6-K
1
a0014b.htm
BP UPDATE ON STRATEGIC PROGRESS
a0014b
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the
period ended 08 February 2022
BP p.l.c.
(Translation
of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file
annual
reports
under cover Form 20-F or Form 40-F.
Form
20-F |X| Form 40-F
---------------
----------------
Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of
1934.
Yes No
|X|
---------------
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press
release
8 February 2022
bp update on strategic progress
Transformation to Integrated Energy Company on track,
aims to grow earnings through 2030
and accelerate net zero ambition
●
Confident in
delivering 2025 targets, aiming to grow EBITDA to
2030.
●
Aims for EBITDA
from resilient hydrocarbons now to be sustained out to
2030.
●
Expects investment
in transition growth businesses to be over 40% of bp capex by
2025.
●
Aiming to generate
$9-10bn EBITDA from transition growth businesses by
2030.
●
bp now aiming to
be net-zero across operations, production and sales by 2050 or
sooner.
bp
today reports its full year results for 2021 and will also give an
update on its strategic transformation, including accelerating its
net zero ambition.
The
strong progress bp has made over the past few years has reinforced
its confidence in the delivery of its earnings and returns targets
for 2025. In addition, it is now aiming to continue to grow EBITDA
through to 2030.
bp is now aiming to sustain
earnings (EBITDA) from resilient hydrocarbons out to
20301,
despite focusing its oil and gas production and refining
throughput.
bp also expects to increase the
proportion of its capital expenditure in transition growth
businesses to more than 40% by 2025 and is aiming for around 50% by
2030. It aims to generate earnings of $9-10 billion from these
businesses by 20302,
driven by five transition growth engines - bioenergy, convenience,
electric vehicle (EV) charging, renewables and
hydrogen.
Bernard
Looney, bp chief executive, said: "Over the past two years we have
set a new purpose, direction and strategy for bp, and completed the
largest re-organisation in our history. With this period of change
fully behind us, we are now solely focused on driving value through
the safe, efficient delivery of our strategy.
"We
enter 2022 with growing confidence. The past two years have
reinforced our belief in the opportunities that the energy
transition presents - to create value for our
shareholders and to get to net zero. The need for, and role of, an
integrated energy company (IEC) has - to our
minds - never been clearer. Underpinning all of this is
our steadfast commitment to perform while
transforming."
Disciplined strategic progress
Since
setting out its strategy in August 2020, bp has made strong
progress across each of its three strategic focus areas and is on
track to meet the targets it set for 2025.
●
In resilient
hydrocarbons, eleven new major
projects have begun production since the start of 2020, completing
a six-year programme that delivered 35 major projects, on average
on schedule and around 15% below budget.
bp now expects to sustain EBITDA
from resilient hydrocarbons at around $33 billion a year to 2025
and aims to maintain it in a $30-35 billion range to
20301,
even while oil and gas production is expected to decline 40% from
2019 levels by 2030. bp plans to deliver this through a continued
focus on costs and performance, and disciplined investment in high
margin opportunities, while also continuing to focus and high-grade
its portfolio.
As
the world seeks lower carbon fuels, bp sees clear opportunities to
leverage its portfolio of assets and customer base - hence
bioenergy is one of bp's transition growth engines. This includes
biofuels, including sustainable aviation fuel, and biogas. Building
on its refinery footprint, bp anticipates investing in five major
biofuels projects, including the conversion of up to two
refineries. It also sees opportunity for considerable growth in
biogas in the US, Europe and UK.
●
In convenience
& mobility, through the
strength of its customer offer, bp has grown its margin share from
convenience and electrification from 25% to 29% since 2019. Over
the same period bp has already almost doubled its EV charging
points to more than 13,000 worldwide.
bp
remains on track with its aim to double 2019 earnings from
convenience & mobility to $9-10 billion in 2030, with both
convenience and EV charging as transition growth
engines.
bp
has 2,150 strategic convenience sites worldwide and has now
increased its aim for 2030 to around 3,500. bp has also increased
its aim for charging points to more than 100,000 by 2030. With a
focus on fast and on-the-go charging - almost half bp's current
network is fast or ultra-fast - and on fleets, bp is aiming to
increase the energy sold across its EV charging networks 100-fold
from 2019 to 2030.
●
In low carbon
energy, bp has quadrupled its
renewables development pipeline since the end of 2019, from 6GW to
24.5GW. This includes its entry into offshore wind, now with a
pipeline of 5.2GW net, including its recent success in the ScotWind
leasing round.
With
disciplined annual capital expenditure in low carbon energy planned
to grow to $3-5 billion by 2025 and $4-6 billion by 2030, bp is
aiming for EBITDA of $2-3 billion by 2030.
bp
sees both renewables and hydrogen as transition growth engines.
With its renewables pipeline and 4.4GW developed to FID at
end-2021, it is on track for its target of having developed 20GW
renewable power capacity by 2025 and its aim for 50GW by 2030. bp
remains confident of achieving 8-10% levered returns for these
investments.
In
hydrogen, bp has built a significant portfolio of options in
advantaged markets worldwide with potential capacity of 0.7-1.3
million tonnes a year. These also enable additional value creation
through integration with renewables and CCS.
bp investing in Britain
In
delivering its strategy, bp expects to show how operating as an
integrated energy company can create value while supporting the low
carbon ambitions of cities, countries and regions. This is
demonstrated by its plans in its home in the UK, where it expects
to invest across all its transition growth engines.
bp
anticipates spending more than double the profit it generates in
the UK out to the middle of this decade. Its plans represent an
important return to growth for bp and its investment in the
UK.
bp
helped to create hydrocarbon value chains in the UK - in the North
Sea, retail and convenience, and supply and trading - and now
intends to help lead the creation of new electron and hydrogen
value chains.
Bernard
Looney commented: "Britain has been our home for more than 110
years and we are excited to help as it transitions to a thriving
net zero economy."
bp's
plans in the UK include:
−
producing clean energy from offshore
wind in the Irish Sea and off the coast of Scotland, and from solar
across the country developed by Lightsource bp;
−
manufacturing green and blue hydrogen,
and other opportunities enabled by CCUS, in Teesside, Scotland and
elsewhere;
−
growing new markets for hydrogen,
including in centres such as Teesside and Aberdeen, and transport
opportunities for hydrogen and biofuels;
−
continued growth of its market-leading
EV charging network and convenience offers; and
−
commercial and geographic integration
through bp's trading, and regions, cities & solutions teams can
further enhance returns created in these new value
chains.
This
approach is not limited to the UK - bp sees opportunities
to apply this integrated energy company model in many other
geographies around the world.
Accelerating net zero ambition
The strategic progress bp is making, and the
growing confidence it has in the opportunities of the energy
transition, is now also allowing it to accelerate its net zero
ambition and aims.
Bernard
Looney said: "We are accelerating the greening of bp. Our
confidence is growing in the opportunities that the energy
transition offers. This allows us to raise our low carbon
ambitions, and we are now aiming to be net zero across operations,
production and sales by 2050 or sooner - unique among our peers. In
a world heading for net zero, we're best positioned for
success if we are also heading for net zero. We believe our
ambition is both good business and supports society's drive towards
the Paris goals."
●
Aim
1: bp now aims to reduce
operational emissions by 50% by 2030, compared with an aim of
30-35% previously, on the way to net zero by 2050 or
sooner.
●
Aim
3: bp is now also aiming for
net zero lifecycle emissions from the energy products it sells by
2050 or sooner - a significant advance from the previous aim of a
50% reduction in their emissions intensity. Additionally, the aim's
scope is expanding to include physically traded
energy products. For 2030 bp is
aiming for a 15-20% reduction in the lifecycle carbon intensity of
these products.
bp
intends to provide shareholders with the opportunity of an advisory
vote on its net zero ambition at its 2022 AGM.
Growing earnings and distributions
Continuing
to deliver this strategy is expected to allow bp to meet its 2025
targets of:
- growing EBIDA
per share at a 7-9% CAGR to 20253;
- growing ROACE
to 12-14% by 20254;
and
-
growing the proportion of capital employed in transition growth
businesses to over 20%, and the proportion of capital investment
allocated to them to over 40%, by 2025.
With
a continuing commitment to its financial frame, including strict
capital discipline, bp believes that - at an oil price of around
$60 per barrel and subject to board discretion - it has the
capacity to increase its dividend per ordinary share by around 4% a
year through 2025. In addition, with its commitment to returning at
least 60% of surplus cash flow through share buybacks - subject to
retaining a strong investment grade credit rating - bp also expects
to deliver around $4 billion buybacks a year at $60 a barrel
through to 2025 - with upside in higher price
environments.
Together
with the strategy this underpins confidence in bp's investor
proposition to deliver long-term value to shareholders through
committed distributions, profitable growth and sustainable
value.
bp's
fourth quarter and full year 2021 results can be seen
here:
bp
press office, London, bppress@bp.com +44 (0)7831
095541
Footnotes:
1 at
$60/bbl Brent (2020, real) and $3/mmbtu Henry Hub (2020, real), RMM
$12/bbl (2020, real). Includes Rosneft and
trading.
2 at
$60/bbl Brent (2020, real) and bp planning
assumptions.
3 between
2H19/1H20 and 2025, at oil prices of $50-60 per barrel in 2020 real
terms and bp planning assumptions.
4 at
oil prices of $50-60 per barrel in 2020 real terms and bp planning
assumptions.
Definitions:
●
For the purposes of this announcement,
each of the following terms has the meaning given to it in bp's
fourth quarter and full year 2021 financial results announcement:
adjusting items; EV charge points; renewables pipeline / renewables
development pipeline; major projects; upstream; developed
renewables to final investment decision (FID); and surplus cash
flow.
●
For the purposes of this announcement,
each of the following terms has the meaning given to it in the bp
Annual Report and Form 20-F 2020: capital expenditure; margin share
for convenience and electrification; return on average capital
employed (ROACE); and strategic convenience
sites.
●
EBIDA: underlying replacement cost profit before interest
and tax, add back depreciation, depletion and amortization and
exploration expenditure written-off (net of non-operating items),
less taxation on an underlying replacement cost
basis.
●
EBIDA per
share: share buybacks are
modelled across a range of share prices in this calculation and
EBIDA is after impact of planned divestments.
●
EBITDA: replacement
cost profit before interest and tax, excluding net adjusting items,
adding back depreciation, depletion and amortization and
exploration write-offs (net of adjusting
items).
●
CAGR: compound annual growth rate.
●
Fast or
ultra-fast: Fast charging
includes rapid charging ≥50kW and ultra-fast charging
≥150kW.
●
Energy
product: a product that is
used by an ultimate end-user to satisfy an energy demand. In the
case of fuels, to burn them to release their calorific content, and
in the case of electricity to provide work or heat. A refined
product such as a lubricant base stock does not count as an energy
product as it is not used to provide energy in its use
phase.
●
Physically traded
energy products: for the
purposes of Aim 3, this includes trades in energy products which
are physically settled in circumstances where bp considers their
inclusion to be consistent with the intent of the Aim. It
therefore excludes, for example, financial trades, and physical
trades where the purpose or effect is that the volumes traded net
off against each other.
●
Net
zero: References to net
zero for bp in the context of our ambition and Aims 1, 2 and 3 mean
achieving a balance between (a) the relevant Scope 1 and 2
emissions (for Aim 1), Scope 3 emissions (for Aim 2) or product
lifecycle emissions (for Aim 3), and (b) the aggregate of
applicable deductions from qualifying activities such as sinks
under our methodology at the applicable time.
●
Net zero
operations: bp's aim to
reach net zero* operational greenhouse gas (CO2 and
methane) emissions by 2050 or sooner, on a gross operational
control basis, in accordance with bp's Aim 1, which relates to our
reported Scope 1 and 2 emissions. Any interim target or
aim in respect of bp's Aim 1 is defined in terms of absolute
reductions relative to the baseline year of
2019.
●
Net zero
production: bp's aim to
reach net zero* CO2 emissions,
in accordance with bp's Aim 2, from the carbon in our upstream oil
and gas production, in respect of the estimated
CO2 emissions
from the combustion of upstream production of crude oil, natural
gas and natural gas liquids (NGLs) on a bp equity share basis based
on bp's net share of production, excluding bp's share of Rosneft
production and assuming that all produced volumes undergo full
stoichiometric combustion to CO2.
Aim 2 is bp's Scope 3 aim and relates to Scope 3, category 11
emissions. Any interim target or aim in respect of bp's
Aim 2 is defined in terms of absolute reductions relative to the
baseline year of 2019.
●
Net zero
sales: bp's aim to reach
net zero* for the greenhouse gas emissions associated with the
lifecycle (including end use) of its marketed and physically
traded* energy products, in accordance with bp's Aim 3.
Any interim target or aim in respect of bp's Aim 3 is defined in
terms of reductions in the weighted average greenhouse gas
emissions per unit of energy delivered (in grams
CO2e/MJ)
relative to the baseline year of 2019. (Work is ongoing to
confirm an assured baseline for this Aim to incorporate the
inclusion of physically traded sales.) Greenhouse gas
emissions (CO2,
methane, N2O)
are estimated on a lifecycle basis covering production/extraction,
transportation, processing, distribution and use of the relevant
products (assuming full stoichiometric combustion of the product to
CO2).
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 announcement
contains certain forecasts, projections and forward-looking
statements - that is, statements related to future, not past events
and circumstances - with respect to the financial condition,
results of operations and businesses of bp and certain of the plans
and objectives of bp with respect to these items. These statements
may generally, but not always, be identified by the use of words
such as 'will', 'expects', 'is expected to', 'aims', 'should',
'may', 'objective', 'is likely to', 'intends', 'believes',
'anticipates', 'plans', 'we see', 'focus on' or similar
expressions.
In
particular, the following, among other statements, are all forward
looking in nature: plans and expectations regarding bp's
performance, earnings, returns, capital expenditure, targets, aims
and market position through 2025 and/or 2030 at the group, segment
and business level, including with respect to bp's resilient
hydrocarbons, convenience and mobility and low carbon energy
businesses; plans and expectations related to bp's 2025 targets of
growing EBIDA per share at 7-9% CAGR through 2025, growing ROACE to
12-14% by 2025, and growing proportion of capital investment in
transition growth businesses to over 40% by 2025; plans,
expectations and assumptions regarding oil and gas demand, supply
or prices, storage, the timing of production of reserves; plans and
expectations regarding capital expenditure dedicated to bp's
transition businesses; expectations regarding bp's earnings from
transition businesses, including the aim to generate $9-10 billion
from transition businesses by 2030, and the drivers thereof; plans
and expectations regarding investments in new projects, including
biofuels, hydrogen and CCS projects; plans to high grade bp's oil
and gas portfolio, as well as plans and expectations related to
costs and margins in bp's resilient hydrocarbons business; plans
and expectations related to the growth of convenience sites, EV
charging points and energy sold across bp's networks by 2030; plans
and expectations in renewables to develop 20 gigawatts of power
capacity by 2025 and 50 gigawatts by 2030; plans and expectations
regarding bp's five growth engines of biofuels, convenience, EV
charging, renewable power and hydrogen, including plans and
expectations related to allocation of capital expenditure and their
levered returns and EBITDA growth; plans and expectations regarding
bp's potential capacity in hydrogen; plans and expectations
regarding bp's investment in the UK, including plans to spend more
than double the profit bp generates in the UK out to the middle of
this decade and potentially longer, plans to develop offshore wind,
solar power, hydrogen and CCUS projects in the UK and plans to grow
bp's EV charging and convenience offers; plans and expectations
regarding bp's net zero ambitions and aims, including targets
related to reduction of operational and lifecycle emissions and
carbon intensity of bp's products and bp's aim to be net-zero
across operations, production and sales by 2050 or sooner; plans
regarding future quarterly dividends and the amount and timing of
share buybacks; and plans and expectations regarding the allocation
of surplus cash flow.
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 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 impact of COVID-19,
overall global economic and business conditions impacting our
business and demand for our 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;
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; our access to future credit resources; business
disruption and crisis management; the impact on our reputation of
ethical misconduct and non-compliance with regulatory obligations;
trading losses; major uninsured losses; decisions by Rosneft's
management and board of directors; 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 Annual Report and Form 20-F 2020 as
filed with the US Securities and Exchange Commission and those
factors discussed under "Principal risks and uncertainties" in bp's
Report on Form 6-K regarding results for the six-month period ended
30 June 2021.
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.
