− Performing: 2022
EBITDA $60.7 billion; full year operating cash flow $40.9 billion;
net debt $21.4 billion, lowest for almost a decade; ROACE 30.5%;
full year tax $15.1 billion; strongest upstream plant reliability
on record; lowest production costs in 16 years
− Transforming: investment
in transition growth engines c. 30% of 2022 total investment, up
from c. 3% in 2019
●
Leaning
further into bp's strategy:
− Investing
more in the energy transition and bp's
transition,
investing more in supporting energy security and energy
affordability today
− Up
to $8 billion more into transition growth engines by
2030 -
growing in higher-return bioenergy, and convenience & EV
charging; focusing hydrogen and renewables & power where bp can
leverage integration
− Up
to $8 billion more into oil and gas by 2030 -
targeting short-cycle fast-payback opportunities with lower
additional operational emissions
− Aim
to materially increase earnings through 2030 -
aiming for $51-56 billion group EBITDA in 2030
●
Delivering
for shareholders:
− Growing
dividends: 10%
increase in dividend per ordinary share for fourth quarter,
representing 21% growth from 4Q 2021
− Growing
buybacks: further
$2.75 billion buybacks announced today; total of $11.25 billion
buybacks announced from 2022 surplus cash flow
− Increasing
targets: over
12% annual EBIDA per share growth to 2025; over 18% ROACE in 2025
and 2030
Since
introducing its new purpose, net zero ambition, organisation and
strategy in 2020, bp has built strong momentum across its strategy
and delivered value for shareholders. The major global
uncertainties experienced in the past three years - from the
pandemic and its aftermath to the impact of Russia's attack on
Ukraine - have increased the world's focus on energy security and
affordability as well as accelerated the drive towards a lower
carbon energy system.
bp chief executive Bernard
Looney said: "It's
clearer than ever after the past three years that the world wants
and needs energy that is secure and affordable as well as lower
carbon - all three together, what's known as the energy trilemma.
To tackle that, action is needed to accelerate the transition. And
- at the same time - action is needed to make sure that the
transition is orderly, so that affordable energy keeps flowing
where it's needed today.
"As an integrated energy company, bp is very deliberately set up to
help on both counts. With three years of delivery and track record
- we have increased confidence our strategy is working. And with
today's announcement we are leaning further in. We are growing our
investment into our transition and, at the same time, growing
investment into today's energy system. In doing so - we see
tremendous opportunity to create value. And it's what governments
and customers are asking of companies like us."
bp now aims to accelerate the growth in earnings
from its transition growth engines (TGEs) while also
delivering higher earnings than previously expected from its oil
and gas businesses through 2030 - both compared to bp's previous
aims(1).
bp plans to support this growth by disciplined
increases in investment over the period to 2030 of up to $8 billion
in the TGEs and up to $8 billion in oil and gas. bp is adjusting
its target capital expenditure range to $14-18 billion a year out
to 2030(2),
from the previous range of $14-16 billion. All investments will
remain subject to disciplined application of bp's balanced
investment and returns criteria.
bp expects this additional incremental investment
to deliver around $3 billion additional group EBITDA in 2025 and is
aiming for that to grow to $5-6 billion in 2030. This would
comprise an additional $2 billion from the TGEs and $3-4 billon
from oil and gas projects in 2030. bp has also raised its oil and
gas price and refining margin assumptions(3).
As
a result of both factors, bp is now targeting group EBITDA of
$46-49 billion in 2025 and is aiming for $51-56 billion in 2030, in
a $70/barrel (2021 real) oil price environment. These compare to
its previous target and aim, from May 2022, of around $38 billion
in 2025 and $39-46 billion in 2030 at $60/barrel (2020
real).
PERFORMING WHILE TRANSFORMING
After
setting out its new purpose, net zero ambition, structure and
strategy in 2020, bp's focus is now on delivering its
transformation into an Integrated Energy
Company.
Bernard
Looney: "Throughout
2022, bp continued to focus on delivery of our Integrated Energy
Company strategy. We are helping provide the energy the world needs
today and - at the same time - investing with discipline into our
transition and the energy transition - as demonstrated by the
Archaea Energy acquisition. We are strengthening bp, with our
strongest upstream plant reliability on record and our lowest
production costs in 16 years, helping to generate strong returns
and reducing debt for the 11th quarter in a row. Importantly, we
are delivering for our shareholders - with buybacks and a growing
dividend. This is exactly what we said we would do and will
continue to do - performing while
transforming."
In
2022, bp delivered EBITDA of $61 billion, operating cash flow of
$41 billion, including around $7 billion working capital build, and
reported underlying replacement cost profit of $28
billion.
It continued to strengthen its finances, reducing
net debt by $9.2 billion over the year to $21.4
billion - the lowest for over nine years. ROACE for
the year was 30.5%. For 2022, bp incurred a total tax charge
of $15.1 billion on an underlying basis, representing an effective
tax rate of 34%.
bp
also delivered sector-leading distributions for its shareholders in
2022. bp today announced a 10% increase in the quarterly dividend
for the fourth quarter of 2022, to 6.61c per ordinary share.
Together with the 10% rise in the second quarter of 2022, this
represents 21% growth in the dividend compared to the fourth
quarter of 2021.
With
plans for $2.75 billion share buybacks from fourth quarter surplus
cash flow announced today, bp has also announced a total of $11.25
billion share buybacks from 2022 surplus cash flow.
Through
2022, bp also continued to deliver its transformation, notably with
the acquisition of biogas producer Archaea Energy, forming Azule
Energy with Eni in Angola, and adding significant potential
opportunities for hydrogen, including in Australia, Abu Dhabi,
Egypt, Oman and Mauritania.
In 2022, it invested $4.9 billion, around 30% of
its total $16.3 billion capital expenditure, into its
transition growth engines − including
the acquisition of Archaea Energy. This compares to around 3% in
2019. bp continues to expect this proportion to grow to around 50%
in 2030.
LEANING FURTHER INTO BP'S STRATEGY
More investment in bp's transition
bp aims to increase investment in
its TGEs by up to $1 billion a year on average, or up to
a cumulative additional $8 billion to 2030. bp's investment in its
TGEs is now expected to reach $7-9 billion a year in
2030(4) − with
cumulative investment over 2023-2030 around $55-65
billion.
bp
aims to invest around half of this cumulative total in the TGEs
where bp has established businesses, capabilities and track record
- in bioenergy, and in convenience and EV charging; the other half
in hydrogen and renewables & power.
bp
expects to achieve returns of greater than 15% from bioenergy, and
from convenience and EV charging combined, and double digit returns
from hydrogen. It expects 6-8% unlevered returns in
renewables.
Earnings
from bp's TGEs are expected to grow as a result of these changes.
bp now expects the TGEs to deliver $3-4 billion EBITDA in
2025, and is aiming for $10-12 billion in 2030, comprising: over $4
billion from bioenergy; over $4 billion from convenience and EV
charging; and $2-3 billion from hydrogen and renewables &
power.
Bernard
Looney: "We
will increase our focus on the transition growth engines able to
deliver nearer-term
solutions - like EV chargers and sustainable aviation fuels - that
can help people and businesses decarbonise sooner. And
we will continue to build our hydrogen and renewables and power
businesses for the longer term, based around projects where bp's
integrated approach can create significant additional
value."
Bioenergy: bp
plans to grow its established bioenergy businesses materially. It
plans to increase its supply of biogas six-fold, underpinned by
Archaea Energy, to up to 70,000 barrels of oil equivalent a day in
2030. bp aims to increase biofuel production to around 100,000
barrels a day by 2030, supported by five major new projects at bp
refineries, focused on production of sustainable aviation
fuel.
Convenience and EV
charging: expansion
of bp's strategic convenience site networks is expected to drive
growth in bp's convenience gross margin by around 10% a year to
2030. Together with EV charging they are expected to help grow bp's
ability to offer lower carbon transport solutions for customers.
Today bp has 22,000 EV charge points and aims for more than 100,000
by 2030 − around
90% rapid or ultra-fast. It is developing leading positions in key
geographies worldwide, underpinned by partnerships with major fleet
operators.
Hydrogen and renewables &
power: through
this decade bp aims to establish the foundations of a material
business for the future. bp
aims to build a leading position globally
in hydrogen, initially supplying its own refineries, scaling
up to meet growing customer demand and in parallel, as markets
develop, developing global export hubs for hydrogen and its
derivatives. By 2030 bp aims to produce between 0.5-0.7 million
tonnes a year of primarily green hydrogen, also pursuing selected
blue hydrogen opportunities.
In renewables &
power, bp will focus investment
on opportunities where it can create integration value and enhance
returns. bp aims to build a portfolio - including a global position
in offshore wind - in support of green hydrogen, e-fuels, EV
charging and power trading, together with continued growth in its
self-funded solar joint venture Lightsource bp. bp remains on track
to deliver its aim of having developed 50GW renewable power to FID
by 2030; of this it aims to have around 10GW net installed capacity
- largely operated. bp also expects to have assets under
construction and for Lightsource bp to contribute
materially.
More investment in today's energy system:
bp
also aims to increase investment into resilient high-quality oil
and gas projects - again by an average of up to $1 billion a year,
or up to a cumulative $8 billion to 2030. The investment will help
to meet near-term demand for secure supplies of oil and gas,
generating additional earnings that can further strengthen bp and
support investment in its transition.
The
incremental investment to 2025 will target shorter-term,
fast-payback projects that maximise value and can deliver rapidly,
with minimal new infrastructure. While bp will continue to
high-grade its global oil and gas portfolio, due to improving
operational reliability and commerciality over the past four years
it also now anticipates retaining some oil and gas assets longer
than previously envisaged.
Bernard
Looney: "We
need continuing near-term investment into today's energy system -
which depends on oil and gas - to meet today's demands and to make
sure the transition is an orderly one. We have high-quality options
throughout our portfolio, allowing us to choose only the best.
We will prioritise projects where we can deliver quickly, at low
cost, using our existing infrastructure,
allowing us to minimise additional emissions and maximise both
value and our contribution to energy security and
affordability."
As a result of these changes, bp anticipates its
oil and gas production will be around 2.3 million barrels of oil
equivalent a day (mmboe/d) in 2025 and aims for it to be around 2.0
mmboe/d in 2030. This 2030 production would be around 25% lower
than bp's production in 2019, excluding production from Rosneft,
compared to bp's previous expectation of a reduction of around 40%.
bp correspondingly now aims for a fall of 20% to 30% in emissions
from the carbon in its oil and gas production(5) in
2030 compared to a 2019 baseline, lower than the previous aim of
35-40%.
From
the first quarter of 2022, bp has no longer reported oil and gas
production from Russia. With the removal of this Russian
production, bp's full year average reported production in 2022 was
around 40% lower than the total production bp reported in
2019.
DELIVERING FOR SHAREHOLDERS
bp
remains focused on the disciplined delivery of its financial frame.
Through the financial frame and bp's business plans out to 2025, in
a $70 per barrel price environment, bp aims to offer:
● Accelerating
growth: with a compound average
growth rate for EBIDA per share of over 12% between 2H 2019/1H2020
to 2025 at $70 per barrel 2021 real.
● Competitive returns:
expecting to achieve a return on average capital employed (ROACE)
of over 18% in both 2025 and 2030 at $70 per barrel 2021
real.
● Debt
reduction: intending
to allocate around 40% of 2023 surplus cash flow to further
strengthening the balance sheet.
● Compelling
shareholder distributions:
− Dividends: bp
expects to maintain a resilient cash balance point of around $40
per barrel Brent oil price, with $11 per barrel refining marker
margin and $3 per million BTU Henry Hub gas price. bp continues to
see the capacity to continue to grow its dividend per ordinary
share by around 4% a year at around $60/barrel, subject to the
board's discretion(6).
− Buybacks(6): bp
is committed to allocating 60% of 2023 surplus cash flow to share
buybacks, expecting a buyback of around $4 billion a
year − at
around $60 a barrel, at the lower end of its capital expenditure
range and subject to maintaining a strong investment grade credit
rating. The buyback commitment offers leverage to higher price
environments.
● This
announcement contains inside information. The person responsible
for arranging the release of this announcement on behalf of BP
p.l.c. is Ben Mathews, Company Secretary.
● bp's
fourth quarter and full year 2022 results can be seen
at www.bp.com/results.
Further information:
bp
press office, London: bppress@bp.com
Notes:
(1)
Compared to aims set
out by bp in February 2022.
(2)
Capital expenditure
in 2023 planned to be in range $16-18 billion.
(3)
Assumptions to 2030,
all 2021 real: Brent oil price $70/barrel; Henry Hub gas price
$4/million Btu; bp refining marker margin, $14/barrel. See also
note 1 of bp 4Q and full year results 2022.
(4)
bp's investment in
TGEs is expected to be $6-8 billion in 2025.
(5)
bp's aim to reach net
zero* CO2 emissions,
in accordance with bp's Aim 2, from the carbon in our oil and gas
production, in respect of the estimated CO2 emissions
from the combustion of upstream production of crude oil, natural
gas and natural gas liquids on a bp equity share basis based on
bp's net share of production, excluding bp's share of
Rosneft production and assuming that all produced
volumes undergo full stoichiometric combustion to
CO2.
Aim 2 is bp's Scope 3 aim and relates to Scope 3, category 11
emissions. Any interim target or aim in respect of
bp's Aim 2 is defined in terms of absolute reductions relative to
the baseline year of 2019.
(6)
In setting the
dividend per ordinary share and the buyback each quarter the board
will 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.
●
For the purposes of
this announcement, each of the following terms has the meaning
given to it in bp's fourth quarter and full year 2022 financial
results announcement: operating cash flow; net debt; ROACE;
upstream plant reliability; EV charge points; surplus cash flow;
cash balance point; capital expenditure; refining marker margin
(RMM); strategic convenience sites and underlying replacement cost
(RC) profit.
●
For the purposes of
this announcement, each of the following terms has the meaning
given to it in the bp Annual Report and Form 20-F 2021: convenience
gross margin.
●
EBIDA: has the
meaning given to the term Adjusted EBIDA in bp's fourth quarter and
full year 2022 financial results announcement.
●
EBIDA per share:
share buybacks are modelled across a range of share prices in this
calculation and EBIDA is after impact of planned
divestments.
●
EBITDA: has the
meaning given to the term Adjusted EBITDA in bp's fourth quarter
and full year 2022 financial results
announcement.
●
Net zero: References
to net zero for bp in the context of our ambition and Aims 1, 2 and
3 mean achieving a balance between (a) the relevant Scope 1 and 2
emissions (for Aim 1), Scope 3 emissions (for Aim 2) or product
lifecycle emissions (for Aim 3), and (b) the aggregate of
applicable deductions from qualifying activities such as sinks
under our methodology at the applicable time.
●
Rapid or ultra-fast:
rapid charging ≥50kW and ultra-fast charging
≥150kW.
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', 'focus on'
or similar expressions.
In particular, the following, among other statements, are all
forward looking in nature: plans and expectations regarding bp's
performance, earnings, returns, capital expenditure, targets and
market position through 2025 and/or 2030; expectations related to
oil and gas prices and refining margins; expectations regarding
bp's plans to invest up to an additional $8 billion in its
transition growth engines and up to additional $8 billion in oil
and gas projects, both by 2030; plans and expectations related to
earnings growth, including the aim of group EBITDA of $51-56
billion in 2030 at oil prices of $70 per barrel in 2021 real terms;
plans and expectations related to bp's target of growing EBIDA per
share at over 12% compound average growth rate through 2025, and
growing ROACE to over 18% in both 2025 and 2030; plans,
expectations and assumptions regarding oil and gas demand, supply
and prices; plans and expectations regarding bp's transition growth
engines of bioenergy, convenience, EV charging, hydrogen and
renewables and power, including plans and expectations related to
allocation of capital expenditure, returns and EBITDA growth;
expectations regarding earnings from incremental investments
including the delivery of $5-6 billion of additional EBITDA in
2030; plans and expectations regarding the growth of bp's bioenergy
business; plans and expectations related to the expansion of
strategic convenience site networks and EV charge points; plans and
expectations regarding hydrogen, including aims to establish a
future material business and build a leading global position,
customer demand, the development of global export hubs, and aims
relating to green and blue hydrogen; plans and expectations in
renewables and power, including the target of developing 50
gigawatts to FID and having 10 gigawatts net installed capacity
mainly bp operated, both by 2030 and Lightsource bp's contribution
to bp's targets and aims; plans and expectations regarding
investment into resilient high-quality oil and gas projects; bp's
plans to continue to high-grade its global oil and gas portfolio;
plans and expectations regarding the retention of certain oil and
gas assets; plans and expectations relating to bp's future oil and
gas production; plans and expectations relating to taxes, including
the effective tax rate; plans regarding future quarterly dividends
and the amount and timing of share buybacks; plans and
expectations regarding the allocation of surplus cash flow and cash
balance point; and plans and expectations relating to the reduction
of debt and maintenance of an investment grade credit
rating.
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 or actions taken by any competent 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 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 and
those factors discussed under "Principal risks and uncertainties"
in bp's Report on Form 6-K regarding results for the six-month
period ended 30 June 2022 as filed with the US Securities and
Exchange Commission.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
