BP plc delivers Strong First Quarter results with focus on Shareholder Distributions

BP plc has announced its group results for the first quarter 2024.

Highlights

•     Resilient financial and operational performance: Adjusted EBITDA $10.3 billion; underlying RC profit $2.7 billion; upstream* production grew +2.1% vs 1Q23; start up of new Azeri Central East (ACE) platform in Caspian Sea

•     Growing shareholder distributions: 1Q24 $1.75 billion share buyback announced as part of our $3.5 billion commitment for the first half of 2024; Dividend per ordinary share of 7.270 cents

•     Focus on delivering our six priorities: announcement to simplify organizational structure; target to deliver at least $2 billion of cash cost* savings by the end of 2026

We’ve delivered another resilient quarter financially and continued to make progress on our strategy. Oil production was up and our ACE platform in the Caspian is now producing. We are simplifying and reducing complexity across bp and plan to deliver at least $2 billion of cash cost savings by the end of 2026 through high grading our portfolio, digital transformation, supply chain efficiencies and global capability hubs. Murray Auchincloss Chief executive officer

(a)      Divestment proceeds are disposal proceeds as per the condensed group cash flow statement. There were no other proceeds for all periods stated.

(b)     See Note 9 for more information.

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

* For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 30.

bp reported solid financial performance in the first quarter with adjusted EBITDA* of $10.3 billion and underlying replacement cost profit of $2.7 billion. Our financial frame is unchanged, and we are delivering competitive shareholder distributions, announcing a $1.75 billion share buyback for the first quarter as part of our commitment of $3.5 billion for the first half of 2024. Kate Thomson Chief financial officer

Highlights

1Q24 underlying replacement cost (RC) profit* $2.7 billion

• Underlying RC profit for the quarter was $2.7 billion, compared with $3.0 billion for the previous quarter. Compared with the fourth quarter 2023, the result reflects lower oil and gas realizations, the impacts of the Whiting refinery outage and significantly weaker fuels margin, partially offset by significantly lower level of turnaround activity, a strong oil trading result and higher realized refining margins. The underlying effective tax rate (ETR)* in the quarter was 43%.
• Reported profit for the quarter was $2.3 billion, compared with $0.4 billion for the fourth quarter 2023. The reported result for the first quarter is adjusted for inventory holding gains* of $0.7 billion (net of tax) and a net adverse impact of adjusting items* of $1.1 billion (net of tax) to derive the underlying RC profit. Adjusting items pre-tax include net impairment charges of $0.6 billion, largely as a result of regulatory and portfolio changes, and adverse fair value accounting effects* of $0.2 billion.

Segment results

• Gas & low carbon energy: The RC profit before interest and tax for the first quarter 2024 was $1.0 billion, compared with $2.2 billion for the previous quarter. After adjusting RC profit before interest and tax for a net adverse impact of adjusting items of $0.6 billion, the underlying RC profit before interest and tax* for the first quarter was $1.7 billion, compared with $1.8 billion in the fourth quarter 2023. The first quarter underlying result reflects lower realizations and foreign exchange losses on Egyptian pound balances, partially offset by lower exploration write-offs. Gas marketing and trading was strong following a strong result in the fourth quarter.
• Oil production & operations: The RC profit before interest and tax for the first quarter 2024 was $3.1 billion, compared with $1.9 billion for the previous quarter. After adjusting RC profit before interest and tax for a net adverse impact of adjusting items of $0.1 billion, the underlying RC profit before interest and tax for the first quarter was $3.1 billion, compared with $3.5 billion in the fourth quarter 2023. The first quarter underlying result reflects lower realizations, partially offset by higher production.
• Customers & products: The RC profit before interest and tax for the first quarter 2024 was $1.0 billion, compared with a loss of $0.6 billion for the previous quarter. After adjusting RC profit before interest and tax for a net adverse impact of adjusting items of $0.3 billion, the underlying RC profit before interest and tax for the first quarter was $1.3 billion, compared with $0.8 billion in the fourth quarter 2023. The customers first quarter underlying result was lower by $0.5 billion, reflecting significantly weaker fuels margin, seasonally lower volumes, and the absence of one-off positive effects that benefited the prior quarter, partly offset by lower costs. The products first quarter underlying result was higher by $1.0 billion, reflecting higher realized refining margins, a significantly lower level of turnaround activity and higher commercial optimization, partially offset by the impacts of the Whiting refinery outage. The oil trading contribution was strong following a weak result in the fourth quarter.

Operating cash flow* $5.0 billion

• Operating cash flow in the quarter of $5.0 billion includes a working capital* build (after adjusting for inventory holding gains, fair value accounting effects and other adjusting items) of $2.4 billion, reflecting seasonal inventory effects, timing of various payments and the price environment. (see page 27).

Delivering the next wave of efficiencies – at least $2 billion cash cost* savings

• bp has a target to deliver at least $2 billion of cash cost savings by the end of 2026 relative to 2023. The reduction is expected to result from cost-saving measures across bp’s business underpinned by high-grading the portfolio, digital transformation, supply chain efficiencies and global capability hubs. Some of these cost savings may have associated restructuring charges.

Further $1.75 billion share buyback announced for 1Q24; $3.5 billion for first half 2024 unchanged

• The $1.75 billion share buyback programme announced with the fourth quarter results was completed on 3 May 2024.
• A resilient dividend is bp’s first priority within its disciplined financial frame, underpinned by a cash balance point* of around $40 per barrel Brent, $11 per barrel RMM and $3 per mmBtu Henry Hub (all 2021 real). For the first quarter, bp has announced a dividend per ordinary share of 7.270 cents.
• bp is committed to maintaining a strong investment grade credit rating. Through the cycle, we are targeting to further improve our credit metrics within an ‘A’ grade credit range.
• bp continues to invest with discipline and a returns focused approach in our transition growth* engines and in our oil, gas and refining businesses. For 2024 and 2025 we expect capital expenditure of around $16 billion per annum.
• In setting the dividend per ordinary share and buyback each quarter, the board will continue to take into account factors including the cumulative level of and outlook for surplus cash flow*, the cash balance point and maintaining a strong investment grade credit rating.