PRESS RELEASE

from BP P.l.c. (isin : GB0007980591)

EQS-Adhoc: BP p.l.c.: 2Q24 SEA Part 1 of 1

EQS-Ad-hoc: BP p.l.c. / Key word(s): Half Year Results
BP p.l.c.: 2Q24 SEA Part 1 of 1

30-Jul-2024 / 08:00 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by EQS News - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.


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FOR IMMEDIATE RELEASE 
London 30 July 2024 
BP p.l.c. Group results
Second quarter and first half 2024(a)

 

 

 

“For a printer friendly version of this announcement please click on the link below to open a PDF version of the announcement”

 

 

 

Strong cash generation, growing distributions

 

 

Financial summary SecondFirstSecond FirstFirst
  quarterquarterquarter halfhalf
$ million 202420242023 20242023
Profit (loss) for the period attributable to bp shareholders (129)2,2631,792 2,13410,010
Inventory holding (gains) losses*, net of tax 113(657)549 (544)1,001
Replacement cost (RC) profit (loss)* (16)1,6062,341 1,59011,011
Net (favourable) adverse impact of adjusting items*, net of tax 2,7721,117248 3,889(3,459)
Underlying RC profit* 2,7562,7232,589 5,4797,552
Operating cash flow* 8,1005,0096,293 13,10913,915
Capital expenditure* (3,691)(4,278)(4,314) (7,969)(7,939)
Divestment and other proceeds(b) 76041388 1,173888
Net issue (repurchase) of shares (1,751)(1,750)(2,073) (3,501)(4,521)
Net debt*(c) 22,61424,01523,660 22,61423,660
Adjusted EBITDA* 9,63910,3069,770 19,94522,836
Announced dividend per ordinary share (cents per share) 8.0007.2707.270 15.27013.880
Underlying RC profit per ordinary share* (cents) 16.6116.2414.77 32.8642.65
Underlying RC profit per ADS* (dollars) 1.000.970.89 1.972.56

Highlights

  • Strong operating cash flow and lower net debt: underlying RC profit $2.8 billion; strong operating cash flow of $8.1 billion; net debt reduced to $22.6 billion.
  • Robust operations: 2Q24 bp-operated upstream plant reliability* 96.1%; 2Q24 bp-operated refining availability* 96.4%.
  • Growing shareholder distributions: Dividend per ordinary share of 8 cents; $1.75 billion share buyback announced for 2Q24, delivering on our commitment to announce $3.5 billion for the first half of 2024; committed to announcing $3.5 billion share buyback for the second half of 2024.
  • Six priorities in action: Advancing growth projects, taking FID on Kaskida in Gulf of Mexico; re-focusing bioenergy business with agreement to take full ownership of bp Bunge Bioenergia and high grading biofuels portfolio.

 

 

Our businesses continue to operate safely and efficiently. We are driving focus across the business and reducing costs, all while building momentum in our drive to 2025. Our recent go-ahead of the Kaskida development in the Gulf of Mexico business, and decision to take full ownership of bp Bunge Bioenergia while scaling back plans for new biofuels projects, demonstrate our commitment to delivering as a simpler, more focused and higher value company. This all supports growing returns for shareholders, as we have announced today.
 
Murray Auchincloss
Chief executive officer
 

 

 

  1. This results announcement also represents bp's half-yearly financial report (see page 15).
  1. Divestment proceeds are disposal proceeds as per the condensed group cash flow statement. See page 3 for more information on other proceeds.
  2. See Note 9 for more information.

 

RC profit (loss), underlying RC profit, net debt, adjusted EBITDA, underlying RC profit per ordinary share and underlying RC profit per ADS are non-IFRS measures. Inventory holding (gains) losses and adjusting items are non-IFRS adjustments.

 

* For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 33.

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We generated strong operating cash flow* in the quarter, which helped reduce net debt* to $22.6 billion. Our decision to increase our dividend by 10%, and extend our buyback programme commitment to 4Q 2024, reflects the confidence we have in our performance and outlook for cash generation. We are maintaining a disciplined financial frame and remain committed to growing value and returns for bp.
 
Kate Thomson Chief financial officer
 

 

 Highlights 
 2Q24 underlying replacement cost (RC) profit* $2.8 billion 
                     Underlying RC profit for the quarter was $2.8 billion, compared with $2.7 billion for the previous quarter. Compared with the first quarter 2024, the result reflects an average gas marketing and trading result, significantly lower realized refining margins, stronger fuels margins and lower taxation. The underlying effective tax rate (ETR)* in the quarter was 33% which reflects the impact of the reassessment of the recognition of deferred tax assets. 
                     Reported loss for the quarter was $0.1 billion, compared with a profit of $2.3 billion for the first quarter 2024. The reported result for the second quarter is adjusted for inventory holding losses* of $0.1 billion (net of tax) and a net adverse impact of adjusting items* of $2.8 billion (net of tax) to derive the underlying RC profit. Adjusting items post-tax include a net charge of $1.5 billion relating to asset impairments and associated onerous contract provisions, including those relating to the ongoing review of the Gelsenkirchen refinery and adverse post-tax fair value accounting effects* of $0.9 billion. 
 Segment results 
                     Gas & low carbon energy: The RC loss before interest and tax for the second quarter 2024 was $0.3 billion, compared with a profit of $1.0 billion for the previous quarter. After adjusting RC loss before interest and tax for a net adverse impact of adjusting items of $1.7 billion, the underlying RC profit before interest and tax* for the second quarter was $1.4 billion, compared with $1.7 billion in the first quarter 2024. The second quarter underlying result reflects an average gas marketing and trading result compared with a strong result in the first quarter, partially offset by the absence of foreign exchange losses from the devaluation of the Egyptian pound and lower exploration write-offs. 
                     Oil production & operations: The RC profit before interest and tax for the second quarter 2024 was $3.3 billion, compared with $3.1 billion for the previous quarter. After adjusting RC profit before interest and tax for a net favourable impact of adjusting items of $0.2 billion, the underlying RC profit before interest and tax for the second quarter was $3.1 billion, compared with $3.1 billion in the first quarter 2024. The second quarter underlying result reflects higher realizations partially offset by higher exploration write-offs. 
                     Customers & products: The RC loss before interest and tax for the second quarter 2024 was $0.1 billion, compared with a profit of $1.0 billion for the previous quarter. After adjusting RC loss before interest and tax for a net adverse impact of adjusting items of $1.3 billion, the underlying RC profit before interest and tax for the second quarter was $1.1 billion, compared with $1.3 billion in the first quarter 2024. The customers second quarter underlying result was higher by $0.4 billion, reflecting stronger fuels margins, convenience performance and seasonal volumes, and continued quarter on quarter momentum in Castrol. The products second quarter underlying result was lower by $0.6 billion, reflecting significantly lower realized refining margins mainly relating to weaker middle distillate margins and narrower North American heavy crude oil differentials, and a higher level of turnaround activity, partially offset by the absence of the first quarter impacts of the Whiting refinery outage. The oil trading contribution was weak following a strong result in the first quarter. 
 Operating cash flow* $8.1 billion and net debt* reduced to $22.6 billion 
                     Operating cash flow in the quarter of $8.1 billion was strong. This includes a working capital* release of $0.5 billion (after adjusting for inventory holding losses, fair value accounting effects and other adjusting items). This largely reflects a partial unwind of previous quarters' working capital build, partially offset by the settlement payment for the Gulf of Mexico (see page 29). Net debt reduced to $22.6 billion, largely driven by strong operating cash flow. 
 Growing distributions within an unchanged financial frame 
                     A resilient dividend is bp’s first priority within its disciplined financial frame, underpinned by a cash balance point* of around $40 per barrel Brent, $11 per barrel RMM and $3 per mmBtu Henry Hub (all 2021 real). For the second quarter, bp has announced a dividend per ordinary share of 8 cents. 
                     bp is committed to maintaining a strong investment grade credit rating. Through the cycle, we are targeting to further improve our credit metrics within an 'A' grade credit range. 
                     bp continues to invest with discipline and a returns focused approach in our transition growth* engines and in our oil, gas and refining businesses. For 2024 and 2025 we expect capital expenditure of around $16 billion per annum. 
                     The $1.75 billion share buyback programme announced with the first quarter results was completed on 26 July 2024. Related to the second quarter results, bp intends to execute a $1.75 billion share buyback prior to reporting the third quarter results. Furthermore, bp is committed to announcing $3.5 billion for the second half of 2024. At current market conditions and subject to maintaining a strong investment grade credit rating, bp plans share buybacks of at least $14 billion through 2025 as part of our commitment, on a point forward basis, to returning at least 80% of surplus cash flow* to shareholders. 
                     In setting the dividend per ordinary share and buyback each quarter, the board will continue to take into account factors including the cumulative level of and outlook for surplus cash flow, the cash balance point and maintaining a strong investment grade credit rating. 

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 39.

 

 

 

 

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Financial results

In addition to the highlights on page 2:

  • Profit or loss attributable to bp shareholders in the second quarter and half year was a loss of $0.1 billion and a profit of $2.1 billion respectively, compared with a profit of $1.8 billion and $10.0 billion in the same periods of 2023.
  • After adjusting loss or profit attributable to bp shareholders for inventory holding losses or gains* and net impact of adjusting items*, underlying replacement cost (RC) profit* for the second quarter and half year was $2.8 billion and $5.5 billion respectively, compared with $2.6 billion and $7.6 billion for the same periods of 2023. The underlying RC profit for the second quarter mainly reflects an average gas marketing and trading result compared with an exceptional result in the second quarter 2023, lower industry refining margins, a significantly lower level of turnaround activity in customers & products, increased volume in oil production & operations, and lower taxation. For the half year, the reduction mainly reflects a lower gas marketing and trading result, lower industry refining margins and lower gas realizations, partially offset by increased volume in oil production & operations and lower taxation.
  • Adjusting items in the second quarter and half year had a net adverse pre-tax impact of $3.1 billion and $4.3 billion respectively, compared with a net adverse pre-tax impact of $0.6 billion and a net favourable pre-tax impact of $3.3 billion in the same periods of 2023.
  • Adjusting items for the second quarter and half year of 2024 include an adverse impact of pre-tax fair value accounting effects*, relative to management's internal measure of performance, of $1.0 billion and $1.2 billion respectively, compared with a favourable pre-tax impact of $1.1 billion and $5.3 billion in the same periods of 2023. This is primarily due to an increase in the forward price of LNG over the quarter and half year 2024, compared to a decline in the comparative periods of 2023.
  • Adjusting items for the second quarter and half year of 2024 include an adverse pre-tax impact of asset impairments of $1.3 billion and $1.9 billion respectively, compared with an adverse pre-tax impact of $1.2 billion and $1.2 billion in the same periods of 2023. In second quarter and half year 2024 there was also an adverse impact of $0.7 billion and $0.9 billion respectively of onerous contract provisions associated with those impairments.
  • The effective tax rate (ETR) on RC profit or loss* for the second quarter and half year was 87% and 63% respectively, compared with 41% and 32% for the same periods in 2023. Excluding adjusting items, the underlying ETR* for the second quarter and half year was 33% and 38%, compared with 43% and 41% for the same periods a year ago. The lower underlying ETR for the second quarter and half year reflects the impact of the reassessment of the recognition of deferred tax assets. ETR on RC profit or loss and underlying ETR are non-IFRS measures.
  • Operating cash flow* for the second quarter and half year was $8.1 billion and $13.1 billion respectively, compared with $6.3 billion and $13.9 billion for the same periods in 2023. The quarter-on-quarter variance has arisen as a result of a higher working capital* release and timings of payments relating to provisions, and the year-on-year variance is driven by the lower underlying profit partly offset by lower tax payments.
  • Capital expenditure* in the second quarter and half year was $3.7 billion and $8.0 billion respectively, compared with $4.3 billion and $7.9 billion in the same periods of 2023. Second quarter and half year 2023 include $1.1 billion in respect of the TravelCenters of America acquisition.
  • Total divestment and other proceeds for the second quarter and half year were $0.8 billion and $1.2 billion respectively, compared with $0.1 billion and $0.9 billion for the same periods in 2023. Other proceeds for the second quarter and half year 2024 were $0.5 billion of proceeds from the sale of a 49% interest in a controlled affiliate holding certain midstream assets offshore US. There were no other proceeds for the same periods in 2023.
  • At the end of the second quarter, net debt* was $22.6 billion, compared with $24.0 billion at the end of the first quarter 2024 and $23.7 billion at the end of the second quarter 2023 reflecting strong operating cash flow.

 

 

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Analysis of RC profit (loss) before interest and tax and reconciliation to profit (loss) for the period

  SecondFirstSecond FirstFirst
  quarterquarterquarter halfhalf
$ million 202420242023 20242023
RC profit (loss) before interest and tax       
gas & low carbon energy (315)1,0362,289 7219,636
oil production & operations 3,2673,0602,568 6,3275,885
customers & products (133)988555 8553,235
other businesses & corporate (180)(300)(297) (480)(387)
Consolidation adjustment – UPII* (73)32(30) (41)(52)
RC profit before interest and tax 2,5664,8165,085 7,38218,317
Finance costs and net finance expense relating to pensions and other post-retirement benefits (1,176)(1,034)(859) (2,210)(1,644)
Taxation on a RC basis (1,207)(2,030)(1,724) (3,237)(5,297)
Non-controlling interests (199)(146)(161) (345)(365)
RC profit (loss) attributable to bp shareholders* (16)1,6062,341 1,59011,011
Inventory holding gains (losses)* (136)851(732) 715(1,332)
Taxation (charge) credit on inventory holding gains and losses 23(194)183 (171)331
Profit (loss) for the period attributable to bp shareholders (129)2,2631,792 2,13410,010

Analysis of underlying RC profit (loss) before interest and tax

  SecondFirstSecond FirstFirst
  quarterquarterquarter halfhalf
$ million 202420242023 20242023
Underlying RC profit (loss) before interest and tax       
gas & low carbon energy 1,4021,6582,233 3,0605,689
oil production & operations 3,0943,1252,777 6,2196,096
customers & products 1,1491,289796 2,4383,555
other businesses & corporate (158)(154)(170) (312)(466)
Consolidation adjustment – UPII (73)32(30) (41)(52)
Underlying RC profit before interest and tax 5,4145,9505,606 11,36414,822
Finance costs and net finance expense relating to pensions and other post-retirement benefits (971)(942)(740) (1,913)(1,421)
Taxation on an underlying RC basis (1,488)(2,139)(2,116) (3,627)(5,484)
Non-controlling interests (199)(146)(161) (345)(365)
Underlying RC profit attributable to bp shareholders* 2,7562,7232,589 5,4797,552

 

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 half 2024 vs First half 2023
Tier 1 and tier 2 process safety events* 23 +3
Reported recordable injury frequency* 0.262 +2.7%
upstream* production(a) (mboe/d) 2,379 +3.4%
upstream unit production costs*(b) ($/boe) 6.17 +4.0%
bp-operated upstream plant reliability* 95.5% +0.5
bp-operated refining availability*(a) 93.4% -2.5

 

  1. 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.
  1. Mainly reflecting portfolio mix.

 

 

 

 

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Outlook & Guidance

3Q 2024 guidance

  • Looking ahead, bp expects third quarter 2024 reported upstream* production to be lower compared with second-quarter 2024, including in higher margin regions.
  • In its customers business, bp expects fuels margins to remain sensitive to movements in cost of supply, and seasonally higher volumes compared to the second quarter.
  • In products, bp expects realized refining margins to continue to be sensitive to relative movements in product cracks and North American heavy crude oil differentials. In addition bp expects a similar level of turnaround activity to the second quarter.
  • bp expects income taxes paid in the third quarter to be around $1 billion higher than the second quarter 2024 mainly due to the timing of instalment payments, which are typically higher in the third quarter each year.

2024 guidance

In addition to the guidance on page 2:

  • bp continues to expect both reported and underlying upstream production* to be slightly higher compared with 2023. Within this, bp continues to expect underlying production from oil production & operations to be higher and production from gas & low carbon energy to be lower.
  • In its customers business, bp continues to expect growth from convenience, including a full year contribution from TravelCenters of America; a stronger contribution from Castrol underpinned by volume growth in focus markets; and continued margin growth from bp pulse driven by higher energy sold. In addition, bp continues to expect fuels margins to remain sensitive to the cost of supply.
  • In products, bp continues to expect a lower level of industry refining margins relative to 2023, with realized margins impacted by narrower North American heavy crude oil differentials. bp now expects refinery turnaround activity to have a lower financial impact compared to 2023 reflecting the lower margin environment, with phasing of activity in 2024 heavily weighted towards the second half, with a higher impact in the fourth quarter.
  • bp continues to expect the other businesses & corporate underlying annual charge to be around $1.0 billion for 2024. The charge may vary from quarter to quarter.
  • bp continues to expect the depreciation, depletion and amortization to be slightly higher than 2023.
  • bp continues to expect the underlying ETR* for 2024 to be around 40% but it is sensitive to the impact that volatility in the current price environment may have on the geographical mix of the group’s profits and losses.
  • bp continues to expect capital expenditure* for 2024 to be around $16 billion, and continues to expect the phasing to be split broadly evenly between the first half and the second half.
  • bp continues to expect divestment and other proceeds of $2-3 billion in 2024, weighted towards the second half. Having realized $18.9 billion of divestment and other proceeds since the second quarter of 2020, bp continues to expect to reach $25 billion of divestment and other proceeds between the second half of 2020 and 2025.
  • bp continues to expect Gulf of Mexico settlement payments for the year to be around $1.2 billion pre-tax including $1.1 billion pre-tax paid during the second quarter.

bp expects to update on our medium-term plans at the same time as our full year results in February 2025.

 

 

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 39.

 

 

 

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gas & low carbon energy*

Financial results

  • The replacement cost (RC) result before interest and tax for the second quarter and half year was a loss of $315 million and a profit of $721 million respectively, compared with a profit of $2,289 million and $9,636 million for the same periods in 2023. The second quarter and half year are adjusted by an adverse impact of net adjusting items* of $1,717 million and $2,339 million respectively, compared with a favourable impact of net adjusting items of $56 million and $3,947 million for the same periods in 2023. Adjusting items include impacts of fair value accounting effects*, relative to management's internal measure of performance, which are an adverse impact of $1,011 million and $898 million for the second quarter and half year in 2024 and a favourable impact of $1,222 million and $5,156 million for the same periods in 2023. Under IFRS, reported earnings include the mark-to-market value of the hedges used to risk-manage LNG contracts, but not of the LNG contracts themselves. The underlying result includes the mark-to-market value of the hedges but also recognizes changes in value of the LNG contracts being risk managed.
  • After adjusting RC loss or profit before interest and tax for adjusting items, the underlying RC profit before interest and tax* for the second quarter and half year was $1,402 million and $3,060 million respectively, compared with $2,233 million and $5,689 million for the same periods in 2023.
  • The underlying RC profit for the second quarter compared with the same period in 2023, reflects an average gas marketing and trading result compared with an exceptional result in the second quarter 2023, partly offset by a lower depreciation, depletion and amortization charge. The underlying RC profit for the half year, compared with the same period in 2023, reflects a lower gas marketing and trading result and lower realizations, partly offset by a lower depreciation, depletion and amortization charge.

Operational update

  • Reported production for the quarter was 899mboe/d, 0.5% lower than the same period in 2023. Underlying production* was 0.4% higher, mainly due to ramp-up of major projects*, partially offset by base decline.
  • Reported production for the half year was 907mboe/d, 3.2% lower than the same period in 2023. Underlying production was 1.6% lower, mainly due to base decline partially offset by major projects. Reported production includes the effect of the disposal of the Algeria business in 2023.
  • Renewables pipeline* at the end of the quarter was 59.0GW (bp net), including 21.1GW bp net share of Lightsource bp's (LSbp's) pipeline. The renewables pipeline increased by 0.7GW net during the half year. In addition, there is over 10GW (bp net) of early stage opportunities in LSbp's hopper.

Strategic progress

gas

  • On 4 June bp announced that the floating production storage and offloading (FPSO) vessel, a key component of the Greater Tortue Ahmeyim (GTA) Phase 1 LNG development, has arrived at its final location offshore on the maritime border of Mauritania and Senegal, following the arrival of the FLNG vessel in the first quarter.
  • On 4 June bp signed a new five-year gas agreement with Turkish state-owned pipeline company BOTAS. This is the fourth contract between Shah Deniz and BOTAS stretching back to the start of production from the Caspian Sea field in 2006.
  • On 21 June bp approved the final investment decision for the Coconut project offshore Trinidad and Tobago.
  • On 24 July bp and its partner the National Gas Company of Trinidad and Tobago Limited were awarded an exploration and production licence by the Bolivarian Republic of Venezuela for the development of the Cocuina gas discovery. Cocuina is the Venezuelan portion of the cross-border Manakin-Cocuina gas field.
  • These events build on the progress announced in our first-quarter results, which comprised the following:

ADNOC and bp announced that they have agreed to form a new joint venture (JV) in Egypt (bp 51%, ADNOC 49%). Subject to regulatory approvals and clearances, the formation of the JV is expected to complete during the second half of 2024; and bp and the Korea Gas Corporation signed an agreement for bp to supply up to 9.8 million tonnes of LNG over an 11 year period starting in 2026 from bp's global LNG portfolio.

low carbon energy

  • On 13 June bp signed an agreement with OQ and Dredging, Environmental and Marine Engineering NV (DEME) to acquire a 49% stake and operatorship in the Hyport green hydrogen* project in Duqm, Oman, subject to regulatory approvals, which could produce around 57,000 tonnes per annum of green hydrogen.
  • On 15 July bp announced its 100MW industrial-scale green hydrogen project has been awarded funding as part of the European IPCEI (Important Projects of Common European interest) Hy2Infra wave. The project, located next to bp’s Lingen refinery in Germany, is expected to be bp’s first fully owned and operated large-scale green hydrogen plant.
  • These events build on the progress announced in our first-quarter results, which comprised the following:

bp announced it has received all the necessary regulatory approvals and it is now 100% owner of the Beacon US offshore wind projects and Equinor the Empire projects; and our UK joint ventures Net Zero Teesside Power (bp 75%, Equinor 25%) and the Northern Endurance Partnership (bp 45%, Equinor 45%, Total Energies 10%) announced the selection of contractors for engineering, procurement, and construction contracts with a combined value of around $5 billion. The final award of contracts is subject to the receipt of relevant regulatory clearances and positive FID by the projects and the UK government.

 

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gas & low carbon energy (continued)

  SecondFirstSecond FirstFirst
  quarterquarterquarter halfhalf
$ million 202420242023 20242023
Profit (loss) before interest and tax (315)1,0362,289 7219,637
Inventory holding (gains) losses*  (1)
RC profit (loss) before interest and tax (315)1,0362,289 7219,636
Net (favourable) adverse impact of adjusting items 1,717622(56) 2,339(3,947)
Underlying RC profit before interest and tax 1,4021,6582,233 3,0605,689
Taxation on an underlying RC basis (369)(518)(575) (887)(1,536)
Underlying RC profit before interest 1,0331,1401,658 2,1734,153

 

  SecondFirstSecond FirstFirst
  quarterquarterquarter halfhalf
$ million 202420242023 20242023
Depreciation, depletion and amortization       
Total depreciation, depletion and amortization 1,2091,2931,407 2,5022,847
        
Exploration write-offs       
Exploration write-offs 28203(1) 231(2)
        
Adjusted EBITDA*       
Total adjusted EBITDA 2,6393,1543,639 5,7938,534
        
Capital expenditure*       
gas 869639697 1,5081,344
low carbon energy 136659190 795556
Total capital expenditure 1,0051,298887 2,3031,900

 

 

  SecondFirstSecond FirstFirst
  quarterquarterquarter halfhalf
  202420242023 20242023
Production (net of royalties)(a)       
Liquids* (mb/d) 98102103 100108
Natural gas (mmcf/d) 4,6484,7084,641 4,6784,801
Total hydrocarbons* (mboe/d) 899914903
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