BP plc

08/02/2022 | Press release | Distributed by Public on 08/02/2022 00:12

Second quarter 2022 results

Second quarter 2022 results

Date:
2 August 2022

Performing while transforming

Second quarter and first half 2022(a)

  • Net debt reduced to $22.8 billion; further share buyback announced
  • 10% increase in resilient dividend per ordinary share; unchanged financial frame;
  • Delivering resilient hydrocarbons - Brazil and Indonesia renewal options; high-grading Canadian portfolio
  • Continued progress in transformation to an IEC - momentum in EV charging and hydrogen
$ million
 		Second quarter 2022 First quarter 2022 Second quarter 2021 First half 2022 First half 2021
Profit (loss) for the period attributable to bp shareholders 9,257 (20,384) 3,116 (11,127) 7,783
Inventory holding (gains) losses*, net of tax (1,607) (2,664) (736) (4,271) (2,078)
Replacement cost (RC) profit (loss)* 7,650 (23,048) 2,380 (15,398) 5,705
Net (favourable) adverse impact of adjusting items*, net of tax 801 29,293 418 30,094 (277)
Underlying RC profit* 8,451 6,245 2,798 14,696 5,428
Operating cash flow* 10,863 8,210 5,411 19,073 11,520
Capital expenditure* (2,838) (2,929) (2,514) (5,767) (6,312)
Divestment and other proceeds(b) 722 1,181 215 1,903 5,054
Surplus cash flow* 6,590 4,089 695 10,679 2,382
Net issue (repurchase) of shares(c) (2,288) (1,592) (500) (3,880) (500)
Net debt*(d) 22,816 27,457 32,706 22,816 32,706
Announced dividend per ordinary share (cents per share) 6.006 5.460 5.460 11.466 10.710
Underlying RC profit per ordinary share* (cents) 43.58 32.00 13.80 75.55 26.75
Underlying RC profit per ADS* (dollars) 2.61 1.92 0.83 4.53 1.61

(a) This results announcement also represents bp's half-yearly financial report (see page 16).
(b) Divestment proceeds are disposal proceeds as per the condensed group cash flow statement. See page 3 for more information on divestment and other proceeds.
(c) Excludes the ordinary shares issued as non-cash consideration for the acquisition of the public units of BP Midstream Partners LP. See Note 7 for more information.
(d) See Note 9 for more information.

RC profit (loss), underlying RC profit (loss), surplus cash flow and net debt are non-GAAP measures. Inventory holding (gains) losses and adjusting items are non-GAAP adjustments.

* For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 36

Highlights

Underlying replacement cost profit* $8.5 billion

  • Underlying replacement cost profit was $8.5 billion, compared with $6.2 billion for the previous quarter. This was driven by strong realized refining margins, continuing exceptional oil trading performance and higher liquids realizations. This was partly offset by an average gas marketing and trading contribution, down from the exceptional result in the first quarter, including an impact from the ongoing outage at Freeport LNG.
  • Reported profit for the quarter was $9.3 billion, compared with a loss of $20.4 billion for the first quarter 2022. The reported result for the second quarter includes a charge for adjusting items* before tax of $0.3 billion within which are adverse fair value accounting effects* of $0.8 billion. The first quarter loss included a post-tax charge of $24.4 billion relating to bp's decision to exit its 19.75% shareholding in Rosneft and its other businesses with Rosneft in Russia.

Operating cash flow* $10.9 billion; net debt* reduced to $22.8 billion

  • Operating cash flow in the quarter of $10.9 billion includes $1.2 billion of Gulf of Mexico oil spill payments within a working capital* build of $2.9 billion (after adjusting for inventory holding gains* and fair value accounting effects).
  • During the second quarter bp executed share buybacks of $2.3 billion. The $2.5-billion programme announced with the first-quarter 2022 results was completed on 22 July.
  • Net debt fell for the ninth successive quarter to reach $22.8 billion at the end of the second quarter.

Growing distributions within an unchanged financial frame

  • A resilient dividend is bp's first priority within its disciplined financial frame.
  • It is underpinned by an average 2021-5 cash balance point* of around $40 per barrel Brent, $11 per barrel RMM and $3 per mmBtu Henry Hub (all 2020 real).
  • bp has announced a 10% increase in its quarterly dividend to 6.006 cents per ordinary share.
  • This increase reflects the underlying performance and cash generation of the business, which has enabled strong progress in delivering share buybacks and net debt reduction.
  • Looking ahead, on average, based on bp's current forecasts, bp continues to expect to have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025 at around $60 per barrel Brent and subject to the board's discretion each quarter.
  • During the second quarter bp generated surplus cash flow* of $6.6 billion and intends to execute a $3.5 billion share buyback prior to announcing its third-quarter results. bp has now announced share buybacks from 2021 and first-half 2022 surplus cash flow equivalent to 60% of the cumulative surplus cash flow.
  • For 2022 and subject to maintaining a strong investment grade credit rating, bp remains committed to using 60% of surplus cash flow for share buybacks and intends to allocate the remaining 40% to further strengthen the balance sheet.

Progressing transformation to an Integrated Energy Company

  • In resilient hydrocarbons bp has strengthened its renewal options partnering with Petrobras in a successful Drill Stem Test at the Cabo Frio discovery in the Campos Basin offshore Brazil and participating in the Timpan-1 discovery offshore Indonesia. bp continues to high-grade its portfolio, agreeing to acquire a 35% interest in the undeveloped Bay du Nord discovery offshore Canada as part of the transaction to sell its 50% interest in the Sunrise oil sands project.
  • In convenience and mobility bp has continued to progress its EV charging strategy, recently announcing expansion plans with Iberdrola in Spain and Portugal and signing a contract to operate China's largest fast(a) EV charging hub.
  • In low carbon energy bp has announced plans to take a 40.5% stake in the AREH project to lead and operate one of the world's largest planned renewables and green hydrogen* energy hubs based in Western Australia; has announced its intent to partner with Iberdrola to develop large-scale integrated green hydrogen production in Spain, Portugal and the UK; and has continued to progress its renewables strategy, submitting bids for two offshore wind leases in the Netherlands.
Today's results show that bp continues to perform while transforming. Our people have continued to work hard throughout the quarter helping to solve the energy trilemma - secure, affordable and lower carbon energy. We do this by providing the oil and gas the world needs today - while at the same time, investing to accelerate the energy transition.
Bernard Looney,chief executive officer

(a) "fast charging" includes rapid charging ≥50kW and ultra-fast charging ≥150kW

Further information

Contacts

bp press office, London: +44 (0)20 7496 4076, [email protected]

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: expectations regarding the conflict in Ukraine and inflationary pressures, including the impacts and consequences on demand; plans, expectations and assumptions regarding oil and gas demand, supply, prices or volatility and storage levels; expectations regarding major project ramp-up, divestment and maintenance activity; expectations regarding refining margins and product demand; expectations regarding implementation of bp's strategy, bp's business, financial performance, results of operations, cash flows, liquidity, prospects, shareholder value and returns and reputation; expectations regarding future hydrocarbon production and project ramp-up; 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 regarding bp's exit of its shareholding in Rosneft and other investments in Russia; plans and expectations with respect to the total depreciation, depletion and amortization and other businesses & corporate underlying annual charge for 2022; plans and expectations regarding investments in the UK, including in charging infrastructure; plans and expectations regarding the divestment programme, including the amount and timing of proceeds; plans and expectations regarding bp's renewable energy and alternative energy businesses; expectations regarding the UK government's new levy on the profits of UK oil and gas companies; expectations regarding the underlying effective tax rate for 2022; expectations regarding the timing and amount of future payments relating to the Gulf of Mexico oil spill; expectations regarding the impact of the recent outage at Freeport LNG; plans and expectations regarding bp's defined benefit pension plans; plans and expectations regarding capital expenditure, including that capital expenditure will be within a range of $14-15 billion in 2022; plans and expectations regarding projects, joint ventures and other partnerships and agreements, including partnerships and other collaborations with Iberdrola, Eni, Korea Gas Corporation, ADNOC, Masdar, Marubeni, HyCC, Shenzhen Huize New Energy Co. Ltd, Julius Stiglechner GmbH, Submer, and AENA, as well as plans and expectations regarding the operation of China's largest fast EV charging hub, the Herschel Expansion project in the Gulf of Mexico, the Gas Natural Acu power plant in Brazil, the Asian Renewable Energy Hub in Western Australia, submission of bids for offshore wind leases in the Netherlands, the sale of its interest in the Sunrise oil sands project, the acquisition of an interest in the Bay du Nord project, the building of a hydrogen refuelling station at the bp truckstop in Queensland, the development of EV charge points and the HyGreen Teesside green hydrogen project.

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 governmental authorities or any other relevant persons may impact Rosneft's business or outlook, bp's ability to sell its interests in Rosneft, or the price for which bp could sell such interests; the possibility that actions of any competent authorities or any other relevant persons may limit bp's ability to sell its interests in Rosneft, or the price for which it could sell such interests; the actions of contractors; natural disasters and adverse weather conditions; changes in public expectations and other changes to business conditions; wars and acts of terrorism; cyber-attacks or sabotage; and 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 2021 as filed with the US Securities and Exchange Commission.