Profit (loss) for the period attributable to bp
shareholders
(20,384)
2,326
4,667
Inventory holding (gains) losses*, net of tax
(2,664)
(358)
(1,342)
Replacement cost (RC) profit (loss)*
(23,048)
1,968
3,325
Net (favourable) adverse impact of adjusting items*, net of
tax
29,293
2,097
(695)
Underlying RC profit*
6,245
4,065
2,630
Operating cash flow*
8,210
6,116
6,109
Capital expenditure*
(2,929)
(3,633)
(3,798)
Divestment
and other proceeds(a)
1,181
2,265
4,839
Surplus cash flow*
4,089
2,993
1,687
Net issue (repurchase) of shares
(1,592)
(1,725)
—
Net
debt*(b)
27,457
30,613
33,313
Announced dividend per ordinary share (cents per
share)
5.46
5.46
5.25
Underlying RC profit per ordinary share* (cents)
32.00
20.53
12.95
Underlying RC profit per ADS* (dollars)
1.92
1.23
0.78
● Reported loss primarily due to decision to exit Rosneft
shareholding
● Net debt reduced to $27.5bn; further share buyback
announced
● Delivering resilient
hydrocarbons: major project start-up in the Gulf of Mexico; deal to
create Azule Energy in Angola
● Continued progress in transformation to an IEC - momentum
in each of the five transition growth engines
In a quarter dominated by the tragic events in Ukraine and
volatility in energy markets, bp's focus has been on supplying the
reliable energy our customers need. Our decision in February to
exit our shareholding in Rosneft resulted in the material non-cash
charges and headline loss we reported today. But it has not changed
our strategy, our financial frame, or our expectations for
shareholder distributions. Importantly bp continues to perform and
step-by-step we are making progress executing our IEC strategy -
producing resilient hydrocarbons to provide energy security while
investing with discipline in the energy
transition.
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 10 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
33.
Top of page
2
Highlights
Reported loss of $20.4 billion, underlying replacement cost
profit of $6.2 billion
●
Reported loss for the quarter was $20.4 billion, compared with
a profit of $2.3 billion for the fourth quarter 2021. The reported
result includes adjusting items* before tax of $30.8
billion.
● Adjusting
items include pre-tax charges of $24.0 billion and $1.5
billion as a result of the loss of significant influence and bp's
decision to exit its 19.75% shareholding in Rosneft and its other
businesses with Rosneft in Russia respectively. As a result, in the
first quarter the post-tax charge is $24.4 billion and the total
reduction in
equity is $14.7
billion. Adjusting items also include fair value accounting effects
of $5.8 billion. See page 3 for further
details.
● Underlying
replacement cost profit* was $6.2 billion, compared with $4.1
billion for the previous quarter. This was driven by exceptional
oil and gas trading, higher oil realizations and a stronger
refining result, partly offset by the absence of Rosneft from the
first quarter underlying result.
● For
the first quarter bp has announced a dividend of 5.46 cents per
ordinary share payable in June 2022.
Net debt* reduced to $27.5 billion; further $2.5 billion share
buyback announced
● Operating
cash flow* of $8.2 billion includes a working capital* build of
$4.1 billion (after adjusting for inventory holding gains* and fair
value accounting effects*).
● Capital
expenditure* in the quarter was $2.9 billion. bp continues to
expect capital expenditure of $14-15 billion in 2022.
● bp
received divestment and other proceeds of $1.2 billion in the first
quarter and continues to expect to receive total proceeds of $2-3
billion during 2022.
● Net
debt fell to $27.5 billion at the end of the first
quarter.
● During
the first quarter bp executed share buybacks of $1.6 billion - $0.5
billion during January to offset the expected full-year dilution of
the 2022 vesting of awards under employee share schemes and a
further $1.1 billion representing progress against the $1.5 billion
programme announced with the fourth quarter 2021 results on
8
February. This
programme was completed on 27 April.
● During
the first quarter bp generated surplus cash flow* of
$4.1 billion and intends to execute a $2.5 billion share
buyback prior to announcing its second quarter
results.
Progressing transformation to an Integrated Energy
Company
● In
resilient hydrocarbons since the start of 2022 bp announced the
start-up of the Herschel Expansion major project* in the Gulf of
Mexico; signed a final agreement with Eni to create Azule Energy a
new independent joint venture in Angola; and advanced its strategy
in biofuels producing sustainable aviation fuel at bp's
Lingen
refinery and
entering into a long-term strategic offtake and market development
agreement for low-carbon biofuels feedstock with
Nuseed.
● In
convenience and mobility since the start of 2022 bp has continued
to progress its EV charging strategy - launching a strategic
partnership with Volkswagen Group and announcing plans to invest
£1 billion in the UK over the next decade; signed a global
strategic convenience partnership with Uber, aiming to make more
than 3,000
retail locations
available on Uber Eats by 2025; and signed a strategic
collaboration agreement with DHL Express to supply sustainable
aviation fuel.
● In
low carbon energy since the start of 2022 bp has increased its
position in offshore wind with the ScotWind lease option award of
1.45GW net; agreed to form an offshore wind partnership with
Marubeni; and advanced its hydrogen strategy, announcing plans to
develop H2-Fifty, a 250MW gross green hydrogen plant in
Rotterdam
and signing an
agreement to form a joint venture with Aberdeen City Council to
develop a hydrogen hub.
bp continues to build a track-record of delivery against its
disciplined financial frame. Net debt fell for the eighth
consecutive quarter; we are investing with discipline to advance
our strategy - making significant progress year-to-date; and we are
delivering on our commitment to shareholder
distributions.
Murray Auchincloss
Chief financial officer
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
39.
Top of page 3
Financial results
At 31
December 2021, the group's reportable segments were gas & low
carbon energy, oil production & operations, customers &
products and Rosneft. For the period from 1 January 2022 to 27
February 2022, any net income from Rosneft is classified as an
adjusting item. The group has ceased to report Rosneft as a
separate segment in the group’s financial reporting for 2022.
From the first quarter of 2022, the group's reportable segments are
gas & low carbon energy, oil production & operations and
customers & products. For more information see note 2 -
Investment in Rosneft.
In
addition to the highlights on page 2:
●
Loss attributable
to bp shareholders in the first quarter was $20.4 billion
compared with a profit of $4.7 billion in the first quarter of
2021.
●
Adjusting items* in
the first quarter were an adverse pre-tax impact of
$30.8 billion compared with a favourable pre-tax impact of
$0.7 billion in the same period of 2021.
●
As a result of bp's
two nominated directors stepping-down from the Rosneft board on 27
February, bp determined that it no longer meets the criteria set
out under IFRS for having "significant influence" over Rosneft. bp
therefore no longer equity accounts for its interest in Rosneft
from that date, treating it prospectively as a financial asset
measured at fair value. Combined with bp's decision to exit its
shareholding in Rosneft and the market impact on Russian assets, an
impairment assessment was undertaken. Within the first quarter
results, the loss of significant influence and the impairment
assessment led to a net pre-tax charge of $24.0 billion
classified as an adjusting item, reducing equity by $14.4 billion.
The adjusting item is made up of(a):
o
A $13.5 billion
pre-tax impairment charge, representing the full carrying value of
the Rosneft investment at 27 February 2022 as, due to sanctions and
geopolitical challenges the level of uncertainty as to the value of
our shareholding means that, under IFRS, it is not currently
possible to estimate any value other than zero.
o
A $11.1 billion
pre-tax charge, principally arising from foreign exchange losses
accumulated from the date of the initial investment in 2013 to 27
February 2022, that under IFRS, to that date, were recorded
directly in equity rather than in the income statement. Of this
$1.4 billion has an incremental impact on equity with $9.7 billion
recorded as at 31 December 2021.
o
These charges are
partly offset by $0.5 billion representing bp's estimated share of
Rosneft's post-tax income in the first quarter until 27 February
2022.
●
Following bp's
decision to exit its other businesses with Rosneft in Russia,
adjusting items within the first quarter 2022 results also include
a $1.5 billion pre tax charge. This comprises a $1.0 billion
pre-tax charge representing the impairment of the entire carrying
value of these businesses and a further $0.5 billion of foreign
exchange losses which were recorded directly in equity since the
date of initial investment has also been moved to the income
statement. These charges reduced equity in the first quarter by
$1.2 billion.
●
Adjusting items for
the first quarter 2022 also include the reversal of a $1.1 billion
deferred tax liability relating to Russian withholding tax on bp's
share of Rosneft's undistributed profit. A further $0.2 billion
deferred tax charge has been reversed through equity. No further
tax impacts are expected as a result of the above pre-tax
charges.
●
Adjusting items for
the first quarter 2022 also include adverse fair value accounting
effects* of $5.8 billion, primarily due to further increases
in forward gas prices compared to the end of the fourth quarter
2021.
●
Pre-tax inventory
holding gains of $3.5 billion for the first quarter 2022 arose
due to significant increases in most crude and product prices
during the quarter.
●
The effective tax
rate (ETR) on RC profit or loss* for the first quarter was -8%,
compared with 26% for the same period in 2021. Excluding adjusting
items, the underlying ETR* for the first quarter was 33%, compared
with 30% for the same period a year ago. The higher underlying ETR
for the first quarter reflects the absence of equity-accounted
earnings from Rosneft. ETR on RC profit or loss and underlying ETR
are non-GAAP measures.
●
Operating cash
flow* for the first quarter 2022 was $8.2 billion compared
with $6.1 billion for the same period last year. The increase
is driven by the increased underlying replacement cost profit,
offset by working capital movements.
●
Capital expenditure
in the first quarter 2022 was $2.9 billion, compared with
$3.8 billion in the first quarter of 2021 which included a
$0.7 billion payment in respect of the strategic partnership with
Equinor.
●
Total divestment
and other proceeds for the first quarter were $1.2 billion,
compared with $4.8 billion for the same period in 2021. This
includes divestment proceeds from the disposal of bp's Swiss retail
assets, the disposal of bp's interest in the Pike oil sands assets
and receipt of deferred consideration related to the 2020
divestment of bp's Alaska business to Hilcorp. Other proceeds for
the first quarter consists of $0.2 billion of proceeds from the
disposal of a loan note related to the Alaska divestment. See page
31 for further information.
●
At the end of the
first quarter, net debt* was $27.5 billion, compared with
$30.6 billion at the end of the fourth quarter 2021 and
$33.3 billion at the end of the first quarter
2021.
(a)
Because of rounding, the total does not agree
exactly with the sum of its component parts.
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
2022
2021
2021
RC profit (loss) before interest and tax
gas
& low carbon energy
(1,524)
1,911
3,430
oil
production & operations
3,831
3,212
1,479
customers
& products
1,981
(426)
934
other
businesses & corporate(a)
(24,719)
(369)
(315)
Of
which:
other
businesses & corporate excluding Rosneft
(686)
(924)
(678)
Rosneft
(24,033)
555
363
Consolidation
adjustment – UPII*
34
(7)
13
RC profit (loss) before interest and tax
(20,397)
4,321
5,541
Finance
costs and net finance expense relating to pensions and other
post-retirement benefits
(644)
(751)
(729)
Taxation on a RC basis
(1,693)
(1,350)
(1,254)
Non-controlling interests
(314)
(252)
(233)
RC profit (loss) attributable to bp shareholders*
(23,048)
1,968
3,325
Inventory holding gains (losses)*
3,501
472
1,730
Taxation (charge) credit on inventory holding gains and
losses
(837)
(114)
(388)
Profit (loss) for the period attributable to bp
shareholders
(20,384)
2,326
4,667
Analysis of underlying RC profit (loss) before interest and
tax
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Underlying RC profit (loss) before interest and tax
gas
& low carbon energy
3,595
2,211
2,270
oil
production & operations
4,683
4,024
1,565
customers
& products
2,156
611
656
other
businesses & corporate(a)
(259)
210
193
Of
which:
other
businesses & corporate excluding Rosneft
(259)
(535)
(170)
Rosneft
—
745
363
Consolidation
adjustment – UPII
34
(7)
13
Underlying RC profit before interest and tax
10,209
7,049
4,697
Finance
costs and net finance expense relating to pensions and other
post-retirement benefits
(486)
(494)
(581)
Taxation on an underlying RC basis
(3,164)
(2,238)
(1,253)
Non-controlling interests
(314)
(252)
(233)
Underlying RC profit attributable to bp shareholders*
6,245
4,065
2,630
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 6-15 for the segments.
(a)
From first quarter
2022 the results of Rosneft, previously reported as a separate
segment, are also included in other businesses & corporate.
Comparative information for 2021 has been restated to reflect the
changes in reportable segments. For more information see Note 2
Investment in Rosneft.
Operating Metrics
Operating metrics
First quarter
2022
vs First quarter
2021
Tier 1 and tier 2 process safety events*
12
-11
Reported recordable injury frequency*
0.148
-5.7%
upstream* production(a)
(mboe/d)
2,252
+1.5%
upstream unit production costs*(b)
($/boe)
6.52
-11.4%
bp-operated hydrocarbon plant reliability*
96.1%
+3.1
bp-operated refining availability*(a)
95.0%
+0.2
(a)
See Operational
updates on pages 6, 9 and 11.
(b)
Reflecting higher
volumes and lower costs including phasing impacts.
Top of page 5
Outlook & Guidance
Macro outlook
●
bp expects an
ongoing elevated risk of oil price volatility. This reflects
uncertainties around the level of disruption to Russian supply, the
capacity for increased OPEC+ supply, the ongoing impact of COVID-19
on demand and the impact of the conflict in Ukraine on economic
growth.
●
bp expects the
short-term outlook for gas prices to remain heavily dependent on
Russian pipeline flows to Europe.
●
In the second
quarter of 2022, bp expects industry refining margins to remain
elevated due to ongoing supply disruptions, particularly in Russia
and Europe.
2Q22 guidance
●
Looking ahead, we
expect second-quarter 2022 underlying upstream* production to be
lower than first-quarter 2022, primarily in gas & low carbon
energy, reflecting base decline and seasonal maintenance. On a
reported basis, second-quarter production will reflect additional
impacts from the absence of production from our Russia incorporated
joint ventures.
●
In our customers
& products business, there is an elevated level of uncertainty
due to the developing impacts from the conflict in Ukraine and
ongoing COVID-19 restrictions. In addition, in Castrol, additive
supplies are expected to remain under pressure. In refining, we
expect higher industry refining margins, although the increase in
realized margins may differ due to market dislocations. In
addition, energy prices are expected to remain elevated and
turnaround costs to be higher.
2022 Guidance
In
addition to the guidance on page 2:
●
For full year 2022
we continue to expect reported upstream production to be broadly
flat compared with 2021 despite the absence of production from our
Russia incorporated joint ventures. On an underlying basis, we
expect production from oil production & operations to be
slightly higher and production from gas & low carbon energy to
be broadly flat.
●
bp continues to
expect the other businesses & corporate underlying annual
charge to be in a range of $1.2-1.4 billion for 2022. The charge
may vary from quarter to quarter.
●
bp continues to
expect the depreciation, depletion and amortization to be at a
similar level to 2021.
●
As updated in
bp Annual Report and Form 20-F
2021, the underlying ETR* for 2022 is expected 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. The increase from prior guidance
of around 35% reflects the exclusion of Rosneft from bp's
underlying result effective 1 January 2022.
●
bp continues to
expect divestment and other proceeds for the year of $2-3 billion.
Against a target of $25 billion of divestment and other proceeds
between the second half of 2020 and 2025 bp has now received almost
$14.0 billion of proceeds.
●
bp continues to
expect Gulf of Mexico oil spill payments for the year to be around
$1.4 billion pre-tax and during the second quarter expects to make
a pre-tax cash payment of $1.2 billion.
●
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.
●
On average, 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 and have capacity for an annual increase in the
dividend per ordinary share of around 4% through 2025.
●
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.
Adjusted EBITDA* targets and aims(a)
●
As a result of the
decision to exit its shareholding in Rosneft and excluding Rosneft
from base year and future periods, on 27 February bp outlined an
expectation that 2025 adjusted EBITDA from resilient hydrocarbons
and group will be around $2 billion lower than bp's previous
targets, at around $31 billion and $38 billion respectively. In
addition, bp has now revised its 2030 adjusted EBITDA aims for
resilient hydrocarbons and group by lowering both by around $2
billion, to a range of $28-33 billion and $39-46 billion
respectively.
(a)
At $60/bbl Brent (2020 $ real) and $3/mmBtu Henry
Hub (2020 $ real) and RMM $12/bbl (2020 $
real).
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
39.
Top of page 6
gas & low carbon energy
Financial results
●
The replacement
cost loss before interest and tax for the first quarter was $1,524
million, compared with a profit of $3,430 million for the same
period in 2021. The first quarter includes an adverse impact of net
adjusting items* of $5,119 million, compared with a favourable
impact of net adjusting items of $1,160 million for the same period
in 2021.
●
After excluding
adjusting items, the underlying replacement cost profit before
interest and tax* for the first quarter was $3,595 million,
compared with $2,270 million for the same period in 2021. Adjusting
items include adverse fair value accounting effects* of $5,015
million, primarily arising from the increase in forward gas prices
during the quarter. Under IFRS, reported earnings include the
mark-to-market value of the hedges used to risk-manage forward LNG
contracts, but not of the LNG contracts themselves. The fair value
accounting effect reduces this mismatch.
●
The underlying
replacement cost profit for the first quarter, compared with the
same period in 2021, reflects higher realizations, offset by a
higher depreciation, depletion and amortization charge, and an
exceptional gas marketing and trading result, albeit lower than in
2021.
Operational update
●
Reported production
for the quarter was 966mboe/d, 6.2% higher than the same period in
2021, mainly due to major project* start-ups during 2021, partially
offset by base decline and the partial divestment in Oman at the
end of the first quarter 2021.
●
Underlying
production* was also higher, by 10.9% for the quarter, mainly due
to major project start-ups during 2021, partially offset by base
decline.
●
Renewables
pipeline* at the end of the quarter was 24.9GW (bp net). The
renewables pipeline increased by 1.8GW during the quarter,
primarily as a result of bp and its partner EnBW being awarded a
lease option off the east coast of Scotland to develop an offshore
wind project with a total generating capacity of around 2.9GW
(1.45GW bp net).
Strategic progress
gas
●
On 18 March bp
announced it had been successful in a bid for operatorship of
deepwater offshore exploration blocks Agung I and II offshore
Indonesia. Agung I covers an area of 6,656 square kilometres off
the coast of Bali and East Java, while Agung II spans 7,970 square
kilometres offshore South Sulawesi, West Nusa Tenggara and East
Java.
●
In February 2022 bp
increased its shareholding in the Shah Deniz gas project in the
Caspian Sea, offshore Azerbaijan, by 1.16% to 29.99%.
●
On 1 February
construction started on the Gas Natural Acu (GNA) 2 power plant at
the Port of Acu, Rio de Janeiro state, Brazil. GNA 2 is expected to
have an installed capacity of 1.7GW. GNA is a joint venture among
bp, Prumo, Siemens and SPIC Brasil. bp is the exclusive LNG
supplier for GNA 1 and GNA 2 which, together, are expected to
achieve 3GW of installed capacity.
●
In April bp and the
Korea Gas Corporation (KOGAS) signed a long-term agreement to
supply 1.58 million tonnes of liquified natural gas (LNG) per year
from 2025 to KOGAS through a new 18-year contract.
low carbon energy
●
On 23 March bp
announced it is partnering with Marubeni to explore a selected
offshore wind development opportunity in Japan. We have agreed to
form a strategic partnership for offshore wind and potentially
other decarbonization projects. In the first phase of the agreement
bp will acquire a 49% interest in a project to jointly bid in the
Ishikari licence round.
●
On 11 March bp
announced that it signed an agreement to form a joint venture with
the Aberdeen City Council that aims to deliver a scalable green
hydrogen production, storage and distribution facility in the city
powered by renewable energy.
●
On 1 February bp
and partner HyCC announced plans to develop H2-Fifty, a 250MW green
hydrogen production plant in the port area of Rotterdam. The
facility could supply bp’s refinery in the city and has the
potential to reduce CO₂ emissions up to 350,000 tonnes per
year.
●
On 25 January bp
submitted bids for our H2Teesside hydrogen project and Net Zero
Teesside Power project as part of the UK government’s Phase 2
of cluster sequencing for carbon capture, usage and storage (CCUS)
deployment.
Top
of page 7
gas & low carbon energy (continued)
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Profit (loss) before interest and tax
(1,499)
1,903
3,452
Inventory holding (gains) losses*
(25)
8
(22)
RC profit (loss) before interest and tax
(1,524)
1,911
3,430
Net (favourable) adverse impact of adjusting items
5,119
300
(1,160)
Underlying RC profit before interest and tax
3,595
2,211
2,270
Taxation on an underlying RC basis
(1,009)
(509)
(535)
Underlying RC profit before interest
2,586
1,702
1,735
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Depreciation, depletion and amortization
Total depreciation, depletion and amortization
1,255
1,265
854
Exploration write-offs
Exploration write-offs
(2)
2
6
Adjusted EBITDA*
Total adjusted EBITDA
4,848
3,478
3,130
Capital expenditure*
gas
642
928
811
low
carbon energy(a)
219
109
1,074
Total capital expenditure
861
1,037
1,885
(a)
First quarter 2021
includes $712 million in respect of the remaining payment to
Equinor for our investment in our strategic US offshore wind
partnership and $326 million as a lease option fee deposit paid to
The Crown Estate in connection with our participation in the UK
Round 4 Offshore Wind Leasing together with our partner
EnBW.
First
Fourth
First
quarter
quarter
quarter
2022
2021
2021
Production (net of
royalties)(b)
Liquids* (mb/d)
121
122
112
Natural gas (mmcf/d)
4,897
4,941
4,623
Total hydrocarbons* (mboe/d)
966
974
909
Average realizations*(c)
Liquids ($/bbl)
86.09
71.63
55.38
Natural gas ($/mcf)
7.88
6.94
3.94
Total hydrocarbons* ($/boe)
50.91
43.68
26.84
(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
2022
31 December
2021
31 March
2021
low carbon energy(a)
Renewables (bp net, GW)
Installed renewables capacity*
1.9
1.9
1.6
Developed renewables to FID*
4.4
4.4
3.3
Renewables pipeline
24.9
23.1
13.8
of which by geographical area:
Renewables
pipeline – Americas
16.3
16.2
7.3
Renewables
pipeline – Asia Pacific
1.4
1.4
1.4
Renewables
pipeline – Europe
7.0
5.3
5.1
Renewables
pipeline – Other
0.2
0.2
—
of which by technology:
Renewables
pipeline – offshore wind
5.2
3.7
3.7
Renewables
pipeline – solar
19.7
19.4
10.1
Total Developed renewables to FID and Renewables
pipeline
29.2
27.5
17.1
(a)
Because of
rounding, some totals may not agree exactly with the sum of their
component parts.
Top
of page 9
oil production & operations
Financial results
●
The replacement
cost profit before interest and tax for the first quarter was
$3,831 million, compared with $1,479 million for the same period in
2021. The first quarter includes an adverse impact of net adjusting
items* of $852 million, which includes an adverse impact of $1,487
million related to the planned exit from our incorporated joint
ventures in Russia, compared with an adverse impact of net
adjusting items of $86 million for the same period in
2021.
●
After excluding
adjusting items, the underlying replacement cost profit before
interest and tax* for the first quarter was $4,683 million,
compared with $1,565 million for the same period in
2021.
●
The higher
underlying replacement cost profit for the first quarter, compared
with the same period in 2021, primarily reflects higher liquids and
gas realizations.
Operational update
●
Reported production
for the quarter was 1,286mboe/d, 1.7% lower than the first quarter
of 2021. Underlying production* for the quarter was flat compared
with the first quarter of 2021.
Strategic progress
●
On 22 February bp
announced the start-up of the Herschel Expansion major project* in
the deepwater Gulf of Mexico. Phase 1 of the project comprises
development of a new subsea production system and the first of up
to three wells tied to the Na Kika platform (bp 50% operator, Shell
50%).
●
On 11 March bp and
Eni signed an agreement to form a new 50:50 independent company,
Azule Energy, a bp and Eni company, through the combination of the
two companies’ Angolan businesses. The agreement follows the
memorandum of understanding between the companies agreed in May
2021. The creation of Azule Energy is subject to customary
governmental approvals, and the transaction is expected to complete
in the second half of 2022.
●
On 1 April, our
partner Petrobras announced the discovery of a new oil accumulation
in the southern portion of the Campos Basin, offshore Brazil.
Evaluation is ongoing (bp 50%, Petrobras operator
50%).
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Profit before interest and tax
3,832
3,212
1,494
Inventory holding (gains) losses*
(1)
—
(15)
RC profit before interest and tax
3,831
3,212
1,479
Net (favourable) adverse impact of adjusting items
852
812
86
Underlying RC profit before interest and tax
4,683
4,024
1,565
Taxation on an underlying RC basis
(1,912)
(1,235)
(729)
Underlying RC profit before interest
2,771
2,789
836
Top of page 10
oil production & operations (continued)
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Depreciation, depletion and amortization
Total depreciation, depletion and amortization
1,429
1,628
1,574
Exploration write-offs
Exploration write-offs
51
45
56
Adjusted EBITDA*
Total adjusted EBITDA
6,163
5,697
3,195
Capital expenditure*
Total capital expenditure
1,254
1,272
1,319
First
Fourth
First
quarter
quarter
quarter
2022
2021
2021
Production (net of
royalties)(a)
Liquids* (mb/d)
948
1,004
997
Natural gas (mmcf/d)
1,964
2,053
1,810
Total hydrocarbons* (mboe/d)
1,286
1,358
1,309
Average realizations*(b)
Liquids ($/bbl)
83.47
71.07
52.92
Natural gas ($/mcf)
9.40
9.27
4.11
Total hydrocarbons* ($/boe)
76.64
66.94
46.81
(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.
Top of page 11
customers & products
Financial results
●
The replacement
cost profit before interest and tax for the first
quarter was
$1,981 million, compared with $934 million for the same period in
2021. The first quarter included an adverse impact of net adjusting
items* of $175 million, compared with a favourable impact of net
adjusting items of $278 million for the same period in
2021.
●
After excluding
adjusting items, the underlying replacement cost profit before
interest and tax* for the first quarter was $2,156 million,
compared with $656 million for the same period in
2021.
●
The customers &
products result for the first quarter reflects a significantly
stronger performance compared with the same period in 2021, with
higher results in both refining and oil trading.
●
customers –
convenience and mobility result, excluding Castrol, for the quarter
was marginally lower than the same period in 2021. The benefits of
both a strong convenience performance and higher volumes were more
than offset with the impact of a volatile environment, with
increasing commodity costs and adverse foreign exchange
impacts.
Castrol
result in the quarter was lower than the same period in 2021 due to
ongoing additive supply shortages and higher input
costs.
●
products – the
products result for the quarter was higher compared with the same
period in 2021, with refining returning to a profit and an
exceptional oil trading result. In refining, the result included
the benefit of higher realized refining margins and utilization.
This was partially offset by increased energy costs.
Operational update
●
Utilization for the
quarter was around 6 percentage points higher than the same period
in 2021 mainly due to lower COVID related demand impacts.
bp-operated refining availability* for the first quarter was 95.0%,
broadly in line with 94.8% for the same period in
2021.
Strategic progress
●
In support of our
leading convenience offers, we signed a global convenience
partnership with Uber, aiming to make more than 3,000 retail
locations available on Uber Eats by 2025. Additionally, to bring a
more seamless store experience to our customers, we announced the
pilot of Mashgin's checkout-free technology at our US convenience
sites.
●
bp completed the
sale of its retail assets in Switzerland to Oel Pool AG, who will
continue to operate the retail sites under the bp
brand.
●
In support of
accelerating our EV charging ambition:
●
in April, bp and
Volkswagen Group launched their strategic partnership to roll-out
an EV fast charging network in Europe and UK, with the potential
for up to 8,000 new charge points by end 2024. bp's growing
charging network will be integrated into Volkswagen, Skoda and Seat
in-car dashboards, helping drivers seamlessly find their nearest
charger;
●
bp announced plans
to invest £1 billion over the next 10 years to support the
roll-out of fast, convenient charging infrastructure across the UK
and to nearly triple our number of UK public charge
points.
●
In biofuels, we
entered into a 10-year strategic agreement with Nuseed with plans
to accelerate market adoption of Nuseed Carinata as a sustainable
low-carbon biofuel feedstock for use in our refineries, as well as
onward marketing.
●
bp’s Lingen
refinery in Germany became the country’s first production
facility to use co-processing on an industrial scale to produce
sustainable aviation fuel (SAF), using biomass derived from used
cooking oil.
●
bp acquired a 30%
stake in Green Biofuels Ltd, the UK’s largest provider of low
emission hydrogenated vegetable oil fuels. This investment will
expand bp's global biofuels portfolio and its lower carbon
solutions for UK customers.
●
Air bp signed a
strategic collaboration agreement with DHL Express to supply SAF
until 2026, and also signed a SAF supply contract with Rolls-Royce
in the UK and Germany.
●
Castrol and BYD, a
leading new energy vehicle brand in China, signed a strategic
cooperation agreement for the supply of the Castrol ON range of EV
fluids. Additionally, Castrol signed a new commercial agreement
with Tesco, the UK’s largest supermarket chain, to stock a
range of Castrol products.
●
On 5 April 2022, bp
completed the previously announced acquisition of the public units
of BP Midstream Partners LP (BPMP) which has resulted in BPMP
becoming a wholly-owned subsidiary of bp.
●
SAPREF shareholders
(bp and Shell) announced that refinery operations in South Africa
will be paused for an indefinite period from the end of March 2022.
Additionally, in April, the New Zealand Whangarei refinery, in
which bp holds a share, converted to an import-only
terminal.
Top of page 12
customers & products (continued)
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Profit (loss) before interest and tax
5,456
(14)
2,539
Inventory holding (gains) losses*
(3,475)
(412)
(1,605)
RC profit (loss) before interest and tax
1,981
(426)
934
Net (favourable) adverse impact of adjusting items
175
1,037
(278)
Underlying RC profit before interest and tax
2,156
611
656
Of
which:(a)
customers
– convenience & mobility
522
637
658
Castrol – included in customers
256
207
334
products
– refining & trading
1,634
(26)
(2)
Taxation on an underlying RC basis
(400)
(640)
(133)
Underlying RC profit before interest
1,756
(29)
523
(a)
A reconciliation to
RC profit before interest and tax by business is provided on page
31.
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Adjusted EBITDA*(b)
customers – convenience & mobility
848
966
982
Castrol – included in customers
295
243
373
products – refining & trading
2,025
399
419
2,873
1,365
1,401
Depreciation, depletion and amortization
Total depreciation, depletion and amortization
717
754
745
Capital expenditure*
customers – convenience & mobility
347
692
316
Castrol – included in customers
52
53
41
products – refining & trading
368
532
216
Total capital expenditure
715
1,224
532
(b)
A reconciliation to
RC profit before interest and tax by business is provided on page
31.
Retail(c)
First
Fourth
First
quarter
quarter
quarter
2022
2021
2021
bp retail sites* – total (#)
20,550
20,500
20,300
bp
retail sites in growth markets*
2,650
2,700
2,650
Strategic
convenience sites*
2,150
2,150
1,950
(c)
Reported to the
nearest 50.
Marketing sales of refined products (mb/d)
First
Fourth
First
quarter
quarter
quarter
2022
2021
2021
US
1,113
1,151
1,016
Europe
883
936
706
Rest of World
471
496
440
2,467
2,583
2,162
Trading/supply
sales of refined products(d)
352
395
336
Total sales volume of refined products
2,819
2,978
2,498
(d)
An amendment of
22mb/d has been made to amounts presented for the first quarter
2021.
Top of page 13
customers & products (continued)
Refining marker margin*
First
Fourth
First
quarter
quarter
quarter
2022
2021
2021
bp average refining marker margin (RMM) ($/bbl)
18.9
15.1
8.7
Refinery throughputs (mb/d)
First
Fourth
First
quarter
quarter
quarter
2022
2021
2021
US
758
720
725
Europe
807
833
747
Rest of World
85
91
129
Total refinery throughputs
1,650
1,644
1,601
bp-operated refining availability* (%)
95.0
95.4
94.8
Top of page 14
other businesses & corporate
Other
businesses & corporate comprises innovation & engineering,
bp ventures, Launchpad, regions, cities & solutions, our
corporate activities & functions and any residual costs of the
Gulf of Mexico oil spill. From first quarter 2022 the results of
Rosneft, previously reported as a separate segment, are also
included in other businesses & corporate. Comparative
information for 2021 has been restated to reflect the changes in
reportable segments. For more information see Note 2 Investment in
Rosneft.
Financial results
●
The replacement
cost loss before interest and tax for the first quarter was $24,719
million, compared with a loss of $315 million for the same period
in 2021. The first quarter included an adverse impact of net
adjusting items* of $24,460 million, compared with an adverse
impact of net adjusting items of $508 million for the same period
in 2021. The adjusting items for the first quarter of 2022 mainly
relate to Rosneft:
o
A $13.5 billion
pre-tax impairment charge, representing the full carrying value of
the Rosneft investment at 27 February 2022 as, due to sanctions and
geopolitical challenges the level of uncertainty as to the value of
our shareholding means that, under IFRS, it is not currently
possible to estimate any value other than zero.
o
A $11.1 billion
pre-tax charge, principally arising from foreign exchange losses
accumulated from the date of the initial investment in 2013 to 27
February 2022, that under IFRS, to that date, were recorded
directly in equity rather than in the income statement. Of this
$1.4 billion has an incremental impact on equity with $9.7 billion
recorded as at 31 December 2021.
o
These charges are
partly offset by $0.5 billion representing bp's estimated share of
Rosneft's post-tax income in the first quarter until 27 February
2022.
●
Fair value
accounting effects* for the first quarter had an adverse impact of
$425 million, compared with an adverse impact of $447 million for
the same period in 2021.
●
After excluding
adjusting items, the underlying replacement cost loss before
interest and tax* for the first quarter was $259 million, compared
with a profit of $193 million for the same period in
2021.
●
For other
businesses & corporate excluding Rosneft, after excluding
adjusting items, the underlying replacement cost loss before
interest and tax for the first quarter was $259 million, compared
with a loss of $170 million for the same period in 2021, reflecting
lower valuation gains from bp ventures.
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Profit (loss) before interest and tax
(24,719)
(301)
(227)
Inventory holding (gains) losses*
—
(68)
(88)
RC profit (loss) before interest and tax
(24,719)
(369)
(315)
Net
(favourable) adverse impact of adjusting items(a)
24,460
579
508
Underlying RC profit (loss) before interest and tax
(259)
210
193
Taxation on an underlying RC basis
23
55
19
Underlying RC profit (loss) before interest
(236)
265
212
(a)
Includes fair value
accounting effects relating to the hybrid bonds that were issued on
17 June 2020. See page 34 for more information.
other businesses & corporate (excluding Rosneft)
Strategic progress
●
On 8 April bp and
AENA signed an agreement to work on the decarbonization of the
energy and mobility system of the airports operated by AENA,
starting with Valencia airport.
●
On 19 April 2022
the Australian Federal Government announced that bp’s Kwinana
Integrated Clean Energy Hub project in Perth, Western Australia had
been awarded up to A$70 million (US$52 million) of grant
funding.
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Profit (loss) before interest and tax
(686)
(924)
(678)
Inventory holding (gains) losses*
—
—
—
RC profit (loss) before interest and tax
(686)
(924)
(678)
Net (favourable) adverse impact of adjusting items
427
389
508
Underlying RC profit (loss) before interest and tax
(259)
(535)
(170)
Taxation on an underlying RC basis
23
128
54
Underlying RC profit (loss) before interest
(236)
(407)
(116)
Top of page 15
other businesses & corporate (Rosneft)
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Profit (loss) before interest and tax
(24,033)
623
451
Inventory holding (gains) losses*
—
(68)
(88)
RC profit (loss) before interest and tax
(24,033)
555
363
Net (favourable) adverse impact of adjusting items
24,033
190
—
Underlying RC profit (loss) before interest and tax
—
745
363
Taxation on an underlying RC basis
—
(73)
(35)
Underlying RC profit (loss) before interest
—
672
328
First
Fourth
First
quarter
quarter
quarter
2022(a)
2021
2021
Production: Hydrocarbons (net
of royalties, bp share)
Liquids* (mb/d)
584
879
827
Natural gas (mmcf/d)
963
1,433
1,294
Total hydrocarbons* (mboe/d)
750
1,126
1,050
(a)
First quarter 2022
reflects bp's estimated share of Rosneft production for the period
1 January to 27 February, averaged over the quarter (see Note
2).
Top
of page 16
Financial statements
Group income statement
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Sales and other operating revenues (Note 6)
49,258
50,554
34,544
Earnings from joint ventures – after interest and
tax
379
243
160
Earnings from associates – after interest and
tax
871
896
601
Interest and other income
194
259
82
Gains on sale of businesses and fixed assets
518
286
1,105
Total revenues and other income
51,220
52,238
36,492
Purchases
27,808
32,089
15,656
Production and manufacturing expenses
6,975
6,397
6,858
Production and similar taxes
505
406
253
Depreciation, depletion and amortization (Note 7)
3,625
3,863
3,367
Net impairment and losses on sale of businesses and fixed assets
(Note 4)
26,031
1,223
373
Exploration expense
92
102
99
Distribution and administration expenses
3,080
3,365
2,615
Profit (loss) before interest and taxation
(16,896)
4,793
7,271
Finance costs
664
759
723
Net
finance (income) expense relating to pensions and other
post-retirement benefits
(20)
(8)
6
Profit (loss) before taxation
(17,540)
4,042
6,542
Taxation
2,530
1,464
1,642
Profit (loss) for the period
(20,070)
2,578
4,900
Attributable to
BP
shareholders
(20,384)
2,326
4,667
Non-controlling
interests
314
252
233
(20,070)
2,578
4,900
Earnings per share (Note 8)
Profit (loss) for the period attributable to BP
shareholders
Per
ordinary share (cents)
Basic
(104.46)
11.75
22.99
Diluted
(104.46)
11.66
22.89
Per
ADS (dollars)
Basic
(6.27)
0.70
1.38
Diluted
(6.27)
0.70
1.37
Top of page 17
Condensed group statement of comprehensive income
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Profit (loss) for the period
(20,070)
2,578
4,900
Other comprehensive income
Items that may be reclassified subsequently to profit or
loss
Currency
translation differences(a)
(1,749)
(619)
(605)
Exchange (gains)
losses on translation of foreign operations reclassified to gain or
loss on sale of businesses and fixed assets(b)
10,791
36
—
Cash
flow hedges and costs of hedging
222
408
(62)
Share
of items relating to equity-accounted entities, net of
tax
85
104
11
Income
tax relating to items that may be reclassified
(102)
(24)
1
9,247
(95)
(655)
Items that will not be reclassified to profit or loss
Remeasurements of
the net pension and other post-retirement benefit liability or
asset(c)
2,128
1,306
2,026
Cash
flow hedges that will subsequently be transferred to the balance
sheet
(1)
—
2
Income
tax relating to items that will not be reclassified
(668)
(434)
(588)
1,459
872
1,440
Other comprehensive income
10,706
777
785
Total comprehensive income
(9,364)
3,355
5,685
Attributable to
BP
shareholders
(9,678)
3,095
5,460
Non-controlling
interests
314
260
225
(9,364)
3,355
5,685
(a)
First quarter 2022
principally affected by movements in the Russian rouble against the
US dollar.
(b)
See Note 2 -
Investment in Rosneft.
(c)
See Note 1 - Basis
of preparation - Pensions and other post-retirement benefits for
further information.
Top of page 18
Condensed group statement of changes in equity
bp shareholders’
Non-controlling interests
Total
$ million
equity(a)
Hybrid 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
Share
of equity-accounted entities’ changes in equity, net of
tax
—
—
—
—
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
bp shareholders’
Non-controlling interests
Total
$ million
equity
Hybrid bonds
Other interest
equity
At 1 January 2021
71,250
12,076
2,242
85,568
Total comprehensive income
5,460
124
101
5,685
Dividends
(1,068)
—
(51)
(1,119)
Cash
flow hedges transferred to the balance sheet, net of
tax
(4)
—
—
(4)
Share-based payments, net of tax
(45)
—
—
(45)
Payments on perpetual hybrid bonds
—
(55)
—
(55)
Transactions
involving non-controlling interests, net of tax
366
—
190
556
At 31 March 2021
75,959
12,145
2,482
90,586
(a)
In 2022 $9.2
billion of the opening foreign currency translation reserve has
been moved to 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. For more information see Note
2.
Top
of page 19
Group balance sheet
31 March
31 December
$ million
2022
2021
Non-current assets
Property, plant and equipment
109,884
112,902
Goodwill
11,883
12,373
Intangible assets
6,352
6,451
Investments in joint ventures
9,512
9,982
Investments
in associates(a)
5,476
21,001
Other investments
2,669
2,544
Fixed assets
145,776
165,253
Loans
912
922
Trade and other receivables
1,631
2,693
Derivative financial instruments
7,809
7,006
Prepayments
575
479
Deferred tax assets
5,516
6,410
Defined benefit pension plan surpluses
13,162
11,919
175,381
194,682
Current assets
Loans
353
355
Inventories
30,109
23,711
Trade and other receivables
35,610
27,139
Derivative financial instruments
9,390
5,744
Prepayments
2,625
2,486
Current tax receivable
255
542
Other investments
103
280
Cash and cash equivalents
34,414
30,681
112,859
90,938
Assets classified as held for sale (Note 3)
7,272
1,652
120,131
92,590
Total assets
295,512
287,272
Current liabilities
Trade and other payables
61,195
52,611
Derivative financial instruments
17,357
7,565
Accruals
4,389
5,638
Lease liabilities
1,737
1,747
Finance debt
5,212
5,557
Current tax payable
2,917
1,554
Provisions
5,811
5,256
98,618
79,928
Liabilities directly associated with assets classified as held for
sale (Note 3)
2,567
359
101,185
80,287
Non-current liabilities
Other payables
10,385
10,567
Derivative financial instruments
9,065
6,356
Accruals
930
968
Lease liabilities
6,729
6,864
Finance debt
55,394
55,619
Deferred tax liabilities
8,498
8,780
Provisions
17,830
19,572
Defined benefit pension plan and other post-retirement benefit plan
deficits
6,977
7,820
115,808
116,546
Total liabilities
216,993
196,833
Net assets
78,519
90,439
Equity
BP
shareholders’ equity
63,299
75,463
Non-controlling interests
15,220
14,976
Total equity
78,519
90,439
(a)
See Note 2 -
Investment in Rosneft.
Top of page 20
Condensed group cash flow statement
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Operating activities
Profit (loss) before taxation
(17,540)
4,042
6,542
Adjustments to
reconcile profit (loss) before taxation to net cash provided by
operating activities
Depreciation,
depletion and amortization and exploration expenditure written
off
3,674
3,909
3,428
Net
impairment and (gain) loss on sale of businesses and fixed
assets
25,513
937
(732)
Earnings from
equity-accounted entities, less dividends received
(1,093)
(201)
(633)
Net
charge for interest and other finance expense, less net interest
paid
184
74
29
Share-based
payments
170
226
(46)
Net
operating charge for pensions and other post-retirement benefits,
less contributions and benefit payments for unfunded
plans
(146)
(184)
(20)
Net
charge for provisions, less payments
484
194
902
Movements in
inventories and other current and non-current assets and
liabilities
(1,771)
(1,709)
(2,793)
Income
taxes paid
(1,265)
(1,172)
(568)
Net cash provided by operating activities
8,210
6,116
6,109
Investing activities
Expenditure on
property, plant and equipment, intangible and other
assets
(2,602)
(2,772)
(3,033)
Acquisitions, net of cash acquired
(8)
(132)
(1)
Investment in joint ventures
(294)
(581)
(742)
Investment in associates
(25)
(148)
(22)
Total cash capital expenditure
(2,929)
(3,633)
(3,798)
Proceeds from disposal of fixed assets
468
520
551
Proceeds from disposal of businesses, net of cash
disposed
549
1,745
3,613
Proceeds from loan repayments
29
36
61
Cash provided from investing activities
1,046
2,301
4,225
Net cash used in investing activities
(1,883)
(1,332)
427
Financing activities
Net issue (repurchase) of shares (Note 8)
(1,592)
(1,725)
—
Lease liability payments
(498)
(502)
(560)
Proceeds from long-term financing
2,002
648
1,956
Repayments of long-term financing
(892)
(2,963)
(7,029)
Net increase (decrease) in short-term debt
(276)
969
222
Issue of perpetual hybrid bonds
66
65
—
Payments relating to perpetual hybrid bonds
(148)
(100)
(55)
Payments
relating to transactions involving non-controlling interests (Other
interest)
(5)
—
—
Receipts
relating to transactions involving non-controlling interests (Other
interest)
7
12
668
Dividends paid - BP shareholders
(1,068)
(1,077)
(1,064)
-
non-controlling interests
(65)
(66)
(51)
Net cash provided by (used in) financing activities
(2,469)
(4,739)
(5,913)
Currency translation differences relating to cash and cash
equivalents
(125)
(58)
(58)
Increase (decrease) in cash and cash equivalents
3,733
(13)
565
Cash and cash equivalents at beginning of period
30,681
30,694
31,111
Cash and cash equivalents at end of period
34,414
30,681
31,676
Top of page 21
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 2021 included in BP Annual Report and Form 20-F
2021.
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 2022 which are the same as those used in preparing
BP Annual Report and Form 20-F
2021. There are no new or amended standards or
interpretations adopted from 1 January 2022 onwards 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
2021. These have been subsequently considered at the end of
this quarter to determine if any changes were required to those
judgements and estimates.
Investment in Rosneft
Following
bp's announcement on 27 February 2022, the significant judgement on
significant influence over Rosneft has been reassessed and a new
significant estimate has been identified for the fair value of bp's
equity investment in Rosneft. bp's segmental reporting has also
changed and comparatives have been restated to reflect the
segmental changes. See Note 2 for further information.
Pensions and other post-retirement benefits
The
group's defined benefit plans are reviewed quarterly to determine
any changes to the fair value of the plan assets or present value
of the defined benefit obligations. As a result of the review
during the first quarter of 2022, the group's total net defined
benefit plan surplus as at 31 March 2022 is $6.2 billion, compared
to a surplus of $4.1 billion at 31 December 2021. The movement for
the quarter principally reflects net actuarial gains reported in
other comprehensive income arising from increases in the UK, US and
Eurozone discount rates, partly offset by negative asset
performance and increases in inflation rates.
Other accounting judgements and estimates
All
other significant accounting judgements and estimates disclosed in
BP Annual Report and Form 20-F
2021 remain applicable and no other new significant
accounting judgements or estimates have been
identified.
Top of page 22
Note 2. Investment in Rosneft
On 27
February 2022, following the military action in Ukraine, bp
announced that it will exit its 19.75% shareholding in Rosneft Oil
Company (Rosneft), a Russian oil and gas company. As of 27 February
2022, bp chief executive officer Bernard Looney also stepped down
from the board of Rosneft with immediate effect and has submitted a
letter of resignation as did the other Rosneft director nominated
by bp, former bp group chief executive Bob Dudley.
As a
result of bp’s nominated directors stepping down from the
Rosneft board, bp has determined that as of 27 February 2022, the
group no longer has significant influence over Rosneft taking into
account the criteria set out in IAS 28 'Investments in Associates
and Joint Ventures'. bp therefore no longer equity accounts for its
interest in Rosneft as of that date, treating it prospectively as a
financial asset measured at fair value within ‘Other
investments’. In response to sanctions imposed on Russia by a
number of countries, Russia has implemented a number of
counter-sanctions including restrictions on the divestment from
Russian assets by foreign investors and a reported temporary
prohibition on registrars and depositories from making payments on
Russian securities in favour of foreign investors. Further details
including application of these counter-sanctions are not yet fully
known. In addition, bp is not able to sell its Rosneft shares on
the Moscow Stock Exchange and is unable to ascribe probabilities to
possible outcomes of any exit process. As a result, it is
considered 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 both the measurement of the impairment charge
and remeasurement as at 31 March 2022.
The
loss of significant influence over Rosneft combined with the market
impacts on Russian assets has led to an impairment charge of
$13,479 million including $528 million which relates to
estimated earnings in the quarter prior to the loss of significant
influence. In addition, accumulated exchange losses of $10,372
million, a cash flow hedge reserve of $651 million relating to the
original acquisition of Rosneft shares and bp's cumulative share of
Rosneft's other comprehensive income of $59 million which were
previously charged to equity were reclassified to the income
statement in the quarter in the aggregate amount of
$11,082 million. The change in accounting treatment also means
that bp no longer recognizes a share in Rosneft’s net income,
production and reserves from 27 February 2022.
As a
result of bp's decision to exit its shareholding in Rosneft, the
group has ceased to report Rosneft as a separate segment in the its
financial reporting for 2022. Rosneft results up to 27 February
2022 are included within other businesses & corporate
(OB&C), and 2021 comparatives have been restated to include the
Rosneft segment as per the table below.
OB&C
(as previously reported)
Rosneft
(as previously reported)
OB&C restated
OB&C
(as previously reported)
Rosneft
(as previously reported)
OB&C restated
Fourth
Fourth
Fourth
First
First
First
quarter
quarter
quarter
quarter
quarter
quarter
$ million
2021
2021
2021
2021
2021
2021
Profit (loss) before interest and tax
(924)
623
(301)
(678)
451
(227)
Inventory holding (gains) losses*
—
(68)
(68)
—
(88)
(88)
RC profit (loss) before interest and tax
(924)
555
(369)
(678)
363
(315)
Net
(favourable) adverse impact of adjusting items(a)
389
190
579
508
—
508
Underlying RC profit (loss) before interest and tax
(535)
745
210
(170)
363
193
Taxation on an underlying RC basis
128
(73)
55
54
(35)
19
Underlying RC profit (loss) before interest
(407)
672
265
(116)
328
212
Also,
as of 27 February 2022, bp decided to exit its other businesses
with Rosneft within Russia, which are included in the oil
production & operations segment. These businesses are also
determined to have a fair value of nil. This decision resulted in
an impairment charge of $1,043 million, including $35 million which
relates to estimated earnings in the quarter, and accumulated
exchange losses of $479 million previously charged to equity and
taken to the income statement. As with Rosneft, bp no longer
recognizes a share in these businesses' net income, production and
reserves.
The
total pre-tax charge in the first quarter of 2022 relating to bp's
investment in Rosneft and other businesses with Rosneft in Russia
is $25,520 million.
Top of page 23
Note 3. Non-current assets held for sale
The
carrying amount of assets classified as held for sale at 31 March
2022 is $7,272 million, with associated liabilities of $2,567
million.
On 11
March 2022, bp and Eni signed an agreement to form Azule Energy, an
independent incorporated 50:50 joint venture, through the
combination of the two companies’ Angolan businesses. Subject
to all customary governmental and other approvals, the transaction
is expected to complete during the second half of 2022. Assets of
$5,514 million and associated liabilities of $2,202 million have
been classified as held for sale in the group balance sheet at 31
March 2022.
As
announced in August 2021, bp and PetroChina have agreed to
establish Basra Energy Company, an incorporated joint venture,
intended to own and manage the companies’ interests in the
Rumaila field in Iraq. Subject to regulatory and other approvals,
the transaction is expected to complete during the second quarter
of 2022. Assets of $1,162 million and associated liabilities of
$366 million are classified as held for sale in the group balance
sheet at 31 March 2022.
On 21
December 2021, Aker BP, an associate of bp, announced the proposed
acquisition of Lundin Energy for consideration in cash and new Aker
BP shares. Subject to regulatory and other approvals, the
transaction is expected to complete mid-year 2022. bp currently
holds a 27.9% interest in Aker BP. Following the transaction this
is expected to become a 15.9% interest in the combined company.
$595 million of bp’s investment in Aker BP is classified as
held for sale in the group balance sheet at 31 March
2022.
Note 4. Impairment and losses on sale of businesses and fixed
assets(a)
Net
impairment charges net of losses on sale of businesses and fixed
assets for the first quarter 2022 were $26,031 million
(charges of $373 million for the comparative period in 2021)
and include net impairment charges for the first quarter of 2022 of
$14,386 million (charges of $220 million for the
comparative period in 2021).
gas & low carbon energy segment
In the
gas & low carbon energy segment there was a net impairment
charge of $252 million for the first quarter 2022 (charges of
$122 million for the comparative period in 2021).
oil production & operations segment
In the
oil production & operations segment there was a net impairment
charge of $624 million for the first quarter 2022 (charges of
$99 million for the comparative period in 2021).
Impairment
charges for the first quarter 2022 principally related to the
decision to exit other businesses with Rosneft within Russia. They
were offset by impairment reversals related to producing assets due
to reserves additions.
other businesses and corporate
In the
other businesses and corporate segment there was a net impairment
charge of $13,479 million for the first quarter 2022 (reversal
of $3 million for the comparative period in 2021) and a loss
on sale of businesses and fixed assets of
$11,082 million.
The
impairment charge and the loss on sale of businesses and fixed
assets for the first quarter mainly relates to bp's investment in
Rosneft - see Note 2.
(a)
All disclosures are
pre-tax.
Top
of page 24
Note 5. Analysis of replacement cost profit (loss) before interest
and tax and reconciliation to profit (loss) before
taxation
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
gas & low carbon energy
(1,524)
1,911
3,430
oil production & operations
3,831
3,212
1,479
customers & products
1,981
(426)
934
other
businesses & corporate(a)
(24,719)
(369)
(315)
(20,431)
4,328
5,528
Consolidation adjustment – UPII*
34
(7)
13
RC profit (loss) before interest and tax
(20,397)
4,321
5,541
Inventory holding gains (losses)*
gas
& low carbon energy
25
(8)
22
oil
production & operations
1
—
15
customers
& products
3,475
412
1,605
other
businesses & corporate(a)
—
68
88
Profit (loss) before interest and tax
(16,896)
4,793
7,271
Finance costs
664
759
723
Net
finance expense/(income) relating to pensions and other
post-retirement benefits
(20)
(8)
6
Profit (loss) before taxation
(17,540)
4,042
6,542
RC profit (loss) before interest and tax*
US
2,277
959
1,907
Non-US
(22,674)
3,362
3,634
(20,397)
4,321
5,541
(a)From
first quarter 2022 the results of Rosneft, previously reported as a
separate segment, are also included in other businesses &
corporate. Comparative information for 2021 has been restated to
reflect the changes in reportable segments. For more information
see Note 2 Investment in Rosneft.
Top of page 25
Note 6. Sales and other operating revenues
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
By segment
gas & low carbon energy
8,166
14,545
8,002
oil production & operations
8,158
7,482
5,155
customers & products
42,163
37,446
27,107
other businesses & corporate
452
484
436
58,939
59,957
40,700
Less: sales and other operating revenues between
segments
gas & low carbon energy
1,948
1,199
1,032
oil production & operations
7,036
7,202
4,855
customers & products
692
650
110
other businesses & corporate
5
352
159
9,681
9,403
6,156
External sales and other operating revenues
gas & low carbon energy
6,218
13,346
6,970
oil production & operations
1,122
280
300
customers & products
41,471
36,796
26,997
other businesses & corporate
447
132
277
Total sales and other operating revenues
49,258
50,554
34,544
By geographical area
US
19,152
17,927
14,491
Non-US
42,797
43,423
26,883
61,949
61,350
41,374
Less: sales and other operating revenues between areas
12,691
10,796
6,830
49,258
50,554
34,544
Revenues from contracts with customers
Sales and other operating revenues include the following in
relation to revenues from contracts with customers:
Crude oil
2,144
1,583
1,334
Oil products
31,751
29,790
19,278
Natural gas, LNG and NGLs
10,680
10,449
4,181
Non-oil products and other revenues from contracts with
customers
2,345
806
1,398
Revenue from contracts with customers
46,920
42,628
26,191
Other
operating revenues(a)
2,338
7,926
8,353
Total sales and other operating revenues
49,258
50,554
34,544
(a)
Principally relates
to commodity derivative transactions.
Top of page 26
Note 7. Depreciation, depletion and amortization
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Total depreciation, depletion and amortization by
segment
gas & low carbon energy
1,255
1,265
854
oil production & operations
1,429
1,628
1,574
customers & products
717
754
745
other businesses & corporate
224
216
194
3,625
3,863
3,367
Total depreciation, depletion and amortization by geographical
area
US
1,083
1,209
1,121
Non-US
2,542
2,654
2,246
3,625
3,863
3,367
Note 8. 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. During the first quarter 2022 300
million of ordinary shares were repurchased for cancellation for a
total cost of $1,592 million, including transaction costs of
$9 million, as part of the share buyback programme announced on 27
April 2021. Of these $500 million offset the expected full year
dilution from the vesting of awards under employee share schemes in
2022 and $1,092 million represent progress against the $1,500
million programme announced with the fourth quarter results on 8
February 2022. This programme was completed by a repurchase of a
further 80 million of shares in April 2022 at a total cost of $409
million. The number of shares in issue is reduced when shares are
repurchased. 165 million of new ordinary shares were issued in
April 2022 as non-cash consideration for the acquisition of the
public units of BP Midstream Partners LP.
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
2022
2021
2021
Results for the period
Profit (loss) for the period attributable to bp
shareholders
(20,384)
2,326
4,667
Less: preference dividend
—
—
1
Profit (loss) attributable to bp ordinary shareholders
(20,384)
2,326
4,666
Number of shares (thousand)(a)(b)
Basic
weighted average number of shares outstanding
19,514,477
19,800,620
20,297,585
ADS
equivalent(c)
3,252,412
3,300,103
3,382,930
Weighted average
number of shares outstanding used to calculate diluted earnings per
share
19,514,477
19,947,023
20,388,628
ADS
equivalent(c)
3,252,412
3,324,503
3,398,104
Shares in issue at period-end
19,409,157
19,642,221
20,331,023
ADS
equivalent(c)
3,234,859
3,273,703
3,388,503
(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 27
Note 9. Dividends
Dividends payable
BP
today announced an interim dividend of 5.46 cents per ordinary
share which is expected to be paid on 24 June 2022 to ordinary
shareholders and American Depositary Share (ADS) holders on the
register on 13 May 2022. The ex-dividend date will be 12 May 2022.
The corresponding amount in sterling is due to be announced on 10
June 2022, calculated based on the average of the market exchange
rates over three dealing days between 6 June 2022 and 8 June 2022.
Holders of ADSs are expected to receive $0.3276 per ADS (less
applicable fees). The board has decided not to offer a scrip
dividend alternative in respect of the first quarter 2022 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
2022
2021
2021
Dividends paid per ordinary share
cents
5.460
5.460
5.250
pence
4.160
4.105
3.768
Dividends paid per ADS (cents)
32.76
32.76
31.50
Note 10. Net debt
Net debt*
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Finance
debt(a)
60,606
61,176
66,123
Fair
value (asset) liability of hedges related to finance
debt(b)
1,265
118
(1,134)
61,871
61,294
64,989
Less: cash and cash equivalents
34,414
30,681
31,676
Net
debt(c)
27,457
30,613
33,313
Total equity
78,519
90,439
90,586
Gearing*
25.9%
25.3%
26.9%
(a)
The fair value of
finance debt at 31 March 2022 was $59,601 million (31 December 2021
$62,946 million, 31 March 2021 $67,775 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 $173 million
at 31 March 2022 (fourth quarter 2021 liability of
$166 million and first quarter 2021 liability of
$346 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 11. Statutory accounts
The
financial information shown in this publication, which was approved
by the Board of Directors on 2 May 2022, is unaudited and does not
constitute statutory financial statements. Audited financial
information will be published in BP Annual Report and Form 20-F 2022. BP Annual
Report and Form 20-F 2021 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 28
Additional information
Capital expenditure*
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Capital expenditure
Organic capital expenditure*
2,573
3,512
2,906
Inorganic
capital expenditure*(a)
356
121
892
2,929
3,633
3,798
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Capital expenditure by segment
gas
& low carbon energy(a)
861
1,037
1,885
oil production & operations
1,254
1,272
1,319
customers & products
715
1,224
532
other businesses & corporate
99
100
62
2,929
3,633
3,798
Capital expenditure by geographical area
US
1,097
1,305
1,487
Non-US
1,832
2,328
2,311
2,929
3,633
3,798
(a)
First quarter 2021
includes the final payment of $712 million in respect of the
strategic partnership with Equinor.
Top of page 29
Adjusting items*
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
gas & low carbon energy
Gains
on sale of businesses and fixed assets(a)
9
—
1,034
Net
impairment and losses on sale of businesses and fixed
assets(b)
(252)
553
(123)
Environmental and other provisions
—
—
—
Restructuring, integration and rationalization costs
4
(4)
(8)
Fair
value accounting effects(c)(d)
(5,015)
(790)
247
Other
135
(59)
10
(5,119)
(300)
1,160
oil production & operations
Gains on sale of businesses and fixed assets
249
224
168
Net
impairment and losses on sale of businesses and fixed
assets(b)
(1,204)
(799)
(209)
Environmental and other provisions
58
(235)
(65)
Restructuring, integration and rationalization costs
(10)
(2)
(4)
Fair value accounting effects
—
—
—
Other
55
—
24
(852)
(812)
(86)
customers & products
Gains on sale of businesses and fixed assets
261
62
(97)
Impairment
and losses on sale of businesses and fixed assets(b)
(13)
(961)
(43)
Environmental and other provisions
—
(102)
—
Restructuring, integration and rationalization costs
1
24
(41)
Fair
value accounting effects(d)
(377)
146
459
Other(e)
(47)
(206)
—
(175)
(1,037)
278
other businesses &
corporate(f)
Gains on sale of businesses and fixed assets
(1)
—
—
Net impairment and losses on sale of businesses and fixed
assets
(1)
(9)
(1)
Environmental and other provisions
(3)
(144)
—
Restructuring, integration and rationalization costs
13
(2)
(25)
Fair
value accounting effects(d)
(425)
(212)
(447)
Rosneft(f)
(24,033)
(190)
—
Gulf of Mexico oil spill
(19)
(24)
(11)
Other
9
2
(24)
(24,460)
(579)
(508)
Total before interest and taxation
(30,606)
(2,728)
844
Finance
costs(g)
(158)
(257)
(148)
Total before taxation
(30,764)
(2,985)
696
Total
taxation(h)
1,471
888
(1)
Total after taxation for period
(29,293)
(2,097)
695
(a)
First quarter 2021
relates to a gain from the divestment of a 20% stake in Oman Block
61.
(b)
See Note 4 for
further information.
(c)
Under IFRS bp
marks-to-market the derivative financial instruments used to
risk-manage LNG contracts, but does not mark-to-market the physical
LNG contracts themselves, resulting in a mismatch in accounting
treatment. The fair value accounting effect reduces this mismatch,
and the underlying result reflects how bp risk-manages its LNG
contracts.
(d)
For further
information, including the nature of fair value accounting effects
reported in each segment, see page 34.
(e)
Fourth quarter 2021
includes amounts arising in relation to the amendment of the timing
of recognition of certain customer incentives in our customers
business.
(f)
From first quarter
2022 the results of Rosneft, previously reported as a separate
segment, are also included in other businesses & corporate.
Comparative information for 2021 has been restated to reflect the
changes in reportable segments. For more information see Note 2
Investment in Rosneft.
(g)
Includes the
unwinding of discounting effects relating to Gulf of Mexico oil
spill payables, the income statement impact associated with the
buyback of finance debt and temporary valuation differences
associated with the group’s interest rate and foreign
currency exchange risk management of finance debt.
(h)
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.
Top
of page 30
Net debt including leases
Net debt including leases*
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Net debt
27,457
30,613
33,313
Lease liabilities
8,466
8,611
9,030
Net
partner (receivable) payable for leases entered into on behalf of
joint operations
206
187
37
Net debt including leases
36,129
39,411
42,380
Total
equity
78,519
90,439
90,586
Gearing including leases*
31.5%
30.4%
31.9%
Gulf of Mexico oil spill
31 March
31 December
$ million
2022
2021
Gulf of Mexico oil spill payables and provisions
(10,496)
(10,433)
Of
which - current
(1,254)
(1,279)
Deferred tax asset
3,438
3,959
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 2021 -
Financial statements - Notes 6, 8, 19, 21, 22, 28, and
32.
Working capital* reconciliation(a)
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Movements in
inventories and other current and non-current assets and
liabilities as per condensed group cash flow statement(b)
(1,771)
(1,709)
(2,793)
Adjusted
for inventory holding gains (losses)* (Note 5 excluding
Rosneft)
3,501
472
1,730
Adjusted for fair value accounting effects
(5,817)
(856)
259
Working capital release (build) after adjusting for net inventory
gains (losses) and fair value accounting effects
(4,087)
(2,093)
(804)
(a)
Commencing with
second quarter 2021 results fair value accounting effects have been
included in the working capital reconciliation. For further
information see page 34.
(b)
The movement in
working capital includes outflows relating to the Gulf of Mexico
oil spill on a pre-tax basis of $47 million in the first quarter
2022, $7 million in the fourth quarter 2021 and $135 million in the
first quarter 2021.
Top of page 31
Surplus cash flow* reconciliation
First
Fourth
First
quarter
quarter
quarter
$ million
2022
2021
2021
Sources:
Net cash provided by operating activities
8,210
6,116
6,109
Cash provided from investing activities
1,046
2,301
4,225
Other
proceeds(a)
164
—
—
Receipts relating to transactions involving non-controlling
interests
7
12
668
Cash inflow
9,427
8,429
11,002
Uses:
Lease liability payments
(498)
(502)
(560)
Payments on perpetual hybrid bonds
(148)
(100)
(55)
Dividends paid – BP shareholders
(1,068)
(1,077)
(1,064)
–
non-controlling interests
(65)
(66)
(51)
Total capital expenditure*
(2,929)
(3,633)
(3,798)
Net repurchase of shares relating to employee share
schemes
(500)
—
—
Payments relating to transactions involving non-controlling
interests
(5)
—
—
Currency translation differences relating to cash and cash
equivalents
(125)
(58)
(58)
Cash outflow
(5,338)
(5,436)
(5,586)
Cash used to meet net debt target
—
—
3,729
Surplus cash flow
4,089
2,993
1,687
(a)
Other proceeds for
the first quarter 2022 include $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
are being recognised as the potential recourse
reduces.
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
2022
2021
2021
RC profit before interest and tax for customers &
products
1,981
(426)
934
Less: Adjusting items* gains (charges)
(175)
(1,037)
278
Underlying RC profit before interest and tax for customers
& products
2,156
611
656
By business:
customers
– convenience & mobility
522
637
658
Castrol – included in customers
256
207
334
products
– refining & trading
1,634
(26)
(2)
Add back: Depreciation, depletion and amortization
717
754
745
By business:
customers
– convenience & mobility
326
329
324
Castrol – included in customers
39
36
39
products
– refining & trading
391
425
421
Adjusted EBITDA for customers & products
2,873
1,365
1,401
By business:
customers
– convenience & mobility
848
966
982
Castrol – included in customers
295
243
373
products
– refining & trading
2,025
399
419
Top of page 32
Realizations* and marker prices
First
Fourth
First
quarter
quarter
quarter
2022
2021
2021
Average realizations(a)
Liquids* ($/bbl)
US
70.34
65.25
45.21
Europe
104.41
80.49
61.72
Rest of World
88.84
74.19
57.48
BP Average
83.80
71.12
53.20
Natural gas ($/mcf)
US
3.90
4.59
3.45
Europe
33.77
32.45
6.89
Rest of World
7.88
6.94
3.94
BP Average
8.24
7.51
3.98
Total hydrocarbons* ($/boe)
US
52.17
51.09
36.91
Europe
134.62
118.97
55.34
Rest of World
62.38
52.93
36.06
BP Average
64.70
56.46
37.75
Average oil marker prices ($/bbl)
Brent
102.23
79.76
61.12
West Texas Intermediate
95.22
77.32
58.13
Western Canadian Select
79.90
59.71
46.12
Alaska North Slope
96.13
79.74
61.07
Mars
93.43
75.21
58.65
Urals (NWE – cif)
87.26
77.66
59.36
Average natural gas marker prices
Henry
Hub gas price(b) ($/mmBtu)
4.96
5.84
2.71
UK Gas – National Balancing Point (p/therm)
232.84
226.24
49.82
(a)
Based on sales of
consolidated subsidiaries only – this excludes equity-accounted
entities.
(b)
Henry Hub First of
Month Index.
Exchange rates
First
Fourth
First
quarter
quarter
quarter
2022
2021
2021
$/£ average rate for the period
1.34
1.35
1.38
$/£ period-end rate
1.32
1.35
1.37
$/€ average rate for the period
1.12
1.14
1.21
$/€ period-end rate
1.12
1.13
1.17
$/AUD average rate for the period
0.72
0.73
0.77
$/AUD period-end rate
0.75
0.73
0.76
Rouble/$ average rate for the period
88.48
72.72
74.41
Rouble/$ period-end rate
82.59
74.66
76.09
Top of page 33
Legal proceedings
For a
full discussion of the group’s material legal proceedings,
see pages 248-249 of bp Annual
Report and Form 20-F 2021.
Glossary
Non-GAAP
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-GAAP
measures are sometimes referred to as alternative performance
measures.
Adjusted EBITDA is a non-GAAP measure presented for bp's
operating segments and is defined as replacement cost (RC) profit
before interest and tax, excluding net adjusting items*, 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.
Adjusted
EBITDA for the group is defined as profit or loss for the period
before finance costs and net finance expense relating to pensions
and other post-retirement benefits, adjusting for inventory holding
gains or losses before tax, adjusting items before interest and
tax, and adding back depreciation, depletion and amortization
(pre-tax) and exploration expenditure written-off (net of adjusting
items, pre-tax). The nearest equivalent measure on an IFRS basis
for the group is profit or loss for the period.
We are
unable to present reconciliations of forward-looking information
for adjusted EBITDA for the group, strategic themes or transition
growth businesses, because without unreasonable efforts, we are
unable to forecast accurately certain adjusting items required to
calculate a meaningful comparable GAAP forward-looking financial
measure. These items include inventory holding gains or losses,
adjusting items and exploration expenditure written off that are
difficult to predict in advance in order to include in a GAAP
estimate.
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-GAAP measures.
An analysis of adjusting items by segment and type is shown on page
29.
Bio-refinery is a facility that is dedicated to processing
biological materials (including waste oil and crop waste) to
produce biofuels such as bio-diesel and sustainable aviation fuel,
which may be blended to customer specifications with other
components such as hydrocarbons at co-located or adjacent terminals
and tanks.
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
for the quarter that would cause the sum of operating cash flow
excluding Gulf of Mexico oil spill payments (assuming actual
refining marker margins and Henry Hub gas prices for the quarter)
and proceeds from loan repayments to equate to the sum of total
cash capital expenditure, lease liability payments, dividend paid,
and payments on perpetual hybrid bonds.
Consolidation adjustment – UPII is unrealized profit
in inventory arising on inter-segment transactions.
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.
Effective tax rate (ETR) on replacement cost (RC) profit or
loss is a non-GAAP 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-GAAP
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.
Top of page 34
Glossary (continued)
Fair value accounting effects are non-GAAP 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. 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. The
fair values of derivative instruments used to risk manage certain
oil, gas, power and other contracts, are deferred to match with the
underlying exposure and the commodity contracts for business
requirements are accounted for on an accruals basis. 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.
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, reduces the measurement
differences between that of the derivative financial instruments
used to risk manage the LNG contracts and the measurement of the
LNG contracts themselves, which therefore gives a better
representation of performance in each period.
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 35
Glossary (continued)
Gearing and net debt are non-GAAP 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 GAAP measures on an IFRS basis are finance debt and
finance debt ratio. A reconciliation of finance debt to net debt is
provided on page 27.
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
GAAP 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 a GAAP estimate.
Gearing including leases and net debt including leases are
non-GAAP 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 GAAP 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
30.
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-GAAP 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 GAAP
information is provided on page 28.
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-GAAP 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.
Gulf of Mexico oil spill
Top of page 36
Glossary (continued)
Organic capital expenditure is a non-GAAP 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 GAAP information is provided on page
28.
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
GAAP 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 GAAP 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 GAAP
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.
Retail sites in growth markets are retail sites that are
either bp branded or co-branded with our partners in China, Mexico
and Indonesia and also include 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 and carry one of
the strategic convenience brands (e.g. M&S, Thorntons, Rewe to
Go). To be considered a strategic convenience brand 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, but exclude sites in growth
markets.
Top of page 37
Glossary (continued)
Surplus cash flow is a non-GAAP measure and 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 2021, 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 recognised as the potential recourse reduces. See
page 31 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-GAAP 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-GAAP
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
GAAP 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 a
GAAP estimate.
Underlying production – 2022 underlying production,
when compared with 2021, 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-GAAP measure and is
RC profit or loss* (as defined on page 36) after excluding net
adjusting items and related taxation. See page 29 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 GAAP information is provided on page
1 for the group and pages 6-15 for the segments.
Underlying RC profit or loss per share is a non-GAAP
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.
Top of page 38
Glossary (continued)
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 and
fair value accounting effects is a non-GAAP measure. It is
calculated by adjusting for inventory holding gains/losses reported
in the period and from the second quarter onwards, it is also
adjusted for fair value accounting effects reported within
adjusting items for the period. 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. In the context of describing working capital after
adjusting for Gulf of Mexico oil spill outflows, change in working
capital also excludes movements in inventories and other current
and non-current assets and liabilities relating to the Gulf of
Mexico oil spill.
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, Castrol ON and
Thorntons
Top of page 39
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 COVID-19
pandemic and the conflict in Ukraine, including the impacts and
consequences on economic growth, demand, and bp’s operations
and financial performance; plans, expectations and assumptions
regarding oil and gas demand, supply or prices, the timing of
production of reserves, storage levels and decision making by
OPEC+; expectations regarding reported and underlying production
and related major project ramp-up, capital investments, divestment
and maintenance activity; expectations regarding refining margins,
refinery utilization rates and product demand; expectations
regarding bp’s future financial performance and cash flows;
expectations regarding future hydrocarbon production and project
ramp-up; 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 dividends; expectations
regarding the amount of full-year dilution from the vesting of
awards under employee share schemes in 2022; 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
business and corporate underlying annual charge for 2022; plans and
expectations regarding investments in the UK, including in charging
infrastructure and public charge points; plans and expectations
regarding debt, net debt, and bp’s intentions to strengthen
the balance sheet; 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 underlying effective
tax rate for 2022; 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 within a range of $14-15 billion in 2022;
expectations regarding adjusted EBITDA for resilient hydrocarbons
and the group; and plans and expectations regarding projects joint
ventures and other partnerships and agreements, including
partnerships and other collaborations with Eni, Nuseed, Uber, Korea
Gas Corporation, EnBW, Marubeni, Aberdeen City Council, HyCC, DHL
Express, BYD, Tesco, Shell and AENA, as well as plans and
expectations regarding the Herschel Expansion project in the Gulf
of Mexico, production of sustainable aviation fuel at the Lingen
refinery, the Gas Natural Acu power plant in Brazil, the sale of
bp’s retail assets in Switzerland to Oel Pool AG, bp’s
stake in Green Biofuels Ltd., the completion of the acquisition of
the oil and gas business of Lundin Energy, the development of EV
charge points and the completion of the establishment of bp’s
Basra Energy Company joint venture with PetroChina.
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 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.
Top of page 40
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
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.
