
legal theories are allegations regarding deceptive communication
and disinformation to the public. The lawsuits seek remedies
including payment of money and other forms of equitable relief. If
such suits were successful, the cost of the remedies sought in the
various cases could be substantial. Over the last several years,
defendants removed each lawsuit to federal court and the removals
were contested by plaintiffs, eventually resulting in multiple
decisions by several Circuit Court of Appeals rejecting defendants'
attempts to have the cases moved to federal court. The US Supreme
Court recently declined to review the various Circuit Court of
Appeals decisions. Accordingly, the cases will proceed in the
various state courts. Due to these jurisdictional challenges, the
lawsuits all remain at relatively early stages. While it is not
possible to predict the outcome of these 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 EBITDA is a non-IFRS measure presented for bp's
operating segments and is defined as replacement cost (RC) profit
before interest and tax, excluding net adjusting items* before
interest and tax, and adding back depreciation, depletion and
amortization and exploration write-offs (net of adjusting items).
Adjusted EBITDA by business is a further analysis of adjusted
EBITDA for the customers & products businesses. bp believes it
is helpful to disclose adjusted EBITDA by operating segment and by
business because it reflects how the segments measure underlying
business delivery. The nearest equivalent measure on an IFRS basis
for the segment is RC profit or loss before interest and tax, which
is bp's measure of profit or loss that is required to be disclosed
for each operating segment under IFRS. A reconciliation to IFRS
information is provided on page 28 for the segments.
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,
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
26.
Blue hydrogen - Hydrogen made from natural gas in combination
with carbon capture and storage (CCS).
Capital expenditure is total cash capital expenditure as stated
in the condensed group cash flow statement. Capital expenditure for
the operating segments 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 and petrochemicals businesses, 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.
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.
Top of page 31
Glossary (continued)
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.
Fair value accounting effects are non-IFRS adjustments to our
IFRS profit (loss). They reflect the difference between the way bp
manages the economic exposure and internally measures performance
of certain activities and the way those activities are measured
under IFRS. Fair value accounting effects are included within
adjusting items. They relate to certain of the group's commodity,
interest rate and currency risk exposures as detailed below. Other
than as noted below, the fair value accounting effects described
are reported in both the gas & low carbon energy and customer
& products segments.
bp uses derivative instruments to manage the economic exposure
relating to inventories above normal operating requirements of
crude oil, natural gas and petroleum products. Under IFRS, these
inventories are recorded at historical cost. The related derivative
instruments, however, are required to be recorded at fair value
with gains and losses recognized in the income statement. This is
because hedge accounting is either not permitted or not followed,
principally due to the impracticality of effectiveness-testing
requirements. Therefore, measurement differences in relation to
recognition of gains and losses occur. Gains and losses on these
inventories, other than net realizable value provisions, are not
recognized until the commodity is sold in a subsequent accounting
period. Gains and losses on the related derivative commodity
contracts are recognized in the income statement, from the time the
derivative commodity contract is entered into, on a fair value
basis using forward prices consistent with the contract
maturity.
bp enters into physical commodity contracts to meet certain
business requirements, such as the purchase of crude for a refinery
or the sale of bp's gas production. Under IFRS these physical
contracts are treated as derivatives and are required to be fair
valued when they are managed as part of a larger portfolio of
similar transactions. Gains and losses arising are recognized in
the income statement from the time the derivative commodity
contract is entered into.
IFRS require that inventory held for trading is recorded at its
fair value using period-end spot prices, whereas any related
derivative commodity instruments are required to be recorded at
values based on forward prices consistent with the contract
maturity. Depending on market conditions, these forward prices can
be either higher or lower than spot prices, resulting in
measurement differences.
bp enters into contracts for pipelines and other transportation,
storage capacity, oil and gas processing, liquefied natural gas
(LNG) and certain gas and power contracts that, under IFRS, are
recorded on an accruals basis. These contracts are risk-managed
using a variety of derivative instruments that are fair valued
under IFRS. This results in measurement differences in relation to
recognition of gains and losses.
The way that bp manages the economic exposures described above,
and measures performance internally, differs from the way these
activities are measured under IFRS. bp calculates this difference
for consolidated entities by comparing the IFRS result with
management's internal measure of performance. We believe that
disclosing management's estimate of this difference provides useful
information for investors because it enables investors to see the
economic effect of these activities as a whole.
These include:
-- Under management's internal measure of performance the
inventory, transportation and capacity contracts in question are
valued based on fair value using relevant forward prices prevailing
at the end of the period.
-- Fair value accounting effects also include changes in the
fair value of the near-term portions of LNG contracts that fall
within bp's risk management framework. LNG contracts are not
considered derivatives, because there is insufficient market
liquidity, and they are therefore accrual accounted under IFRS.
However, oil and natural gas derivative financial instruments used
to risk manage the near-term portions of the LNG contracts are fair
valued under IFRS. The fair value accounting effect, which is
reported in the gas and low carbon energy segment, represents the
change in value of LNG contacts that are being risk managed and
which is reflected in the underlying result, but not in reported
earnings. Management believes that this gives a better
representation of performance in each period.
Furthermore, the fair values of derivative instruments used to
risk manage certain other oil, gas, power and other contracts, are
deferred to match with the underlying exposure. The commodity
contracts for business requirements are accounted for on an
accruals basis.
In addition, fair value accounting effects include changes in
the fair value of derivatives entered into by the group to manage
currency exposure and interest rate risks relating to hybrid bonds
to their respective first call periods. The hybrid bonds which were
issued on 17 June 2020 are classified as equity instruments and
were recorded in the balance sheet at that date at their USD
equivalent issued value. Under IFRS these equity instruments are
not remeasured from period to period, and do not qualify for
application of hedge accounting. The derivative instruments
relating to the hybrid bonds, however, are required to be recorded
at fair value with mark to market gains and losses recognized in
the income statement. Therefore, measurement differences in
relation to the recognition of gains and losses occur. The fair
value accounting effect, which is reported in the other businesses
& corporate segment, eliminates the fair value gains and losses
of these derivative financial instruments that are recognized in
the income statement. We believe that this gives a better
representation of performance, by more appropriately reflecting the
economic effect of these risk management activities, in each
period.
Top of page 32
Glossary (continued)
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 24.
We are unable to present reconciliations of forward-looking
information for net debt or gearing to finance debt and total
equity, because without unreasonable efforts, we are unable to
forecast accurately certain adjusting items required to present a
meaningful comparable IFRS forward-looking financial measure. These
items include fair value asset (liability) of hedges related to
finance debt and cash and cash equivalents, that are difficult to
predict in advance in order to include in an IFRS estimate.
Gearing including leases and net debt including leases are
non-IFRS measures. Net debt including leases is calculated as net
debt plus lease liabilities, less the net amount of partner
receivables and payables relating to leases entered into on behalf
of joint operations. Gearing including leases is defined as the
ratio of net debt including leases to the total of net debt
including leases plus total equity. bp believes these measures
provide useful information to investors as they enable investors to
understand the impact of the group's lease portfolio on net debt
and gearing. The nearest equivalent measures on an IFRS basis are
finance debt and finance debt ratio. A reconciliation of finance
debt to net debt including leases is provided on page 27.
Green hydrogen - Hydrogen produced by electrolysis of water
using renewable power.
Hydrocarbons - Liquids and natural gas. Natural gas is converted
to oil equivalent at 5.8 billion cubic feet = 1 million
barrels.
Inorganic capital expenditure is a subset of capital expenditure
on a cash basis and a non-IFRS measure. Inorganic capital
expenditure comprises consideration in business combinations and
certain other significant investments made by the group. It is
reported on a cash basis. bp believes that this measure provides
useful information as it allows investors to understand how bp's
management invests funds in projects which expand the group's
activities through acquisition. The nearest equivalent measure on
an IFRS basis is capital expenditure on a cash basis. Further
information and a reconciliation to IFRS information is provided on
page 25.
Installed renewables capacity is bp's share of capacity for
operating assets owned by entities where bp has an equity
share.
Inventory holding gains and losses are non-IFRS adjustments to
our IFRS profit (loss) and represent:
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.
Top of page 33
Glossary (continued)
Organic capital expenditure is a non-IFRS measure. Organic
capital expenditure comprises capital expenditure on a cash basis
less inorganic capital expenditure. bp believes that this measure
provides useful information as it allows investors to understand
how bp's management invests funds in developing and maintaining the
group's assets. The nearest equivalent measure on an IFRS basis is
capital expenditure on a cash basis and a reconciliation to IFRS
information is provided on page 25 .
We are unable to present reconciliations of forward-looking
information for organic capital expenditure to total cash capital
expenditure, because without unreasonable efforts, we are unable to
forecast accurately the adjusting item, inorganic capital
expenditure, that is difficult to predict in advance in order to
derive the nearest IFRS estimate.
Production-sharing agreement/contract (PSA/PSC) is an
arrangement through which an oil and gas company bears the risks
and costs of exploration, development and production. In return, if
exploration is successful, the oil company receives entitlement to
variable physical volumes of hydrocarbons, representing recovery of
the costs incurred and a stipulated share of the production
remaining after such cost recovery.
Realizations are the result of dividing revenue generated from
hydrocarbon sales, excluding revenue generated from purchases made
for resale and royalty volumes, by revenue generating hydrocarbon
production volumes. Revenue generating hydrocarbon production
reflects the bp share of production as adjusted for any production
which does not generate revenue. Adjustments may include losses due
to shrinkage, amounts consumed during processing, and contractual
or regulatory host committed volumes such as royalties. For the gas
& low carbon energy and oil production & operations
segments, realizations include transfers between businesses.
Refining availability represents Solomon Associates' operational
availability for bp-operated refineries, which is defined as the
percentage of the year that a unit is available for processing
after subtracting the annualized time lost due to turnaround
activity and all planned mechanical, process and regulatory
downtime.
The Refining marker margin (RMM) is the average of regional
indicator margins weighted for bp's crude refining capacity in each
region. Each regional marker margin is based on product yields and
a marker crude oil deemed appropriate for the region. The regional
indicator margins may not be representative of the margins achieved
by bp in any period because of bp's particular refinery
configurations and crude and product slate.
Renewables pipeline - Renewable projects satisfying the
following criteria until the point they can be considered developed
to final investment decision (FID): Site based projects that have
obtained land exclusivity rights, or for PPA 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 this represents a more up to
date reflection of the safety environment.
Retail sites include sites operated by dealers, jobbers,
franchisees or brand licensees or joint venture (JV) partners,
under the bp brand. These may move to and from the bp brand as
their fuel supply agreement or brand licence agreement expires and
are renegotiated in the normal course of business. Retail sites are
primarily branded bp, ARCO, Amoco, Aral and Thorntons, and also
includes sites in India through our Jio-bp JV.
Solomon availability - See Refining availability definition.
Strategic convenience sites are retail sites, within the bp
portfolio, which sell bp-branded vehicle energy (e.g. bp, Aral,
Arco, Amoco, Thorntons and bp pulse ) and either carry one of the
strategic convenience brands (e.g. M&S, Rewe to Go) or a
differentiated convenience offer. To be considered a strategic
convenience site, the convenience offer should have a demonstrable
level of differentiation in the market in which it operates.
Strategic convenience site count includes sites under a pilot
phase.
Top of page 34
Glossary (continued)
Surplus cash flow does not represent the residual cash flow
available for discretionary expenditures. It is a non-IFRS
financial measure that should be considered in addition to, not as
a substitute for or superior to, net cash provided by operating
activities, reported in accordance with IFRS. bp believes it is
helpful to disclose the surplus cash flow because this measure
forms part of bp's financial frame.
Surplus cash flow refers to the net surplus of sources of cash
over uses of cash, after reaching the $35 billion net debt target.
Sources of cash include net cash provided by operating activities,
cash provided from investing activities and cash receipts relating
to transactions involving non-controlling interests. Uses of cash
include lease liability payments, payments on perpetual hybrid
bond, dividends paid, cash capital expenditure, the cash cost of
share buybacks to offset the dilution from vesting of awards under
employee share schemes, cash payments relating to transactions
involving non-controlling interests and currency translation
differences relating to cash and cash equivalents as presented on
the condensed group cash flow statement.
For the first quarter 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 28 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 this
represents a more up to date reflection of the safety
environment.
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 33) after excluding net
adjusting items and related taxation. See page 26 for additional
information on the adjusting items that are used to arrive at
underlying RC profit or loss in order to enable a full
understanding of the items and their financial impact.
Underlying RC profit or loss before interest and tax for the
operating segments or customers & products businesses is
calculated as RC profit or loss (as defined above) including profit
or loss attributable to non-controlling interests before interest
and tax for the operating segments and excluding net adjusting
items for the respective operating segment or business.
bp believes that underlying RC profit or loss is a useful
measure for investors because it is a measure closely tracked by
management to evaluate bp's operating performance and to make
financial, strategic and operating decisions and because it may
help investors to understand and evaluate, in the same manner as
management, the underlying trends in bp's operational performance
on a comparable basis, period on period, by adjusting for the
effects of these adjusting items. The nearest equivalent measure on
an IFRS basis for the group is profit or loss attributable to bp
shareholders. The nearest equivalent measure on an IFRS basis for
segments and businesses is RC profit or loss before interest and
taxation. A reconciliation to IFRS information is provided on page
1 for the group and pages 6-14 for the segments.
Top of page 35
Glossary (continued)
Underlying RC profit or loss per share / underlying RC profit or
loss per ADS is a non-IFRS measure. Earnings per share is defined
in Note 7. Underlying RC profit or loss per ordinary share is
calculated using the same denominator as earnings per share as
defined in the consolidated financial statements. The numerator
used is underlying RC profit or loss attributable to bp
shareholders rather than profit or loss attributable to bp
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 cost is 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 and fair value accounting effects relating to
subsidiaries reported within adjusting items for the period. From
2022, it is adjusted for 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 and Thorntons
Top of page 36
Cautionary statement
In order to utilize the 'safe harbor' provisions of the United
States Private Securities Litigation Reform Act of 1995 (the
'PSLRA') and the general doctrine of cautionary statements, bp is
providing the following cautionary statement:
The discussion in this results announcement contains certain
forecasts, projections and forward-looking statements - that is,
statements related to future, not past events and circumstances -
with respect to the financial condition, results of operations and
businesses of bp and certain of the plans and objectives of bp with
respect to these items. These statements may generally, but not
always, be identified by the use of words such as 'will',
'expects', 'is expected to', 'aims', 'should', 'may', 'objective',
'is likely to', 'intends', 'believes', 'anticipates', 'plans', 'we
see' or similar expressions.
In particular, the following, among other statements, are all
forward looking in nature: plans, expectations and assumptions
regarding oil and gas demand, supply, prices or volatility;
expectations regarding upstream production and bp's customers &
products business; expectations regarding refining margins;
expectations regarding marketing margins and volumes; expectations
regarding turnaround activity; expectations regarding production
from oil production & operations and from gas & low carbon
energy; expectations regarding bp's business, financial
performance, results of operations and cash flows; expectations
regarding future project start-ups; expectations with regards to
bp's transformation to an IEC; expectations regarding price
assumptions used in accounting estimates; bp's plans and
expectations regarding the amount and timing of share buybacks and
quarterly and interim dividends; plans and expectations regarding
bp's credit rating, including in respect of maintaining a strong
investment grade credit rating; 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
2023; plans and expectations regarding the factors taken into
account in setting the dividend per ordinary share and buyback each
quarter; plans and expectations regarding investments,
collaborations and partnerships in electric vehicle (EV) charging
infrastructure; plans and expectations related to bp's transition
growth engines of bioenergy, convenience, EV charging, renewables
& power and hydrogen; 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, including the amount and timing of
proceeds; expectations regarding the underlying effective tax rate
for 2023; expectations regarding the timing and amount of future
payments relating to the Gulf of Mexico oil spill; plans and
expectations regarding capital expenditure, including that
capital
expenditure will be $16-18 billion in 2023; expectations
regarding legal proceedings, including those related to climate
change; plans and expectations regarding projects, joint ventures,
partnerships, agreements and memoranda of understanding with
commercial entities and other third party partners.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that will or may occur in the future and are outside
the control of bp.
Actual results or outcomes, may differ materially from those
expressed in such statements, depending on a variety of factors,
including: the extent and duration of the impact of current market
conditions including the volatility of oil prices, the effects of
bp's plan to exit its shareholding in Rosneft and other investments
in Russia, the impact of COVID-19, 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 any competent
authorities or any other relevant persons may limit or otherwise
impact, bp's ability to sell its interests in Rosneft, or the price
for which bp could sell such interests; the actions of contractors;
natural disasters and adverse weather conditions; changes in public
expectations and other changes to business conditions; wars and
acts of terrorism; cyber-attacks or sabotage; and other factors
discussed elsewhere in this report, as well as those factors
discussed under "Risk factors" in bp's Annual Report and Form 20-F
2022 as filed with the US Securities and Exchange Commission.
Top of page 37
Contacts
London Houston
Press Office David Nicholas Megan Baldino
+44 (0) 7831 095541 +1 907 529 9029
Investor Relations Craig Marshall Graham Collins
bp.com/investors +44 (0) 203 401 5592 +1 832 753 5116
BP p.l.c.'s LEI Code 213800LH1BZH3D16G760
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