Bp PLC 6-K, filed Aug 1, 2023
Bp PLC (BP)
6-K
2023-08-01
For: 2023-08-01
View Original
Added on
July 04, 2026
About this 6-K
Bp PLC filed this 6-K on August 1, 2023.
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 01 August, 2023
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
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Exhibit
1.1
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2Q23
SEA part 1 of 1 dated 01 August 2023
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Exhibit 1.1
Top of page 1
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FOR IMMEDIATE RELEASE
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London 1 August 2023
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BP p.l.c. Group results
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Second quarter and first half 2023(a)
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“For
a printer friendly version of this announcement please click on the
link below to open a PDF version of the
announcement”
http://www.rns-pdf.londonstockexchange.com/rns/8128H_1-2023-7-31.pdf
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Performing while transforming
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Financial summary
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Second
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First
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Second
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First
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First
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quarter
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quarter
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quarter
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half
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half
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$ million
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2023
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2023
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2022
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2023
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2022
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Profit (loss) for the period attributable to bp
shareholders
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1,792
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8,218
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9,257
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10,010
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(11,127)
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Inventory holding (gains) losses*, net of tax
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549
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452
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(1,607)
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1,001
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(4,271)
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Replacement cost (RC) profit (loss)*
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2,341
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8,670
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7,650
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11,011
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(15,398)
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Net (favourable) adverse impact of adjusting items*, net of
tax
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248
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(3,707)
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801
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(3,459)
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30,094
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Underlying RC profit*
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2,589
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4,963
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8,451
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7,552
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14,696
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Operating cash flow*
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6,293
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7,622
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10,863
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13,915
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19,073
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Capital expenditure*
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(4,314)
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(3,625)
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(2,838)
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(7,939)
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(5,767)
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Divestment
and other proceeds(b)
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88
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800
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722
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888
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1,903
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Surplus cash flow*
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(269)
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2,283
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6,546
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2,014
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10,584
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Net issue (repurchase) of shares
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(2,073)
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(2,448)
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(2,288)
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(4,521)
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(3,880)
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Net
debt*(c)
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23,660
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21,232
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22,816
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23,660
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22,816
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Adjusted
EBITDA*
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9,770
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13,066
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16,357
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22,836
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30,240
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Announced dividend per ordinary share (cents per
share)
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7.270
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6.610
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6.006
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13.880
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11.466
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Underlying RC profit per ordinary share* (cents)
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14.77
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27.74
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43.58
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42.65
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75.55
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Underlying RC profit per ADS* (dollars)
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0.89
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1.66
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2.61
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2.56
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4.53
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● Underlying RC profit $2.6bn; Operating cash flow
$6.3bn
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● 10% increase in resilient dividend to 7.270 cents per
ordinary share; further $1.5bn share buyback announced
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● Delivering resilient hydrocarbons - 2Q23 start-up of two
major projects*; successful commissioning of Cherry Point refinery
improvement projects
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● Continued progress in transformation to an IEC -
acquisition of TravelCenters of America; 4GW entry to German
offshore wind; strong progress across the five transition growth*
engines
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Another quarter of performing while transforming. Our underlying
performance was resilient with good cash delivery - during a period
of significant turnaround activity and weaker margins in our
refining business. We’re delivering our strategy at pace -
we’ve started up two major oil and gas projects to help keep
energy flowing today and we’re accelerating our
transformation through our five transition growth engines. And
we’re delivering for shareholders growing our dividend and
announcing a further share buyback. This reflects confidence in our
performance and the outlook for cash flow, as well as continued
progress reducing our share count.
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Bernard Looney
Chief executive officer
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(a)
This
results announcement also represents bp's half-yearly financial
report (see page 16).
(b)
Divestment
proceeds are disposal proceeds as per the condensed group cash flow
statement. See page 3 for more information on divestment and other
proceeds.
(c)
See
Note 10 for more information.
RC profit (loss), underlying RC profit (loss), surplus cash flow,
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 35.
Top of page 2
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Highlights
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Underlying replacement cost profit* $2.6 billion
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● Underlying
replacement cost profit for the quarter was $2.6 billion, compared with $5.0 billion for the previous quarter.
Compared to the first quarter
2023, the result reflects:
significantly lower realized refining margins, a significantly
higher level of turnaround and maintenance activity and a weak oil
trading result; lower oil and gas realizations; and an exceptional
gas marketing and trading result, albeit lower than the first
quarter.
● Reported
profit for the quarter was $1.8
billion, compared with $8.2
billion for the first
quarter 2023. The reported
result for the second quarter
is adjusted for inventory holding losses* of $0.5 billion (net of tax) and a net adverse
impact of adjusting items* of $0.2
billion (net of tax) to derive the underlying replacement
cost profit. Adjusting items include impairments of $1.2 billion and favourable fair value
accounting effects* of $1.1
billion.
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Operating cash flow* $6.3 billion
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● Operating
cash flow in the quarter of $6.3
billion includes $1.2 billion of Gulf of Mexico oil spill
payments within a working capital* release (after adjusting for
inventory holding losses, fair value accounting effects and other
adjusting items) of $0.1
billion (see page
30).
● Capital
expenditure* in the second
quarter was $4.3 billion
including $1.1 billion for the acquisition of TravelCenters of
America, net of adjustments. bp continues to expect capital
expenditure, including inorganic capital expenditure*, of $16-18
billion in 2023.
● During
the second quarter, bp
completed $2.1 billion of share buybacks. This included $225
million as part of the $675 million programme announced on 7
February 2023 to offset the expected full-year dilution from the
vesting of awards under employee share schemes in
2023.
● The
$1.75 billion share buyback programme announced with the
first quarter results was
completed on 28 July 2023. Over the last four quarters bp has
completed over $10 billion of buybacks from surplus cash flow* and
reduced its issued share capital by over 9%.
● Net
debt* was $23.7 billion at the
end of the second quarter.
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Growing distributions within an unchanged financial
frame
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● 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 second quarter, bp has announced a dividend per ordinary share
of 7.270 cents, an increase of 10%.
● bp
remains committed to using 60% of 2023 surplus cash flow for share
buybacks, subject to maintaining a strong investment grade credit
rating.
● bp
intends to execute a further $1.5 billion share buyback prior to
reporting third quarter results.
● 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 the maintenance of a strong investment grade
credit rating.
● bp’s
guidance for distributions remains unchanged. Based on bp’s
current forecasts, at around $60 per barrel Brent and subject to
the board’s discretion each quarter, bp expects to be able to
deliver share buybacks of around $4.0 billion per annum, at the
lower end of its $14-18 billion capital expenditure range, and have
capacity for an annual increase in the dividend per ordinary share
of around 4%.
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Strong momentum in transformation to an integrated energy
company
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● In
resilient hydrocarbons, during the second quarter bp announced the
start-up of the bp-operated Mad Dog Phase 2 project and the
Reliance operated KG D6-MJ project, together expected to add around
90 thousand barrels of oil equivalent per day of net production by
2025. In addition, bp's Cherry Point refinery in the US
successfully commissioned the hydrocracker improvement project and
cooling water infrastructure project to improve availability and
reduce costs and CO2
emissions.
● In
convenience and mobility, bp completed the acquisition of
TravelCenters of America, adding a network of 288 sites,
strategically located on major highways across the US. The deal is
expected to almost double bp's global convenience gross margin*,
and bring growth opportunities in four of bp's five transition
growth* engines. In July, bp and Lekkerland extended their
convenience partnership to deliver REWE To Go stores at Aral retail
sites until 2028. And during the first half 2023 bp grew energy
sold from EV charging by around 170% compared to the first half
2022.
● In
low carbon energy, bp was awarded the rights to develop two
offshore wind projects, with total potential generating capacity of
4GW, in the German tender round, marking its entry into offshore
wind in continental Europe. In addition, bp has made significant
progress growing its pipeline of hydrogen projects to reach 2.8mtpa
at the end of the second quarter.
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In the second quarter bp has continued to execute against its
unchanged financial frame. We have increased our dividend by 10%;
we are investing with discipline to advance our strategy; and we
are committed to returning 60% of 2023 surplus cash flow through
share buybacks with a further $1.5 billion announced for the second
quarter.
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Murray Auchincloss
Chief financial officer
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The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
41.
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Financial results
In addition to the highlights on page 2:
●
Profit
attributable to bp shareholders in the second quarter and half year
was $1.8 billion and $10.0 billion respectively, compared
with a profit of $9.3 billion and a loss of $11.1 billion
in the same periods of 2022.
-
After
adjusting profit attributable to bp shareholders for inventory
holding losses* and net impact of adjusting items*, underlying
replacement cost profit* for the second quarter and half year was
$2.6 billion and $7.6 billion respectively, compared with
$8.5 billion and $14.7 billion for the same periods of
2022. This reduction in underlying replacement cost profit for the
second quarter and half year reflects lower oil and gas
realizations, the impact of portfolio changes in oil production
& operations, significantly lower refining margins, and a weak
oil trading performance, partly offset by a higher gas marketing
and trading result.
-
Adjusting
items in the second quarter and half year had a net adverse pre-tax
impact of $0.6 billion and a net favourable pre-tax impact of
$3.3 billion respectively, compared with an adverse pre-tax
impact of $0.3 billion and $31.1 billion in the same
periods of 2022.
-
Adjusting
items for the second quarter and half year of 2023 include a
favourable impact of pre-tax fair value accounting effects*,
relative to management's internal measure of performance, of $1.1
billion and $5.3 billion respectively, compared with an adverse
pre-tax impact of $0.8 billion and $6.6 billion in the
same periods of 2022. This is primarily due to a decline in the
forward price of LNG during the periods, but an increase in the
comparative periods. Under IFRS, reported earnings include the
mark-to-market value of the hedges used to risk-manage LNG
contracts, but not of the LNG contracts themselves. The underlying
result includes the mark-to-market value of the hedges but also
recognizes changes in value of the LNG contracts being risk
managed.
-
Adjusting
items for the half year 2022 include a pre-tax charge of
$24.0 billion relating to bp’s decision to exit its
19.75% shareholding in Rosneft. A further $1.5 billion pre-tax
charge relating to bp's decision to exit its other businesses with
Rosneft in Russia is also included.
●
The
effective tax rate (ETR) on RC profit or loss* for the second
quarter and half year was 41% and 32% respectively, compared with
33% and -62% for the same periods in 2022. Excluding adjusting
items, the underlying ETR* for the second quarter and half year was
43% and 41% respectively, compared with 29% and 30% for the same
periods a year ago. The higher underlying ETR for the second
quarter and half year reflects changes in the geographical mix of
profits and the UK Energy Profits Levy on North Sea profits. ETR on
RC profit or loss and underlying ETR are non-IFRS
measures.
●
Operating
cash flow* for the second quarter and half year was
$6.3 billion and $13.9 billion respectively, compared
with $10.9 billion and $19.1 billion for the same periods
in 2022, consistent with the movements in underlying replacement
cost profit in the periods.
●
Capital
expenditure* in the second quarter and half year was
$4.3 billion and $7.9 billion respectively, compared with
$2.8 billion and $5.8 billion in the same periods of
2022, reflecting the inorganic $1.1 billion spend on the
acquisition of TravelCenters of America in the second quarter
2023.
●
Total
divestment and other proceeds for the second quarter and half year
were $0.1 billion and $0.9 billion respectively, compared
with $0.7 billion and $1.9 billion for the same periods
in 2022. There were no other proceeds for the second quarter and
half year of 2023. Other proceeds for the second quarter and half
year of 2022 were $0.4 billion and $0.6 billion respectively of
proceeds from the disposal of a loan note related to the Alaska
divestment.
●
At
the end of the second quarter, net debt* was $23.7 billion,
compared with $21.2 billion at the end of the first quarter
2023 and $22.8 billion at the end of the second quarter
2022.
Top of page 4
Analysis of RC profit (loss) before interest and tax and
reconciliation to profit (loss) for the period
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Second
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First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|
gas
& low carbon energy
|
|
2,289
|
7,347
|
2,737
|
|
9,636
|
1,213
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|
oil
production & operations
|
|
2,568
|
3,317
|
7,237
|
|
5,885
|
11,068
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|
customers
& products
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|
555
|
2,680
|
3,531
|
|
3,235
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5,512
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|
other
businesses & corporate
|
|
(297)
|
(90)
|
(1,028)
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|
(387)
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(25,747)
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Of
which:
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|
|
|
|
|
|
|
|
other
businesses & corporate excluding Rosneft
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|
(297)
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(90)
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(1,028)
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|
(387)
|
(1,714)
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|
Rosneft
|
|
—
|
—
|
—
|
|
—
|
(24,033)
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|
Consolidation
adjustment – UPII*
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|
(30)
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(22)
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(21)
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|
(52)
|
13
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|
RC profit (loss) before interest and tax
|
|
5,085
|
13,232
|
12,456
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|
18,317
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(7,941)
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Finance
costs and net finance expense relating to pensions and other
post-retirement benefits
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|
(859)
|
(785)
|
(539)
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|
(1,644)
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(1,183)
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|
Taxation on a RC basis
|
|
(1,724)
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(3,573)
|
(3,988)
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|
(5,297)
|
(5,681)
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|
Non-controlling interests
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|
(161)
|
(204)
|
(279)
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|
(365)
|
(593)
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|
RC profit (loss) attributable to bp shareholders*
|
|
2,341
|
8,670
|
7,650
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|
11,011
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(15,398)
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Inventory holding gains (losses)*
|
|
(732)
|
(600)
|
2,146
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|
(1,332)
|
5,647
|
|
Taxation (charge) credit on inventory holding gains and
losses
|
|
183
|
148
|
(539)
|
|
331
|
(1,376)
|
|
Profit (loss) for the period attributable to bp
shareholders
|
|
1,792
|
8,218
|
9,257
|
|
10,010
|
(11,127)
|
Analysis of underlying RC profit (loss) before interest and
tax
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Underlying RC profit (loss) before interest and tax
|
|
|
|
|
|
|
|
|
gas
& low carbon energy
|
|
2,233
|
3,456
|
3,080
|
|
5,689
|
6,675
|
|
oil
production & operations
|
|
2,777
|
3,319
|
5,902
|
|
6,096
|
10,585
|
|
customers
& products
|
|
796
|
2,759
|
4,006
|
|
3,555
|
6,162
|
|
other
businesses & corporate
|
|
(170)
|
(296)
|
(201)
|
|
(466)
|
(460)
|
|
Of
which:
|
|
|
|
|
|
|
|
|
other
businesses & corporate excluding Rosneft
|
|
(170)
|
(296)
|
(201)
|
|
(466)
|
(460)
|
|
Rosneft
|
|
—
|
—
|
—
|
|
—
|
—
|
|
Consolidation
adjustment – UPII
|
|
(30)
|
(22)
|
(21)
|
|
(52)
|
13
|
|
Underlying RC profit before interest and tax
|
|
5,606
|
9,216
|
12,766
|
|
14,822
|
22,975
|
|
Finance
costs and net finance expense relating to pensions and other
post-retirement benefits
|
|
(740)
|
(681)
|
(509)
|
|
(1,421)
|
(995)
|
|
Taxation on an underlying RC basis
|
|
(2,116)
|
(3,368)
|
(3,527)
|
|
(5,484)
|
(6,691)
|
|
Non-controlling interests
|
|
(161)
|
(204)
|
(279)
|
|
(365)
|
(593)
|
|
Underlying RC profit attributable to bp shareholders*
|
|
2,589
|
4,963
|
8,451
|
|
7,552
|
14,696
|
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.
Operating Metrics
|
Operating metrics
|
|
First half 2023
|
|
vs
First half 2022
|
|
Tier 1 and tier 2 process safety events*
|
|
20
|
|
-4
|
|
Reported recordable injury frequency*
|
|
0.237
|
|
+23.8%
|
|
upstream* production(a)
(mboe/d)
|
|
2,301
|
|
+3.4%
|
|
upstream unit production costs*(b)
($/boe)
|
|
5.94
|
|
-9.1%
|
|
bp-operated upstream plant reliability*
|
|
95.0%
|
|
-0.3
|
|
bp-operated refining availability*(a)
|
|
95.9%
|
|
1.5
|
(a)
See
Operational updates on pages 6, 9 and 11. Because of rounding,
upstream production may not agree exactly with the sum of gas &
low carbon energy and oil production & operations.
(b)
Mainly
reflecting impact of portfolio changes.
Top of page 5
Outlook & Guidance
Macro outlook
●
For
the third quarter, bp expects oil prices to be supported by
seasonal demand and the OPEC+ production restrictions.
●
During
the third quarter, bp expects the risk of an earlier than normal
seasonal fill of European gas storage to continue to weigh on
European gas and Asian LNG prices absent disruptions to supply. In
the US, Henry Hub gas prices are expected to find support from
coal-to-gas switching in the power sector.
●
In
the third quarter, bp expects industry refining margins to remain
above historical average levels, supported by low product
inventories and seasonal demand in the US.
3Q23 guidance
●
Looking
ahead, bp expects third-quarter 2023 reported upstream* production
to be broadly flat compared to second quarter 2023. Within this, bp
expects production from oil production & operations to be lower
and gas & low carbon energy to be higher, including the effects
of seasonal maintenance in higher margin regions offset by major
project* delivery.
●
In
its customers business, bp expects seasonally higher volumes. In
refining, bp expects a lower level of turnaround and maintenance
activity compared to the second quarter.
2023 guidance
In
addition to the guidance on page 2:
●
bp
now expects both reported and underlying upstream production to be
higher compared with 2022. Within this, bp expects underlying
production* from oil production & operations to be higher and
production from gas & low carbon energy to be slightly lower.
bp now expects four major project start-ups during 2023, with
Greater Tortue Ahmeyim (GTA) Phase 1 now expected to start-up
during the first quarter of 2024.
●
bp
continues to expect the other businesses & corporate underlying
annual charge to be in a range of $1.1-1.3 billion for 2023. The
charge may vary from quarter to quarter.
●
bp
continues to expect the depreciation, depletion and amortization to
be slightly above 2022.
●
bp
continues to expect the underlying ETR* for 2023 to be around 40%
but it 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.
●
Having
realized $16.8 billion of divestment and other proceeds since the
second quarter of 2020, bp continues to expect divestment and other
proceeds of $2-3 billion in 2023 and continues to expect to reach
$25 billion of divestment and other proceeds between the second
half of 2020 and 2025.
●
bp
continues to expect Gulf of Mexico oil spill payments for the year
to be around $1.3 billion pre-tax including the $1.2 billion
pre-tax payment made during the second quarter.
●
bp
continues to expect capital expenditure* of $16-18 billion in 2023
including inorganic capital expenditure*.
●
bp
is committed to maintaining a strong investment grade credit
rating, targeting further progress within an 'A' grade credit
rating. For 2023 bp continues to intend to allocate 40% of surplus
cash flow* to further strengthening the balance sheet.
●
For
2023 and subject to maintaining a strong investment grade credit
rating, bp remains committed to using 60% of surplus cash flow for
share buybacks.
●
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 the maintenance of a strong investment grade
credit rating.
●
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, at the lower end of its $14-18 billion capital
expenditure range, and have capacity for an annual increase in the
dividend per ordinary share of around 4%.
|
The commentary above contains forward-looking statements and should
be read in conjunction with the cautionary statement on page
41.
|
Top of page 6
gas & low carbon energy*
Financial results
●
The
replacement cost (RC) profit before interest and tax for the second
quarter and half year was $2,289 million and $9,636 million
respectively, compared with $2,737 million and $1,213 million for
the same periods in 2022. The second quarter and half year are
adjusted by a favourable impact of net adjusting items* of $56
million and $3,947 million respectively, compared with an adverse
impact of net adjusting items of $343 million and $5,462 million
for the same periods in 2022. Adjusting items include impacts of
fair value accounting effects*, relative to management's internal
measure of performance, which are a favourable impact of $1,222
million and $5,156 million for the second quarter and half year in
2023 and an adverse impact of $74 million and $5,089 million for
the same periods in 2022. Under IFRS, reported earnings include the
mark-to-market value of the hedges used to risk-manage LNG
contracts, but not of the LNG contracts themselves. The underlying
result includes the mark-to-market value of the hedges but also
recognizes changes in value of the LNG contracts being risk
managed, which decreased as forward prices fell during the first
half. Adjusting items also include a net impairment charge of
$1,058 million and $1,060 million respectively, compared
with net charges of $265 million and $517 million for the
same periods in 2022.
●
After
adjusting RC profit before interest and tax for adjusting items,
the underlying RC profit before interest and tax* for the second
quarter and half year was $2,233 million and $5,689 million
respectively, compared with $3,080 million and $6,675 million for
the same periods in 2022.
●
The
underlying RC profit for the second quarter and for the half year,
compared with the same periods in 2022, both reflect lower
realizations and a higher depreciation, depletion and amortization
charge partially offset by a higher gas marketing and trading
result.
Operational update
●
Reported
production for the quarter was 903mboe/d, 2.2% lower than the same
period in 2022. Underlying production* was 2.9% lower, mainly due
to lower base performance partially offset by new project
delivery.
●
Reported
production for the half year was 936mboe/d, 0.9% lower than the
same period in 2022. Underlying production was 2.0% lower, also
mainly due to lower base performance partially offset by new
project delivery.
●
Renewables
pipeline* at the end of the quarter was 39.6GW (bp net), including
16.6GW bp net share of Lightsource bp's (LSbp's) pipeline. The
renewables pipeline increased by 2.4GW during the half year due to
additions to LSbp's portfolio. In addition, there is over 10GW (bp
net) of early stage opportunities in LSbp's hopper.
Strategic progress
gas
●
On
30 June bp and Reliance (operator) announced that production has
commenced from MJ, the last of three new deepwater developments in
the KG D6 block off the coast of India. Production from the fields
is expected to account for around one third of India’s
current domestic gas production and meet approximately 15% of
India’s gas demand.
●
This
builds on the progress announced in our first-quarter results,
which comprised the following: bp signed an agreement with Shell to
purchase Shell’s 27% interest in the Browse project, offshore
Australia, subject to approvals; bp and its partners confirmed the
development concept for the second phase of the bp-operated Greater
Tortue Ahmeyim (GTA) liquefied natural gas project, to take forward
to the next stage of evaluation; bp and our co-venturers in the
Shah Deniz Consortium have secured additional capacity in the Trans
Adriatic Pipeline (TAP); bp announced that it had completed the
sale of its upstream business in Algeria to Eni; and bp confirmed
that, together with ADNOC, it has made a non-binding offer to take
NewMed Energy private.
low carbon energy
●
Hydrogen and CCS
o
Hydrogen
pipeline* grew by 1.0mtpa in the first half to 2.8mtpa, reflecting
projects moving into concept development in the US and
Oman.
●
Offshore wind
o
On
12 July, bp was awarded the rights to develop two North Sea
offshore wind projects in Germany. The sites are located 130km and
150km offshore, in water depths of about 40m, and have a total
potential generating capacity of 4GW, raising our global offshore
wind pipeline to 9.3GW.
●
These events build on the progress announced in
our first-quarter results, which comprised the following: it was
announced that three bp-led hydrogen and CCS projects in north-east
England - Net Zero Teesside Power gas-fired power station and CCS,
H2Teesside blue hydrogen* and HyGreen Teesside green hydrogen* -
have been chosen by the UK government to go to the next stage of
development; bp signed
an agreement with Harbour Energy to take a 40% stake in the Viking
carbon capture and storage (CCS) project in the North Sea; and bp
launched plans for low-carbon green hydrogen cluster in
Spain’s Valencia region. bp announced a successful bid in the
Innovation and Targeted Oil and Gas (INTOG) Scottish offshore wind
leasing round, bp’s first step in floating offshore wind; and
bp and Deep Wind Offshore announced the formation of a joint
venture to develop offshore wind opportunities in South
Korea.
Top of page 7
gas & low carbon energy (continued)
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Profit before interest and tax
|
|
2,289
|
7,348
|
2,728
|
|
9,637
|
1,229
|
|
Inventory holding (gains) losses*
|
|
—
|
(1)
|
9
|
|
(1)
|
(16)
|
|
RC profit before interest and tax
|
|
2,289
|
7,347
|
2,737
|
|
9,636
|
1,213
|
|
Net (favourable) adverse impact of adjusting items
|
|
(56)
|
(3,891)
|
343
|
|
(3,947)
|
5,462
|
|
Underlying RC profit before interest and tax
|
|
2,233
|
3,456
|
3,080
|
|
5,689
|
6,675
|
|
Taxation on an underlying RC basis
|
|
(575)
|
(961)
|
(717)
|
|
(1,536)
|
(1,726)
|
|
Underlying RC profit before interest
|
|
1,658
|
2,495
|
2,363
|
|
4,153
|
4,949
|
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Depreciation, depletion and amortization
|
|
|
|
|
|
|
|
|
Total depreciation, depletion and amortization
|
|
1,407
|
1,440
|
1,203
|
|
2,847
|
2,458
|
|
|
|
|
|
|
|
|
|
|
Exploration write-offs
|
|
|
|
|
|
|
|
|
Exploration write-offs
|
|
(1)
|
(1)
|
—
|
|
(2)
|
(2)
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA*
|
|
|
|
|
|
|
|
|
Total adjusted EBITDA
|
|
3,639
|
4,895
|
4,283
|
|
8,534
|
9,131
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure*
|
|
|
|
|
|
|
|
|
gas
|
|
697
|
647
|
681
|
|
1,344
|
1,323
|
|
low carbon energy
|
|
190
|
366
|
142
|
|
556
|
361
|
|
Total capital expenditure
|
|
887
|
1,013
|
823
|
|
1,900
|
1,684
|
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Production (net of
royalties)(a)
|
|
|
|
|
|
|
|
|
Liquids* (mb/d)
|
|
103
|
114
|
112
|
|
108
|
116
|
|
Natural gas (mmcf/d)
|
|
4,641
|
4,962
|
4,709
|
|
4,801
|
4,803
|
|
Total hydrocarbons* (mboe/d)
|
|
903
|
969
|
924
|
|
936
|
944
|
|
|
|
|
|
|
|
|
|
|
Average realizations*(b)
|
|
|
|
|
|
|
|
|
Liquids(c)
($/bbl)
|
|
73.57
|
79.44
|
105.50
|
|
76.42
|
95.40
|
|
Natural gas ($/mcf)
|
|
5.53
|
7.41
|
8.42
|
|
6.49
|
8.15
|
|
Total
hydrocarbons*(c)
($/boe)
|
|
36.96
|
46.95
|
55.79
|
|
42.01
|
53.31
|
(a)
Includes
bp’s share of production of equity-accounted entities in the
gas & low carbon energy segment.
(b)
Realizations
are based on sales by consolidated subsidiaries only – this
excludes equity-accounted entities.
(c)
A
minor amendment has been made to the first quarter of
2023.
Top of page 8
gas & low carbon energy (continued)
|
|
|
30 June 2023
|
31 March 2023
|
30 June 2022
|
|
|
|
|||
|
low carbon energy(d)
|
|
|||
|
|
|
|
|
|
|
Renewables (bp net, GW)
|
|
|
|
|
|
Installed renewables capacity*
|
|
2.4
|
2.2
|
2.0
|
|
|
|
|
|
|
|
Developed renewables to FID*
|
|
6.1
|
5.9
|
4.4
|
|
Renewables pipeline
|
|
39.6
|
38.8
|
25.8
|
|
of which by geographical area:
|
|
|
|
|
|
Renewables
pipeline – Americas
|
|
17.8
|
17.5
|
16.9
|
|
Renewables pipeline
– Asia Pacific(e)
|
|
12.2
|
12.2
|
1.4
|
|
Renewables
pipeline – Europe
|
|
9.5
|
8.9
|
7.2
|
|
Renewables
pipeline – Other
|
|
0.1
|
0.1
|
0.2
|
|
of which by technology:
|
|
|
|
|
|
Renewables
pipeline – offshore wind
|
|
5.3
|
5.3
|
5.2
|
|
Renewables
pipeline – onshore wind
|
|
6.3
|
6.3
|
—
|
|
Renewables
pipeline – solar
|
|
28.1
|
27.2
|
20.6
|
|
Total Developed renewables to FID and Renewables
pipeline
|
|
45.7
|
44.7
|
30.1
|
(d)
Because
of rounding, some totals may not agree exactly with the sum of
their component parts.
(e)
30 June 2023 and 31 March 2023 include
10.3GW of onshore wind and solar pipeline in support of
hydrogen.
Top of page 9
oil production & operations
Financial results
●
The
replacement cost (RC) profit before interest and tax for the second
quarter and half year was $2,568 million and $5,885 million
respectively, compared with $7,237 million and $11,068 million for
the same periods in 2022. The second quarter and half year are
adjusted by an adverse impact of net adjusting items* of $209
million and $211 million respectively, compared with a favourable
impact of net adjusting items of $1,335 million and $483 million
for the same periods in 2022.
●
After
adjusting items, the underlying RC profit before interest and tax*
for the second quarter and half year was $2,777 million and $6,096
million respectively, compared with $5,902 million and $10,585
million for the same periods in 2022.
●
The
underlying RC profit for the second quarter and half year compared
to the same periods in 2022, reflects lower realizations, and the
impact of portfolio changes, partly offset by higher
volumes.
Operational update
●
Reported
production for the quarter was 1,369mboe/d, 7.5% higher than the
second quarter of 2022. Underlying production* for the quarter was
5.5% higher compared with the second quarter of 2022 reflecting bpx
energy performance, improved base performance and major
projects*.
●
Reported
production for the half year was 1,365mboe/d, 6.6% higher than the
same period of 2022. Underlying production for the half year was
5.8% higher compared with the same period of 2022 reflecting base
performance, bpx energy performance and major
projects.
Strategic Progress
●
During
the second quarter bp has been awarded 36 lease blocks in the Gulf
of Mexico lease sale 259, which includes 22 leases that may provide
options to further enhance our resource positions at Kaskida and
Tiber.
●
In
May bp drilled a successful appraisal well in the southwest part of
the Mad Dog field and is considering an extension of the current
development through a multi-well tie-back to Argos (bp 60.5%
operator).
●
Evaluating
options to progress a bp operated Tiber development project in the
Gulf of Mexico.
●
On
28 June the Norwegian Ministry of Petroleum and Energy approved a
total of nine plans for development and operation to Aker BP (bp
15.9%), with estimated recoverable reserves to be above 700 million
barrels of oil equivalent.
●
Construction
on the topside (upper) unit of the Azeri Central East (ACE)
platform has been completed, sailaway is due to occur in the third
quarter 2023. The ACE project is the next stage of development of
the giant Azeri-Chirag-Gunashli (ACG) field in the Azerbaijan
sector of the Caspian Sea (bp 30.37% operator).
●
These
events build on the progress announced in our first-quarter
results:
Azule
Energy (bp and Eni’s 50:50 joint venture in Angola) has taken
the final investment decision for the Agogo Integrated West Hub
Development oil project;
MiQ,
the non-profit global leader in methane certification, announced
that it has independently audited and certified bp as the first
energy major in the US to verify the methane intensity of its
entire US onshore portfolio of natural gas;
bp
announced start-up of the Mad Dog Phase 2 Argos platform. bp
expects to safely and systematically ramp up production through
2023; and
moving
forward with concept selection for a bp-operated Kaskida
development project in the Gulf of Mexico.
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Profit before interest and tax
|
|
2,568
|
3,318
|
7,230
|
|
5,886
|
11,062
|
|
Inventory holding (gains) losses*
|
|
—
|
(1)
|
7
|
|
(1)
|
6
|
|
RC profit before interest and tax
|
|
2,568
|
3,317
|
7,237
|
|
5,885
|
11,068
|
|
Net (favourable) adverse impact of adjusting items
|
|
209
|
2
|
(1,335)
|
|
211
|
(483)
|
|
Underlying RC profit before interest and tax
|
|
2,777
|
3,319
|
5,902
|
|
6,096
|
10,585
|
|
Taxation on an underlying RC basis
|
|
(1,413)
|
(1,766)
|
(2,295)
|
|
(3,179)
|
(4,207)
|
|
Underlying RC profit before interest
|
|
1,364
|
1,553
|
3,607
|
|
2,917
|
6,378
|
Top of page 10
oil production & operations (continued)
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Depreciation, depletion and amortization
|
|
|
|
|
|
|
|
|
Total depreciation, depletion and amortization
|
|
1,370
|
1,327
|
1,371
|
|
2,697
|
2,800
|
|
|
|
|
|
|
|
|
|
|
Exploration write-offs
|
|
|
|
|
|
|
|
|
Exploration write-offs
|
|
242
|
51
|
79
|
|
293
|
130
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA*
|
|
|
|
|
|
|
|
|
Total adjusted EBITDA
|
|
4,389
|
4,697
|
7,352
|
|
9,086
|
13,515
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure*
|
|
|
|
|
|
|
|
|
Total capital expenditure
|
|
1,478
|
1,520
|
1,208
|
|
2,998
|
2,462
|
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Production (net of
royalties)(a)
|
|
|
|
|
|
|
|
|
Liquids* (mb/d)
|
|
1,000
|
1,005
|
935
|
|
1,003
|
941
|
|
Natural gas (mmcf/d)
|
|
2,140
|
2,060
|
1,964
|
|
2,100
|
1,964
|
|
Total hydrocarbons* (mboe/d)
|
|
1,369
|
1,360
|
1,274
|
|
1,365
|
1,280
|
|
|
|
|
|
|
|
|
|
|
Average realizations*(b)
|
|
|
|
|
|
|
|
|
Liquids ($/bbl)
|
|
69.19
|
71.63
|
100.34
|
|
70.40
|
92.00
|
|
Natural
gas(c)
($/mcf)
|
|
3.23
|
6.57
|
9.83
|
|
4.90
|
9.69
|
|
Total
hydrocarbons*(c)
($/boe)
|
|
54.57
|
62.36
|
90.03
|
|
58.40
|
83.52
|
(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.
(c)
Realizations
calculation methodology has been changed to reflect gas price
fluctuations within the North Sea region. Second quarter 2022 and
first half 2022 were restated. There is no impact on financial
results.
Top of page 11
customers & products
Financial results
●
The replacement cost (RC) profit before interest
and tax for the second quarter and half year was
$555 million and $3,235 million respectively, compared with $3,531
million and $5,512 million for the same periods in 2022. The second
quarter and half year are adjusted by an adverse impact of net
adjusting items* of $241 million and $320 million respectively,
compared with an adverse impact of net adjusting items of $475
million and $650 million for the same periods in 2022. Adjusting
items include impacts of fair value accounting effects*, relative
to management's internal measure of performance, which are an
adverse impact of $109 million for the quarter and $32 million for
the half year in 2023, compared with an adverse impact of $62
million and $439 million for the same periods in
2022.
●
After
adjusting items, the underlying RC profit before interest and tax*
for the second quarter and half year was $796 million and $3,555
million respectively, compared with $4,006 million and $6,162
million for the same periods in 2022.
●
The
customers & products results for the second quarter and half
year were significantly lower than the same periods in 2022,
primarily reflecting a lower refining result and a weak oil trading
performance.
●
customers
– the convenience and mobility
results, excluding Castrol, for the second quarter and half year
were higher than the same periods in 2022. The benefits of a
stronger performance in retail fuels and year on year growth in
convenience, before the uplift from the acquisition of
TravelCenters of America, were partially offset by higher costs,
including increased expenditure in our transition growth* engines
and the impact of inflation.
Castrol results for
the second quarter and half
year were
lower than the same periods in 2022,
with the impact of higher margins more than offset by adverse
foreign exchange impacts and higher costs.
●
products
– the products results for the
second quarter and half year were lower compared with the same
periods in 2022. In refining, the results reflected significantly
lower refining margins and a higher level of turnaround activity,
compared to the same periods in 2022. The results also reflected a
weak contribution from oil trading compared to the exceptional
result in the same periods last year.
Operational update
●
bp-operated
refining availability* for the second quarter and half year was
95.7% and 95.9% respectively, higher compared with 93.9% and 94.4%
for the same periods in 2022.
Strategic progress
●
In
May, bp completed its purchase of TravelCenters of America, one of
the biggest networks of highway travel centres in the US, adding a
network of 288 sites, strategically located on major highways
across the US. The deal is expected to almost double bp's global
convenience gross margin* and brings growth opportunities in four
of bp's five transition growth* engines.
●
In
July, bp and Lekkerland extended their successful partnership to
deliver REWE To Go stores at Aral retail sites until 2028. This is
bp's largest European convenience supply agreement and brings
together Germany's largest forecourt brand with one of the
country's leading convenience specialists in support of bp’s
convenience growth engine delivery.
●
EV charge points* installed and energy
sold in the
first half grew by around 70% and around 170% respectively,
compared to the same period last year, with charge points now at
more than 27,000.
●
In
May, Castrol opened its new EV lab at Castrol China Technology
Centre in Shanghai, to focus on developing and testing EV fluids.
The expansion supports bp’s strategy to drive lower-carbon
mobility in China and to help customers achieve their
sustainability goals. In addition, in June, Castrol signed a
strategic co-operation protocol with Yiwu TNFia, one of the largest
automobile service chains in East China, positioning Castrol to
expand its share of products in Yiwu TNFia’s large and
growing network of auto workshops.
●
In May, bp's Cherry Point refinery in the US
successfully commissioned the hydrocracker improvement project and
cooling water infrastructure project. The new vacuum tower and
cooling water tower are now online and are expected to improve
availability, reduce maintenance costs and CO2
emissions.
●
These
events build on the progress announced in our first-quarter
results, including:
o
bp
signed a new agreement with Rontec, one of the UK’s largest
roadside retail networks, to supply around two billion litres of
fuel over the next five years to more than 60 of Rontec’s
sites;
o
bp pulse signed a strategic collaboration
agreement with Iberdrola to accelerate EV charging infrastructure
roll-out in Spain and Portugal. bp and Iberdrola intend to form a
joint venture with plans to invest up to €1 billion and
install 5,000 fast(a)
EV charge points by 2025 and around
11,000 by 2030. The formation of the joint venture is subject to
regulatory approval;
o
bp
announced a new global mobility agreement with Uber, which will see
the companies work together to help accelerate Uber’s
commitment to become a global zero-tailpipe emissions mobility
platform by 2040;
o
bp
completed the sale of its 50% interest in the bp-Husky Toledo
refinery in Ohio, US, to Cenovus Energy, its partner in the
facility.
(a)
“fast
charging” includes rapid charging ≥50kW and ultra-fast
charging ≥150kW.
Top of page 12
customers & products (continued)
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Profit (loss) before interest and tax
|
|
(177)
|
2,078
|
5,693
|
|
1,901
|
11,149
|
|
Inventory holding (gains) losses*
|
|
732
|
602
|
(2,162)
|
|
1,334
|
(5,637)
|
|
RC profit before interest and tax
|
|
555
|
2,680
|
3,531
|
|
3,235
|
5,512
|
|
Net (favourable) adverse impact of adjusting items
|
|
241
|
79
|
475
|
|
320
|
650
|
|
Underlying RC profit before interest and tax
|
|
796
|
2,759
|
4,006
|
|
3,555
|
6,162
|
|
Of
which:(a)
|
|
|
|
|
|
|
|
|
customers
– convenience & mobility
|
|
701
|
391
|
679
|
|
1,092
|
1,201
|
|
Castrol – included in customers
|
|
171
|
161
|
223
|
|
332
|
479
|
|
products
– refining & trading
|
|
95
|
2,368
|
3,327
|
|
2,463
|
4,961
|
|
Taxation on an underlying RC basis
|
|
(271)
|
(777)
|
(783)
|
|
(1,048)
|
(1,183)
|
|
Underlying RC profit before interest
|
|
525
|
1,982
|
3,223
|
|
2,507
|
4,979
|
(a)
A
reconciliation to RC profit before interest and tax by business is
provided on page 32.
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Adjusted EBITDA*(b)
|
|
|
|
|
|
|
|
|
customers – convenience & mobility
|
|
1,149
|
732
|
994
|
|
1,881
|
1,842
|
|
Castrol – included in customers
|
|
213
|
200
|
261
|
|
413
|
556
|
|
products – refining & trading
|
|
541
|
2,824
|
3,727
|
|
3,365
|
5,752
|
|
|
|
1,690
|
3,556
|
4,721
|
|
5,246
|
7,594
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
|
|
|
|
|
Total depreciation, depletion and amortization
|
|
894
|
797
|
715
|
|
1,691
|
1,432
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure*
|
|
|
|
|
|
|
|
|
customers – convenience & mobility
|
|
1,452
|
458
|
334
|
|
1,910
|
681
|
|
Castrol – included in customers
|
|
44
|
68
|
43
|
|
112
|
95
|
|
products – refining & trading
|
|
406
|
532
|
341
|
|
938
|
709
|
|
Total capital expenditure
|
|
1,858
|
990
|
675
|
|
2,848
|
1,390
|
(b)
A
reconciliation to RC profit before interest and tax by business is
provided on page 32.
|
Retail(c)
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
bp retail sites* – total (#)
|
|
21,100
|
20,700
|
20,600
|
|
21,100
|
20,600
|
|
Strategic
convenience sites*
|
|
2,750
|
2,450
|
2,200
|
|
2,750
|
2,200
|
(c)
Reported
to the nearest 50.
|
Marketing sales of refined products (mb/d)
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
US
|
|
1,275
|
1,078
|
1,163
|
|
1,177
|
1,138
|
|
Europe
|
|
1,056
|
973
|
1,032
|
|
1,015
|
958
|
|
Rest of World
|
|
472
|
462
|
439
|
|
467
|
455
|
|
|
|
2,803
|
2,513
|
2,634
|
|
2,659
|
2,551
|
|
Trading/supply sales of refined products
|
|
353
|
333
|
369
|
|
343
|
361
|
|
Total sales volume of refined products
|
|
3,156
|
2,846
|
3,003
|
|
3,002
|
2,912
|
Top of page 13
customers & products (continued)
|
Refining marker margin*
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
bp
average refining marker margin (RMM)(d)
($/bbl)
|
|
24.7
|
28.1
|
45.5
|
|
26.4
|
32.2
|
(d)
The RMM in the quarter
is calculated based on bp’s current refinery portfolio. On a
comparative basis, the second quarter and half year 2022 RMM would
be $45.4/bbl and $32.5/bbl
respectively.
|
Refinery throughputs (mb/d)
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
US
|
|
638
|
686
|
637
|
|
662
|
698
|
|
Europe
|
|
726
|
832
|
841
|
|
779
|
824
|
|
Rest of World
|
|
—
|
—
|
2
|
|
—
|
43
|
|
Total refinery throughputs
|
|
1,364
|
1,518
|
1,480
|
|
1,441
|
1,565
|
|
bp-operated refining availability* (%)
|
|
95.7
|
96.1
|
93.9
|
|
95.9
|
94.4
|
Top of page 14
other businesses & corporate
Other businesses & corporate comprises innovation &
engineering, bp ventures, Launchpad, regions, corporates &
solutions, our corporate activities & functions and any
residual costs of the Gulf of Mexico oil spill. It also includes
Rosneft results up to 27 February 2022.
Financial results
●
The
replacement cost (RC) loss before interest and tax for the second
quarter and half year was $297 million and $387 million
respectively, compared with $1,028 million and $25,747 million for
the same periods in 2022. The second quarter and half year are
adjusted by an adverse impact of net adjusting items* of $127
million and a favourable impact of net adjusting items of $79
million respectively, compared with an adverse impact of net
adjusting items of $827 million and $25,287 million for the same
periods in 2022. Adjusting items include impacts of fair value
accounting effects* which are an adverse impact of $48 million for
the quarter and a favourable impact of $197 million for the half
year in 2023, an adverse impact of $686 million and $1,111 million
for the same periods in 2022. The adjusting items for the half year
in 2022 mainly relate to Rosneft.
●
After
adjusting RC loss for net adjusting items, the underlying RC loss
before interest and tax* for the second quarter and half year was
$170 million and $466 million respectively, compared with $201
million and $460 million for the same periods in 2022.
Strategic progress
●
In
June bp ventures invested $10 million in WasteFuel, which is
planning to develop a global network of plants to convert municipal
and agricultural waste into bio-methanol, a biofuel which could
play a significant role in decarbonizing hard-to-abate sectors like
shipping.
●
In
April bp ventures completed the investment of €7.5 million in
Service4Charger, which offers intelligent, scalable e-mobility
solutions and full-service implementation, including the planning,
installation, operation, and maintenance of charging infrastructure
for electric vehicles (EVs).
●
These
events build on the progress announced in our first-quarter results
in which bp ventures invested $11 million in Magenta Mobility, one
of India’s largest providers of electric mobility for
last-mile delivery, the journey from hub to customer.
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Profit (loss) before interest and tax
|
|
(297)
|
(90)
|
(1,028)
|
|
(387)
|
(25,747)
|
|
Inventory holding (gains) losses*
|
|
—
|
—
|
—
|
|
—
|
—
|
|
RC profit (loss) before interest and tax
|
|
(297)
|
(90)
|
(1,028)
|
|
(387)
|
(25,747)
|
|
Net
(favourable) adverse impact of adjusting items(a)
|
|
127
|
(206)
|
827
|
|
(79)
|
25,287
|
|
Underlying RC profit (loss) before interest and tax
|
|
(170)
|
(296)
|
(201)
|
|
(466)
|
(460)
|
|
Taxation on an underlying RC basis
|
|
10
|
29
|
167
|
|
39
|
190
|
|
Underlying RC profit (loss) before interest
|
|
(160)
|
(267)
|
(34)
|
|
(427)
|
(270)
|
(a)
Includes
fair value accounting effects relating to the hybrid bonds that
were issued on 17 June 2020. See page 36 for more
information.
other businesses & corporate (excluding Rosneft)
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Profit (loss) before interest and tax
|
|
(297)
|
(90)
|
(1,028)
|
|
(387)
|
(1,714)
|
|
Inventory holding (gains) losses*
|
|
—
|
—
|
—
|
|
—
|
—
|
|
RC profit (loss) before interest and tax
|
|
(297)
|
(90)
|
(1,028)
|
|
(387)
|
(1,714)
|
|
Net (favourable) adverse impact of adjusting items
|
|
127
|
(206)
|
827
|
|
(79)
|
1,254
|
|
Underlying RC profit (loss) before interest and tax
|
|
(170)
|
(296)
|
(201)
|
|
(466)
|
(460)
|
|
Taxation on an underlying RC basis
|
|
10
|
29
|
167
|
|
39
|
190
|
|
Underlying RC profit (loss) before interest
|
|
(160)
|
(267)
|
(34)
|
|
(427)
|
(270)
|
Top of page 15
other businesses & corporate (continued)
other businesses & corporate (Rosneft)
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Profit (loss) before interest and tax
|
|
—
|
—
|
—
|
|
—
|
(24,033)
|
|
Inventory holding (gains) losses*
|
|
—
|
—
|
—
|
|
—
|
—
|
|
RC profit (loss) before interest and tax
|
|
—
|
—
|
—
|
|
—
|
(24,033)
|
|
Net (favourable) adverse impact of adjusting items
|
|
—
|
—
|
—
|
|
—
|
24,033
|
|
Underlying RC profit (loss) before interest and tax
|
|
—
|
—
|
—
|
|
—
|
—
|
|
Taxation on an underlying RC basis
|
|
—
|
—
|
—
|
|
—
|
—
|
|
Underlying RC profit (loss) before interest
|
|
—
|
—
|
—
|
|
—
|
—
|
Top of page 16
This results announcement also represents BP’s half-yearly
financial report for the purposes of the Disclosure Guidance and
Transparency Rules made by the UK Financial Conduct Authority. In
this context: (i) the condensed set of financial statements can be
found on pages 18-27; (ii) pages 1-15, and 28-41 comprise the
interim management report; and (iii) the directors’
responsibility statement and auditors’ independent review
report can be found on pages 16-17.
Statement of directors’ responsibilities
The directors confirm that, to the best of their knowledge, the
condensed set of financial statements on pages 18-27 has been
prepared in accordance with United Kingdom adopted IAS 34
‘Interim Financial Reporting’, and that the interim
management report on pages 1-15, and 28-41 includes a fair review
of the information required by the Disclosure Guidance and
Transparency Rules.
The directors of BP p.l.c. are listed on pages 80-83 of
bp Annual Report
and Form 20-F 2022.
By order of the board
|
Bernard Looney
|
Murray Auchincloss
|
|
Chief Executive Officer
|
Chief Financial Officer
|
|
31 July 2023
|
31 July 2023
|
Top of page 17
Independent review report to BP p.l.c.
Conclusion
We have been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2023 which comprises the group income
statement, condensed group statement of comprehensive income,
condensed group statement of changes in equity, group balance
sheet, condensed cash flow statement and related notes 1 to
11.
Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2023
is not prepared, in all material respects, in accordance with
United Kingdom adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United
Kingdom’s Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard
on Review Engagements (UK) 2410 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the Financial Reporting Council for use in the United
Kingdom (ISRE (UK) 2410). A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
As disclosed in Note 1, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB), IFRS as adopted by the UK, and
European Union (EU). The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with United Kingdom adopted International Accounting
Standard 34, 'Interim Financial Reporting'.
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those
performed in an audit as described in the Basis for Conclusion
section of this report, nothing has come to our attention to
suggest that the directors have inappropriately adopted the going
concern basis of accounting or that the directors have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This Conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410; however future events or conditions
may cause the entity to cease to continue as a going
concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom’s Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group’s ability to continue as
a going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do
so.
Auditor’s Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are responsible
for expressing to the company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
Conclusion, including our Conclusion Relating to Going Concern, are
based on procedures that are less extensive than audit procedures,
as described in the Basis for Conclusion paragraph of this
report.
Use of our report
This report is made solely to the company in accordance with ISRE
(UK) 2410. Our work has been undertaken so that we might state to
the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
31 July 2023
The maintenance and integrity of the BP p.l.c. website are the
responsibility of the directors; the review work carried out by the
statutory auditors does not involve consideration of these matters
and, accordingly, the statutory auditors accept no responsibility
for any changes that may have occurred to the financial information
since it was initially presented on the website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Top of page 18
Financial statements
Group income statement
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
Sales
and other operating revenues (Note
6)
|
|
48,538
|
56,182
|
67,866
|
|
104,720
|
117,124
|
|
Earnings from joint ventures – after interest and
tax
|
|
360
|
195
|
62
|
|
555
|
441
|
|
Earnings from associates – after interest and
tax
|
|
231
|
173
|
127
|
|
404
|
998
|
|
Interest and other income
|
|
378
|
248
|
142
|
|
626
|
336
|
|
Gains on sale of businesses and fixed assets
|
|
(28)
|
153
|
1,309
|
|
125
|
1,827
|
|
Total revenues and other income
|
|
49,479
|
56,951
|
69,506
|
|
106,430
|
120,726
|
|
Purchases
|
|
29,172
|
29,122
|
39,141
|
|
58,294
|
66,949
|
|
Production and manufacturing expenses
|
|
6,231
|
6,982
|
7,601
|
|
13,213
|
14,576
|
|
Production and similar taxes
|
|
404
|
474
|
624
|
|
878
|
1,129
|
|
Depreciation,
depletion and amortization (Note
7)
|
|
3,923
|
3,800
|
3,512
|
|
7,723
|
7,137
|
|
Net impairment and losses on sale of businesses and fixed assets
(Note 4)
|
|
1,269
|
88
|
445
|
|
1,357
|
26,476
|
|
Exploration expense
|
|
293
|
106
|
128
|
|
399
|
220
|
|
Distribution and administration expenses
|
|
3,834
|
3,747
|
3,453
|
|
7,581
|
6,533
|
|
Profit (loss) before interest and taxation
|
|
4,353
|
12,632
|
14,602
|
|
16,985
|
(2,294)
|
|
Finance costs
|
|
920
|
843
|
556
|
|
1,763
|
1,220
|
|
Net
finance (income) expense relating to pensions and other
post-retirement benefits
|
|
(61)
|
(58)
|
(17)
|
|
(119)
|
(37)
|
|
Profit (loss) before taxation
|
|
3,494
|
11,847
|
14,063
|
|
15,341
|
(3,477)
|
|
Taxation
|
|
1,541
|
3,425
|
4,527
|
|
4,966
|
7,057
|
|
Profit (loss) for the period
|
|
1,953
|
8,422
|
9,536
|
|
10,375
|
(10,534)
|
|
Attributable to
|
|
|
|
|
|
|
|
|
bp
shareholders
|
|
1,792
|
8,218
|
9,257
|
|
10,010
|
(11,127)
|
|
Non-controlling
interests
|
|
161
|
204
|
279
|
|
365
|
593
|
|
|
|
1,953
|
8,422
|
9,536
|
|
10,375
|
(10,534)
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (Note 8)
|
|
|
|
|
|
|
|
|
Profit (loss) for the period attributable to bp
shareholders
|
|
|
|
|
|
|
|
|
Per
ordinary share (cents)
|
|
|
|
|
|
|
|
|
Basic
|
|
10.22
|
45.93
|
47.74
|
|
56.53
|
(57.21)
|
|
Diluted
|
|
10.01
|
45.06
|
47.18
|
|
55.40
|
(57.21)
|
|
Per
ADS (dollars)
|
|
|
|
|
|
|
|
|
Basic
|
|
0.61
|
2.76
|
2.86
|
|
3.39
|
(3.43)
|
|
Diluted
|
|
0.60
|
2.70
|
2.83
|
|
3.32
|
(3.43)
|
Top of page 19
Condensed group statement of comprehensive income
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) for the period
|
|
1,953
|
8,422
|
9,536
|
|
10,375
|
(10,534)
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to profit or
loss
|
|
|
|
|
|
|
|
|
Currency
translation differences(a)
|
|
11
|
453
|
(2,454)
|
|
464
|
(4,203)
|
|
Exchange (gains)
losses on translation of foreign operations reclassified to gain or
loss on sale of businesses and fixed assets(b)
|
|
—
|
—
|
—
|
|
—
|
10,791
|
|
Cash
flow hedges and costs of hedging
|
|
(56)
|
546
|
99
|
|
490
|
321
|
|
Share
of items relating to equity-accounted entities, net of
tax
|
|
(27)
|
(203)
|
59
|
|
(230)
|
144
|
|
Income
tax relating to items that may be reclassified
|
|
71
|
(76)
|
(70)
|
|
(5)
|
(172)
|
|
|
|
(1)
|
720
|
(2,366)
|
|
719
|
6,881
|
|
Items that will not be reclassified to profit or loss
|
|
|
|
|
|
|
|
|
Remeasurements
of the net pension and other post-retirement benefit liability or
asset
|
|
(855)
|
(87)
|
(392)
|
|
(942)
|
1,736
|
|
Cash
flow hedges that will subsequently be transferred to the balance
sheet
|
|
—
|
—
|
(3)
|
|
—
|
(4)
|
|
Income
tax relating to items that will not be reclassified
|
|
308
|
23
|
179
|
|
331
|
(489)
|
|
|
|
(547)
|
(64)
|
(216)
|
|
(611)
|
1,243
|
|
Other comprehensive income
|
|
(548)
|
656
|
(2,582)
|
|
108
|
8,124
|
|
Total comprehensive income
|
|
1,405
|
9,078
|
6,954
|
|
10,483
|
(2,410)
|
|
Attributable to
|
|
|
|
|
|
|
|
|
bp
shareholders
|
|
1,240
|
8,861
|
6,742
|
|
10,101
|
(2,936)
|
|
Non-controlling
interests
|
|
165
|
217
|
212
|
|
382
|
526
|
|
|
|
1,405
|
9,078
|
6,954
|
|
10,483
|
(2,410)
|
(a)
Second
quarter 2022 is principally affected by movements in the Pound
Sterling against the US dollar. First half 2022 principally
affected by movements in the Pound Sterling and Russian rouble
against the US dollar.
(b)
First
half 2022 predominantly relates to the loss of significant
influence over Rosneft.
Top of page 20
Condensed group statement of changes in equity
|
|
|
bp shareholders’
|
Non-controlling interests
|
Total
|
|
|
$ million
|
|
equity
|
Hybrid bonds
|
Other interest
|
equity
|
|
At 1 January 2023
|
|
67,553
|
13,390
|
2,047
|
82,990
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
10,101
|
288
|
94
|
10,483
|
|
Dividends
|
|
(2,348)
|
—
|
(135)
|
(2,483)
|
|
Repurchase of ordinary share capital
|
|
(5,166)
|
—
|
—
|
(5,166)
|
|
Share-based payments, net of tax
|
|
205
|
—
|
—
|
205
|
|
Issue of perpetual hybrid bonds
|
|
(1)
|
133
|
—
|
132
|
|
Payments on perpetual hybrid bonds
|
|
(5)
|
(409)
|
—
|
(414)
|
|
Transactions
involving non-controlling interests, net of tax
|
|
—
|
—
|
(144)
|
(144)
|
|
At 30 June 2023
|
|
70,339
|
13,402
|
1,862
|
85,603
|
|
|
|
|
|
|
|
|
|
|
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
|
|
(2,936)
|
254
|
272
|
(2,410)
|
|
Dividends
|
|
(2,130)
|
—
|
(128)
|
(2,258)
|
|
Cash
flow hedges transferred to the balance sheet, net of
tax
|
|
(1)
|
—
|
—
|
(1)
|
|
Issue
of ordinary share capital(b)
|
|
820
|
—
|
—
|
820
|
|
Repurchase of ordinary share capital
|
|
(4,490)
|
—
|
—
|
(4,490)
|
|
Share-based payments, net of tax
|
|
380
|
—
|
—
|
380
|
|
Issue of perpetual hybrid bonds
|
|
(2)
|
130
|
—
|
128
|
|
Payments on perpetual hybrid bonds
|
|
15
|
(394)
|
—
|
(379)
|
|
Transactions
involving non-controlling interests, net of tax
|
|
(510)
|
—
|
(156)
|
(666)
|
|
At 30 June 2022
|
|
66,609
|
13,031
|
1,923
|
81,563
|
(a)
In
2022 $9.2 billion of the opening foreign currency translation
reserve has been moved to the 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.
(b)
Relates
to ordinary shares issued as non-cash consideration for the
acquisition of the public units of BP Midstream Partners
LP.
Top of page 21
Group balance sheet
|
|
|
30 June
|
31 December
|
|
$ million
|
|
2023
|
2022
|
|
Non-current assets
|
|
|
|
|
Property, plant and equipment
|
|
108,126
|
106,044
|
|
Goodwill
|
|
12,206
|
11,960
|
|
Intangible assets
|
|
10,447
|
10,200
|
|
Investments in joint ventures
|
|
13,081
|
12,400
|
|
Investments in associates
|
|
7,941
|
8,201
|
|
Other investments
|
|
2,328
|
2,670
|
|
Fixed assets
|
|
154,129
|
151,475
|
|
Loans
|
|
1,468
|
1,271
|
|
Trade and other receivables
|
|
1,209
|
1,092
|
|
Derivative financial instruments
|
|
10,655
|
12,841
|
|
Prepayments
|
|
685
|
576
|
|
Deferred tax assets
|
|
3,747
|
3,908
|
|
Defined benefit pension plan surpluses
|
|
8,860
|
9,269
|
|
|
|
180,753
|
180,432
|
|
Current assets
|
|
|
|
|
Loans
|
|
304
|
315
|
|
Inventories
|
|
23,349
|
28,081
|
|
Trade and other receivables
|
|
27,701
|
34,010
|
|
Derivative financial instruments
|
|
12,042
|
11,554
|
|
Prepayments
|
|
1,673
|
2,092
|
|
Current tax receivable
|
|
660
|
621
|
|
Other investments
|
|
671
|
578
|
|
Cash and cash equivalents
|
|
28,914
|
29,195
|
|
|
|
95,314
|
106,446
|
|
Assets classified as held for sale (Note 3)
|
|
—
|
1,242
|
|
|
|
95,314
|
107,688
|
|
Total assets
|
|
276,067
|
288,120
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
56,183
|
63,984
|
|
Derivative financial instruments
|
|
6,351
|
12,618
|
|
Accruals
|
|
6,004
|
6,398
|
|
Lease liabilities
|
|
2,465
|
2,102
|
|
Finance debt
|
|
2,338
|
3,198
|
|
Current tax payable
|
|
3,550
|
4,065
|
|
Provisions
|
|
4,574
|
6,332
|
|
|
|
81,465
|
98,697
|
|
Liabilities directly associated with assets classified as held for
sale (Note 3)
|
|
—
|
321
|
|
|
|
81,465
|
99,018
|
|
Non-current liabilities
|
|
|
|
|
Other payables
|
|
9,282
|
10,387
|
|
Derivative financial instruments
|
|
11,071
|
13,537
|
|
Accruals
|
|
1,245
|
1,233
|
|
Lease liabilities
|
|
8,496
|
6,447
|
|
Finance debt
|
|
47,400
|
43,746
|
|
Deferred tax liabilities
|
|
10,648
|
10,526
|
|
Provisions
|
|
15,572
|
14,992
|
|
Defined benefit pension plan and other post-retirement benefit plan
deficits
|
|
5,285
|
5,244
|
|
|
|
108,999
|
106,112
|
|
Total liabilities
|
|
190,464
|
205,130
|
|
Net assets
|
|
85,603
|
82,990
|
|
Equity
|
|
|
|
|
bp
shareholders’ equity
|
|
70,339
|
67,553
|
|
Non-controlling interests
|
|
15,264
|
15,437
|
|
Total equity
|
|
85,603
|
82,990
|
Top of page 22
Condensed group cash flow statement
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Profit (loss) before taxation
|
|
3,494
|
11,847
|
14,063
|
|
15,341
|
(3,477)
|
|
Adjustments to
reconcile profit (loss) before taxation to net cash provided by
operating activities
|
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization and exploration expenditure written
off
|
|
4,164
|
3,850
|
3,591
|
|
8,014
|
7,265
|
|
Net
impairment and (gain) loss on sale of businesses and fixed
assets
|
|
1,297
|
(65)
|
(864)
|
|
1,232
|
24,649
|
|
Earnings from
equity-accounted entities, less dividends received
|
|
(31)
|
1
|
72
|
|
(30)
|
(1,021)
|
|
Net
charge for interest and other finance expense, less net interest
paid
|
|
102
|
63
|
(46)
|
|
165
|
138
|
|
Share-based
payments
|
|
243
|
(22)
|
208
|
|
221
|
378
|
|
Net
operating charge for pensions and other post-retirement benefits,
less contributions and benefit payments for unfunded
plans
|
|
(47)
|
(43)
|
(36)
|
|
(90)
|
(182)
|
|
Net
charge for provisions, less payments
|
|
(221)
|
(1,099)
|
796
|
|
(1,320)
|
1,280
|
|
Movements in
inventories and other current and non-current assets and
liabilities
|
|
(742)
|
(3,755)
|
(4,416)
|
|
(4,497)
|
(6,187)
|
|
Income
taxes paid
|
|
(1,966)
|
(3,155)
|
(2,505)
|
|
(5,121)
|
(3,770)
|
|
Net cash provided by operating activities
|
|
6,293
|
7,622
|
10,863
|
|
13,915
|
19,073
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Expenditure on property, plant and equipment, intangible and other
assets
|
|
(3,453)
|
(3,129)
|
(2,666)
|
|
(6,582)
|
(5,268)
|
|
Acquisitions, net of cash acquired (Note 2)
|
|
(804)
|
52
|
3
|
|
(752)
|
(5)
|
|
Investment in joint ventures
|
|
(50)
|
(540)
|
(159)
|
|
(590)
|
(453)
|
|
Investment in associates
|
|
(7)
|
(8)
|
(16)
|
|
(15)
|
(41)
|
|
Total cash capital expenditure
|
|
(4,314)
|
(3,625)
|
(2,838)
|
|
(7,939)
|
(5,767)
|
|
Proceeds from disposal of fixed assets
|
|
28
|
15
|
202
|
|
43
|
670
|
|
Proceeds from disposal of businesses, net of cash
disposed
|
|
60
|
785
|
111
|
|
845
|
660
|
|
Proceeds from loan repayments
|
|
21
|
6
|
16
|
|
27
|
45
|
|
Cash provided from investing activities
|
|
109
|
806
|
329
|
|
915
|
1,375
|
|
Net cash used in investing activities
|
|
(4,205)
|
(2,819)
|
(2,509)
|
|
(7,024)
|
(4,392)
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Net
issue (repurchase) of shares (Note
8)
|
|
(2,073)
|
(2,448)
|
(2,288)
|
|
(4,521)
|
(3,880)
|
|
Lease liability payments
|
|
(620)
|
(555)
|
(472)
|
|
(1,175)
|
(970)
|
|
Proceeds from long-term financing
|
|
3,643
|
2,395
|
—
|
|
6,038
|
2,002
|
|
Repayments of long-term financing
|
|
(2,828)
|
(799)
|
(4,573)
|
|
(3,627)
|
(5,465)
|
|
Net increase (decrease) in short-term debt
|
|
(348)
|
(529)
|
(688)
|
|
(877)
|
(964)
|
|
Issue of perpetual hybrid bonds
|
|
87
|
45
|
62
|
|
132
|
128
|
|
Payments relating to perpetual hybrid bonds
|
|
(250)
|
(236)
|
(161)
|
|
(486)
|
(309)
|
|
Payments
relating to transactions involving non-controlling interests (Other
interest)
|
|
—
|
(180)
|
(1)
|
|
(180)
|
(6)
|
|
Receipts
relating to transactions involving non-controlling interests (Other
interest)
|
|
2
|
7
|
—
|
|
9
|
7
|
|
Dividends paid - bp shareholders
|
|
(1,153)
|
(1,183)
|
(1,062)
|
|
(2,336)
|
(2,130)
|
|
-
non-controlling interests
|
|
(67)
|
(68)
|
(63)
|
|
(135)
|
(128)
|
|
Net cash provided by (used in) financing activities
|
|
(3,607)
|
(3,551)
|
(9,246)
|
|
(7,158)
|
(11,715)
|
|
Currency translation differences relating to cash and cash
equivalents
|
|
—
|
(14)
|
(414)
|
|
(14)
|
(539)
|
|
Increase (decrease) in cash and cash equivalents
|
|
(1,519)
|
1,238
|
(1,306)
|
|
(281)
|
2,427
|
|
Cash and cash equivalents at beginning of period
|
|
30,433
|
29,195
|
34,414
|
|
29,195
|
30,681
|
|
Cash and cash equivalents at end of period
|
|
28,914
|
30,433
|
33,108
|
|
28,914
|
33,108
|
Top of page 23
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 2022 included in
BP Annual Report
and Form 20-F 2022.
The directors consider it appropriate to adopt the going concern
basis of accounting in preparing these interim financial
statements.
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 except for Pillar Two
amendments noted below. 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
2023 which are the same as
those used in preparing BP Annual Report and Form 20-F
2022.
In May 2023 the IASB issued International Tax Reform – Pillar
Two Model Rules - Amendments to IAS 12 Income Taxes to clarify the
application of IAS 12 to tax legislation enacted or substantively
enacted to implement Pillar Two of the Organisation for Economic
Co-operation and Development’s Base Erosion and Profit
Shifting project, which aims to address the tax challenges arising
from the digitalisation of the economy. The amendments include a
mandatory temporary exception from accounting for deferred tax on
such tax law. The amendments were adopted by the UK in July and are
yet to be adopted by the EU, however no impact is expected on the
financial statements for 2023.
There are no other new or amended standards or interpretations
adopted from 1 January 2023 onwards, including IFRS 17 'Insurance
Contracts,' that have a significant impact on the financial
information.
In July 2023 the UK government enacted legislation to implement the
Pillar Two rules. The legislation is effective for bp from 1
January 2024 and includes an income inclusion rule and a domestic
minimum tax, which together are designed to ensure a minimum
effective tax rate of 15% in each country in which the group
operates. Similar legislation is being enacted by other governments
around the world. As a result of the amendments to IAS 12, no
impact is expected on the financial statements in 2023, and work is
ongoing to assess the potential impact in the 2024 financial
statements.
Significant accounting judgements and estimates
bp's significant accounting judgements and estimates were disclosed
in BP
Annual Report and Form 20-F 2022. These have been subsequently considered at the
end of each quarter to determine if any changes were required to
those judgements and estimates. No significant changes were
identified.
Investment in Rosneft
Since the first quarter 2022, bp accounts for its interest in
Rosneft and its other businesses with Rosneft within Russia, as
financial assets measured at fair value within ‘Other
investments’. It is considered by management 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 the measurement of the interest in Rosneft
and the other businesses with
Rosneft within Russia as at 30 June
2023.
Note 2. Business combinations
The group undertook a number of business combinations during the
first half of 2023. Total consideration paid in cash for the second
quarter and half year 2023 amounted to $1,313 million and
$1,250 million respectively, offset by cash acquired of
$509 million and $498 million respectively.
The provisional fair value of the net assets (including goodwill)
recognized from business combinations, inclusive of measurement
period adjustments for business combinations in previous periods,
for the half year 2023 was $1,223 million. This principally
related to the acquisition of TravelCenters of
America.
Top of page 24
Note 3. Non-current assets held for sale
There were no assets or liabilities classified as held for sale at
30 June 2023.
Note 4. Impairment and losses on sale of businesses and fixed
assets
Net impairment charges and losses on sale of businesses and fixed
assets for the second quarter and half year were
$1,269 million and $1,357 million respectively, compared
with net charges of $445 million and $26,476 million for
the same periods in 2022 and include net impairment charges for the
second quarter and half year of $1,208 million and
$1,167 million respectively, compared with net charges of
$402 million and $14,788 million for the same periods in
2022.
Second quarter and half year 2023 impairments includes a net
impairment charge of $1,058 million and $1,060 million
respectively, compared with net charges of $265 million and
$517 million for the same periods in 2022 in the gas & low
carbon energy segment.
The impairment charge and the loss on sale of businesses and fixed
assets for 2022 mainly relates to bp's investment in Rosneft, which
has been reported in other businesses and corporate.
Note 5. Analysis of replacement cost profit (loss) before interest
and tax and reconciliation to profit (loss) before
taxation
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
gas & low carbon energy
|
|
2,289
|
7,347
|
2,737
|
|
9,636
|
1,213
|
|
oil production & operations
|
|
2,568
|
3,317
|
7,237
|
|
5,885
|
11,068
|
|
customers & products
|
|
555
|
2,680
|
3,531
|
|
3,235
|
5,512
|
|
other businesses & corporate
|
|
(297)
|
(90)
|
(1,028)
|
|
(387)
|
(25,747)
|
|
|
|
5,115
|
13,254
|
12,477
|
|
18,369
|
(7,954)
|
|
Consolidation adjustment – UPII*
|
|
(30)
|
(22)
|
(21)
|
|
(52)
|
13
|
|
RC profit (loss) before interest and tax
|
|
5,085
|
13,232
|
12,456
|
|
18,317
|
(7,941)
|
|
Inventory holding gains (losses)*
|
|
|
|
|
|
|
|
|
gas
& low carbon energy
|
|
—
|
1
|
(9)
|
|
1
|
16
|
|
oil
production & operations
|
|
—
|
1
|
(7)
|
|
1
|
(6)
|
|
customers
& products
|
|
(732)
|
(602)
|
2,162
|
|
(1,334)
|
5,637
|
|
Profit (loss) before interest and tax
|
|
4,353
|
12,632
|
14,602
|
|
16,985
|
(2,294)
|
|
Finance costs
|
|
920
|
843
|
556
|
|
1,763
|
1,220
|
|
Net
finance expense/(income) relating to pensions and other
post-retirement benefits
|
|
(61)
|
(58)
|
(17)
|
|
(119)
|
(37)
|
|
Profit (loss) before taxation
|
|
3,494
|
11,847
|
14,063
|
|
15,341
|
(3,477)
|
|
|
|
|
|
|
|
|
|
|
RC profit (loss) before interest and tax*
|
|
|
|
|
|
|
|
|
US
|
|
2,244
|
3,075
|
3,322
|
|
5,319
|
5,599
|
|
Non-US
|
|
2,841
|
10,157
|
9,134
|
|
12,998
|
(13,540)
|
|
|
|
5,085
|
13,232
|
12,456
|
|
18,317
|
(7,941)
|
Top of page 25
Note 6. Sales and other operating revenues
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
By segment
|
|
|
|
|
|
|
|
|
gas & low carbon energy
|
|
10,428
|
17,886
|
13,243
|
|
28,314
|
21,409
|
|
oil production & operations
|
|
5,777
|
6,153
|
9,504
|
|
11,930
|
17,662
|
|
customers & products
|
|
38,051
|
38,882
|
55,557
|
|
76,933
|
97,720
|
|
other businesses & corporate
|
|
590
|
738
|
516
|
|
1,328
|
968
|
|
|
|
54,846
|
63,659
|
78,820
|
|
118,505
|
137,759
|
|
|
|
|
|
|
|
|
|
|
Less: sales and other operating revenues between
segments
|
|
|
|
|
|
|
|
|
gas & low carbon energy
|
|
840
|
536
|
1,621
|
|
1,376
|
3,569
|
|
oil production & operations
|
|
5,236
|
6,261
|
8,753
|
|
11,497
|
15,789
|
|
customers & products
|
|
(180)
|
144
|
392
|
|
(36)
|
1,084
|
|
other businesses & corporate
|
|
412
|
536
|
188
|
|
948
|
193
|
|
|
|
6,308
|
7,477
|
10,954
|
|
13,785
|
20,635
|
|
|
|
|
|
|
|
|
|
|
External sales and other operating revenues
|
|
|
|
|
|
|
|
|
gas & low carbon energy
|
|
9,588
|
17,350
|
11,622
|
|
26,938
|
17,840
|
|
oil production & operations
|
|
541
|
(108)
|
751
|
|
433
|
1,873
|
|
customers & products
|
|
38,231
|
38,738
|
55,165
|
|
76,969
|
96,636
|
|
other businesses & corporate
|
|
178
|
202
|
328
|
|
380
|
775
|
|
Total sales and other operating revenues
|
|
48,538
|
56,182
|
67,866
|
|
104,720
|
117,124
|
|
|
|
|
|
|
|
|
|
|
By geographical area
|
|
|
|
|
|
|
|
|
US
|
|
20,065
|
19,160
|
27,331
|
|
39,225
|
46,483
|
|
Non-US
|
|
38,492
|
46,350
|
54,331
|
|
84,842
|
97,128
|
|
|
|
58,557
|
65,510
|
81,662
|
|
124,067
|
143,611
|
|
Less: sales and other operating revenues between areas
|
|
10,019
|
9,328
|
13,796
|
|
19,347
|
26,487
|
|
|
|
48,538
|
56,182
|
67,866
|
|
104,720
|
117,124
|
|
|
|
|
|
|
|
|
|
|
Revenues from contracts with customers
|
|
|
|
|
|
|
|
|
Sales and other operating revenues include the following in
relation to revenues from contracts with customers:
|
|
|
|
|
|
|
|
|
Crude oil
|
|
520
|
637
|
2,034
|
|
1,157
|
4,178
|
|
Oil products
|
|
31,218
|
30,141
|
43,267
|
|
61,359
|
75,018
|
|
Natural gas, LNG and NGLs
|
|
5,841
|
9,644
|
8,944
|
|
15,485
|
19,624
|
|
Non-oil products and other revenues from contracts with
customers
|
|
2,750
|
1,872
|
1,825
|
|
4,622
|
4,170
|
|
Revenue from contracts with customers
|
|
40,329
|
42,294
|
56,070
|
|
82,623
|
102,990
|
|
Other
operating revenues(a)
|
|
8,209
|
13,888
|
11,796
|
|
22,097
|
14,134
|
|
Total sales and other operating revenues
|
|
48,538
|
56,182
|
67,866
|
|
104,720
|
117,124
|
(a)
Principally
relates to commodity derivative transactions including sales of bp
own production in trading books.
Top of page 26
Note 7. Depreciation, depletion and amortization
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Total depreciation, depletion and amortization by
segment
|
|
|
|
|
|
|
|
|
gas & low carbon energy
|
|
1,407
|
1,440
|
1,203
|
|
2,847
|
2,458
|
|
oil production & operations
|
|
1,370
|
1,327
|
1,371
|
|
2,697
|
2,800
|
|
customers & products
|
|
894
|
797
|
715
|
|
1,691
|
1,432
|
|
other businesses & corporate
|
|
252
|
236
|
223
|
|
488
|
447
|
|
|
|
3,923
|
3,800
|
3,512
|
|
7,723
|
7,137
|
|
Total depreciation, depletion and amortization by geographical
area
|
|
|
|
|
|
|
|
|
US
|
|
1,338
|
1,254
|
1,159
|
|
2,592
|
2,242
|
|
Non-US
|
|
2,585
|
2,546
|
2,353
|
|
5,131
|
4,895
|
|
|
|
3,923
|
3,800
|
3,512
|
|
7,723
|
7,137
|
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. Against the authority granted at
bp's 2022 annual general meeting, 329 million ordinary shares
repurchased for cancellation were settled during the second quarter 2023 for a total cost of
$2,073 million. A further
152 million ordinary
shares were repurchased between the end of the reporting period and
the date when the financial statements are authorised for issue for
a total cost of $917 million.
This amount, plus a further $224 million, has been accrued at 30
June 2023. The number of shares in issue is reduced when shares are
repurchased, but is not reduced in respect of the period-end
commitment to repurchase shares subsequent to the end of the
period.
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.
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Results for the period
|
|
|
|
|
|
|
|
|
Profit (loss) for the period attributable to bp
shareholders
|
|
1,792
|
8,218
|
9,257
|
|
10,010
|
(11,127)
|
|
Less: preference dividend
|
|
1
|
—
|
1
|
|
1
|
1
|
|
Profit (loss) attributable to bp ordinary shareholders
|
|
1,791
|
8,218
|
9,256
|
|
10,009
|
(11,128)
|
|
|
|
|
|
|
|
|
|
|
Number of shares (thousand)(a)(b)
|
|
|
|
|
|
|
|
|
Basic
weighted average number of shares outstanding
|
|
17,523,778
|
17,891,455
|
19,388,427
|
|
17,706,388
|
19,451,040
|
|
ADS
equivalent(c)
|
|
2,920,629
|
2,981,909
|
3,231,404
|
|
2,951,064
|
3,241,840
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding used to calculate diluted earnings per
share
|
|
17,900,984
|
18,238,522
|
19,619,628
|
|
18,068,256
|
19,451,040
|
|
ADS
equivalent(c)
|
|
2,983,497
|
3,039,753
|
3,269,938
|
|
3,011,376
|
3,241,840
|
|
|
|
|
|
|
|
|
|
|
Shares in issue at period-end
|
|
17,379,366
|
17,703,285
|
19,135,400
|
|
17,379,366
|
19,135,400
|
|
ADS
equivalent(c)
|
|
2,896,561
|
2,950,547
|
3,189,233
|
|
2,896,561
|
3,189,233
|
(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
half 2022 are 202,620 thousand (ADS equivalent 33,770
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 7.270 cents per ordinary
share which is expected to be paid on 22 September 2023 to ordinary
shareholders and American Depositary Share (ADS) holders on the
register on 11 August 2023. The ex-dividend date will be 10 August
2023. The corresponding amount in sterling is due to be announced
on 5 September 2023, calculated based on the average of the market
exchange rates over three dealing days between 30 August 2023 and 1
September 2023. Holders of ADSs are expected to receive $0.43620
per ADS (less applicable fees). The board has decided not to offer
a scrip dividend alternative in respect of the second quarter 2023
dividend. Ordinary shareholders and ADS holders (subject to certain
exceptions) will be able to participate in a dividend reinvestment
programme. Details of the second quarter dividend and timetable are
available at bp.com/dividends
and further details of the dividend
reinvestment programmes are available at bp.com/drip.
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Dividends paid per ordinary share
|
|
|
|
|
|
|
|
|
cents
|
|
6.610
|
6.610
|
5.460
|
|
13.220
|
10.920
|
|
pence
|
|
5.309
|
5.551
|
4.356
|
|
10.860
|
8.515
|
|
Dividends paid per ADS (cents)
|
|
39.66
|
39.66
|
32.76
|
|
79.32
|
65.52
|
Note 10. Net debt
|
Net debt*
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Finance
debt(a)
|
|
49,738
|
48,595
|
52,866
|
|
49,738
|
52,866
|
|
Fair
value (asset) liability of hedges related to finance
debt(b)
|
|
2,836
|
3,070
|
3,058
|
|
2,836
|
3,058
|
|
|
|
52,574
|
51,665
|
55,924
|
|
52,574
|
55,924
|
|
Less: cash and cash equivalents
|
|
28,914
|
30,433
|
33,108
|
|
28,914
|
33,108
|
|
Net
debt(c)
|
|
23,660
|
21,232
|
22,816
|
|
23,660
|
22,816
|
|
Total equity
|
|
85,603
|
87,181
|
81,563
|
|
85,603
|
81,563
|
|
Gearing*
|
|
21.7%
|
19.6%
|
21.9%
|
|
21.7%
|
21.9%
|
(a)
The fair value of
finance debt at 30 June 2023 was $45,580 million (31 March 2023 $45,071 million, 30 June 2022
$49,056 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 $98 million
at 30 June 2023 (first quarter 2023 liability of $97 million
and second quarter 2022 liability of $246 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.
As part of actively managing its debt portfolio, in the second
quarter the group bought back $1.7 billion equivalent of finance
debt consisting entirely of euro bonds (first quarter 2023 $nil,
second quarter 2022 $4.5 billion USD bonds). Year to date the group
has bought back a total of $1.7 billion equivalent of finance debt
($4.5 billion for the comparative period in 2022). Derivatives
associated with non-US dollar debt bought back were also
terminated. These transactions have no significant impact on net
debt or gearing.
Note 11. Statutory accounts
The financial information shown in this publication, which was
approved by the Board of Directors on 31 July 2023, is unaudited
and does not constitute statutory financial statements. Audited
financial information will be published in BP Annual Report and Form 20-F
2023. BP Annual Report and Form 20-F 2022 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*
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Capital expenditure
|
|
|
|
|
|
|
|
|
Organic capital expenditure*
|
|
3,233
|
3,495
|
2,845
|
|
6,728
|
5,418
|
|
Inorganic
capital expenditure*(a)
|
|
1,081
|
130
|
(7)
|
|
1,211
|
349
|
|
|
|
4,314
|
3,625
|
2,838
|
|
7,939
|
5,767
|
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Capital expenditure by segment
|
|
|
|
|
|
|
|
|
gas & low carbon energy
|
|
887
|
1,013
|
823
|
|
1,900
|
1,684
|
|
oil production & operations
|
|
1,478
|
1,520
|
1,208
|
|
2,998
|
2,462
|
|
customers
& products(a)
|
|
1,858
|
990
|
675
|
|
2,848
|
1,390
|
|
other businesses & corporate
|
|
91
|
102
|
132
|
|
193
|
231
|
|
|
|
4,314
|
3,625
|
2,838
|
|
7,939
|
5,767
|
|
Capital expenditure by geographical area
|
|
|
|
|
|
|
|
|
US
|
|
2,661
|
1,697
|
1,253
|
|
4,358
|
2,350
|
|
Non-US
|
|
1,653
|
1,928
|
1,585
|
|
3,581
|
3,417
|
|
|
|
4,314
|
3,625
|
2,838
|
|
7,939
|
5,767
|
(a)
Second
quarter and first half 2023 include $1.1 billion, net of
adjustments, in respect of the TravelCenters of America
acquisition.
Top of page 29
Adjusting items*
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
gas & low carbon energy
|
|
|
|
|
|
|
|
|
Gains on sale of businesses and fixed assets
|
|
1
|
15
|
—
|
|
16
|
9
|
|
Net
impairment and losses on sale of businesses and fixed
assets(a)
|
|
(1,058)
|
(2)
|
(265)
|
|
(1,060)
|
(517)
|
|
Environmental and other provisions
|
|
—
|
—
|
—
|
|
—
|
—
|
|
Restructuring, integration and rationalization costs
|
|
1
|
—
|
1
|
|
1
|
5
|
|
Fair
value accounting effects(b)(c)
|
|
1,222
|
3,934
|
(74)
|
|
5,156
|
(5,089)
|
|
Other
|
|
(110)
|
(56)
|
(5)
|
|
(166)
|
130
|
|
|
|
56
|
3,891
|
(343)
|
|
3,947
|
(5,462)
|
|
oil production & operations
|
|
|
|
|
|
|
|
|
Gains
on sale of businesses and fixed assets(d)
|
|
(31)
|
137
|
1,278
|
|
106
|
1,527
|
|
Net impairment and losses on sale of businesses and fixed
assets
|
|
(140)
|
8
|
268
|
|
(132)
|
(936)
|
|
Environmental and other provisions
|
|
(44)
|
(49)
|
(204)
|
|
(93)
|
(146)
|
|
Restructuring, integration and rationalization costs
|
|
(1)
|
—
|
(7)
|
|
(1)
|
(17)
|
|
Fair value accounting effects
|
|
—
|
—
|
—
|
|
—
|
—
|
|
Other
|
|
7
|
(98)
|
—
|
|
(91)
|
55
|
|
|
|
(209)
|
(2)
|
1,335
|
|
(211)
|
483
|
|
customers & products
|
|
|
|
|
|
|
|
|
Gains on sale of businesses and fixed assets
|
|
2
|
1
|
31
|
|
3
|
292
|
|
Net impairment and losses on sale of businesses and fixed
assets
|
|
(36)
|
(83)
|
(434)
|
|
(119)
|
(447)
|
|
Environmental and other provisions
|
|
(1)
|
(10)
|
(35)
|
|
(11)
|
(35)
|
|
Restructuring, integration and rationalization costs
|
|
1
|
(2)
|
9
|
|
(1)
|
10
|
|
Fair
value accounting effects(c)
|
|
(109)
|
77
|
(62)
|
|
(32)
|
(439)
|
|
Other
|
|
(98)
|
(62)
|
16
|
|
(160)
|
(31)
|
|
|
|
(241)
|
(79)
|
(475)
|
|
(320)
|
(650)
|
|
other businesses & corporate
|
|
|
|
|
|
|
|
|
Gains on sale of businesses and fixed assets
|
|
—
|
—
|
—
|
|
—
|
(1)
|
|
Net impairment and losses on sale of businesses and fixed
assets
|
|
(31)
|
(6)
|
(15)
|
|
(37)
|
(16)
|
|
Environmental and other provisions
|
|
(17)
|
(14)
|
(89)
|
|
(31)
|
(92)
|
|
Restructuring, integration and rationalization costs
|
|
—
|
(10)
|
(3)
|
|
(10)
|
10
|
|
Fair
value accounting effects(c)
|
|
(48)
|
245
|
(686)
|
|
197
|
(1,111)
|
|
Rosneft
|
|
—
|
—
|
—
|
|
—
|
(24,033)
|
|
Gulf of Mexico oil spill
|
|
(18)
|
(9)
|
(21)
|
|
(27)
|
(40)
|
|
Other
|
|
(13)
|
—
|
(13)
|
|
(13)
|
(4)
|
|
|
|
(127)
|
206
|
(827)
|
|
79
|
(25,287)
|
|
Total before interest and taxation
|
|
(521)
|
4,016
|
(310)
|
|
3,495
|
(30,916)
|
|
Finance
costs(e)
|
|
(119)
|
(104)
|
(30)
|
|
(223)
|
(188)
|
|
Total before taxation
|
|
(640)
|
3,912
|
(340)
|
|
3,272
|
(31,104)
|
|
Taxation
on adjusting items(f)
|
|
160
|
(205)
|
(461)
|
|
(45)
|
1,010
|
|
Taxation
– tax rate change effect of UK energy profits
levy(g)
|
|
232
|
—
|
—
|
|
232
|
—
|
|
Total
after taxation for period(h)
|
|
(248)
|
3,707
|
(801)
|
|
3,459
|
(30,094)
|
(a)
See
Note 4 for further information.
(b)
Under
IFRS bp marks-to-market the value of the hedges used to risk-manage
LNG contracts, but not the contracts themselves, resulting in a
mismatch in accounting treatment. The fair value accounting effect
includes the change in value of LNG contracts that are being risk
managed, and the underlying result reflects how bp risk-manages its
LNG contracts.
(c)
For
further information, including the nature of fair value accounting
effects reported in each segment, see pages 3, 6 and
36.
(d)
Second
quarter and first half 2022 include gains of $904 million related
to the deemed disposal of 12% of the group's interest in Aker BP,
an associate of bp, following completion of Aker BP's acquisition
of Lundin Energy, and $361 million in relation to the disposal of
the group's interest in the Rumaila field in Iraq to Basra Energy
Company, an associate of bp.
(e)
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 (see Note 10 for further information) and
temporary valuation differences associated with the group’s
interest rate and foreign currency exchange risk management of
finance debt.
(f)
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.
(g)
Second
quarter 2023 includes a revision to the deferred tax impact of the
introduction of the UK Energy Profits Levy (EPL) on temporary
differences existing at 31 December 2022 that are expected to
unwind over the period 1 January 2023 to 31 March 2028. The EPL
increases the headline rate of tax to 75% and applies to taxable
profits from bp’s North Sea business made from 1 January 2023
until 31 March 2028.
(h)
Second
quarter and first half 2023 include a $34-million charge and a
$78-million charge respectively for the EU Solidarity
Contribution.
Top of page 30
Net debt including leases
|
Net debt including leases*
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Net debt
|
|
23,660
|
21,232
|
22,816
|
|
23,660
|
22,816
|
|
Lease liabilities
|
|
10,961
|
8,605
|
8,056
|
|
10,961
|
8,056
|
|
Net
partner (receivable) payable for leases entered into on behalf of
joint operations
|
|
(136)
|
19
|
14
|
|
(136)
|
14
|
|
Net debt including leases
|
|
34,485
|
29,856
|
30,886
|
|
34,485
|
30,886
|
|
Total
equity
|
|
85,603
|
87,181
|
81,563
|
|
85,603
|
81,563
|
|
Gearing including leases*
|
|
28.7%
|
25.5%
|
27.5%
|
|
28.7%
|
27.5%
|
Gulf of Mexico oil spill
|
|
|
30 June
|
31 December
|
|
$ million
|
|
2023
|
2022
|
|
Gulf of Mexico oil spill payables and provisions
|
|
(8,549)
|
(9,566)
|
|
Of
which - current
|
|
(1,111)
|
(1,216)
|
|
|
|
|
|
|
Deferred tax asset
|
|
1,293
|
1,444
|
During the second quarter pre-tax payments of $1,204 million were
made relating to the 2016 consent decree and settlement agreement
with the United States and the five Gulf coast states. 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
2022 - Financial
statements - Notes 7, 22, 23, 29, and 33.
Working capital* reconciliation
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Movements in
inventories and other current and non-current assets and
liabilities as per condensed group cash flow statement(a)
|
|
(742)
|
(3,755)
|
(4,416)
|
|
(4,497)
|
(6,187)
|
|
Adjusted for inventory holding gains (losses)* (Note
5)
|
|
(732)
|
(600)
|
2,146
|
|
(1,332)
|
5,647
|
|
Adjusted for fair value accounting effects relating to
subsidiaries
|
|
1,053
|
4,242
|
(676)
|
|
5,295
|
(6,493)
|
|
Other
adjusting items(b)
|
|
558
|
(1,298)
|
1,011
|
|
(740)
|
1,449
|
|
Working capital release (build) after adjusting for net inventory
gains (losses), fair value accounting effects and other adjusting
items
|
|
137
|
(1,411)
|
(1,935)
|
|
(1,274)
|
(5,584)
|
(a)
The
movement in working capital includes outflows relating to the Gulf
of Mexico oil spill on a pre-tax basis of $1,204 million and
$1,216 million in the second quarter and first half of 2023
respectively. For the same periods in 2022 the amount was an
outflow of $1,209 million and $1,256 million
respectively.
(b)
Other
adjusting items relate to the non-cash movement of US emissions
obligations carried as a provision that will be settled by
allowances held as inventory.
Top of page 31
Surplus cash flow* reconciliation
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Sources:
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
6,293
|
7,622
|
10,863
|
|
13,915
|
19,073
|
|
Cash provided from investing activities
|
|
109
|
806
|
329
|
|
915
|
1,375
|
|
Other(a)
|
|
(42)
|
(59)
|
365
|
|
(101)
|
485
|
|
Cash inflow
|
|
6,360
|
8,369
|
11,557
|
|
14,729
|
20,933
|
|
|
|
|
|
|
|
|
|
|
Uses:
|
|
|
|
|
|
|
|
|
Lease liability payments
|
|
(620)
|
(555)
|
(472)
|
|
(1,175)
|
(970)
|
|
Payments on perpetual hybrid bonds
|
|
(250)
|
(236)
|
(161)
|
|
(486)
|
(309)
|
|
Dividends paid – BP shareholders
|
|
(1,153)
|
(1,183)
|
(1,062)
|
|
(2,336)
|
(2,130)
|
|
–
non-controlling interests
|
|
(67)
|
(68)
|
(63)
|
|
(135)
|
(128)
|
|
Total capital expenditure*
|
|
(4,314)
|
(3,625)
|
(2,838)
|
|
(7,939)
|
(5,767)
|
|
Net repurchase of shares relating to employee share
schemes
|
|
(225)
|
(225)
|
—
|
|
(450)
|
(500)
|
|
Payments relating to transactions involving non-controlling
interests
|
|
—
|
(180)
|
(1)
|
|
(180)
|
(6)
|
|
Currency translation differences relating to cash and cash
equivalents
|
|
—
|
(14)
|
(414)
|
|
(14)
|
(539)
|
|
Cash outflow
|
|
(6,629)
|
(6,086)
|
(5,011)
|
|
(12,715)
|
(10,349)
|
|
|
|
|
|
|
|
|
|
|
Surplus cash flow
|
|
(269)
|
2,283
|
6,546
|
|
2,014
|
10,584
|
(a)
Other
includes adjustments for net operating cash received or paid which
is held on behalf of third parties for medium-term deferred payment
and prior periods have been adjusted accordingly. Second quarter
and first half 2022 include $409 million and $573 million
respectively 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 were recognized as the
potential recourse reduces and by end second quarter 2022 all were
recognized.
Top of page 32
Adjusted earnings before interest, taxation, depreciation and
amortization (adjusted EBITDA)*
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Profit (loss) for the period
|
|
1,953
|
8,422
|
9,536
|
|
10,375
|
(10,534)
|
|
Finance costs
|
|
920
|
843
|
556
|
|
1,763
|
1,220
|
|
Net finance (income) expense relating to pensions and other
post-retirement benefits
|
|
(61)
|
(58)
|
(17)
|
|
(119)
|
(37)
|
|
Taxation
|
|
1,541
|
3,425
|
4,527
|
|
4,966
|
7,057
|
|
Profit (loss) before interest and tax
|
|
4,353
|
12,632
|
14,602
|
|
16,985
|
(2,294)
|
|
Inventory holding (gains) losses*, before tax
|
|
732
|
600
|
(2,146)
|
|
1,332
|
(5,647)
|
|
RC profit (loss) before interest and tax
|
|
5,085
|
13,232
|
12,456
|
|
18,317
|
(7,941)
|
|
Net (favourable) adverse impact of adjusting items*, before
interest and tax
|
|
521
|
(4,016)
|
310
|
|
(3,495)
|
30,916
|
|
Underlying RC profit before interest and tax
|
|
5,606
|
9,216
|
12,766
|
|
14,822
|
22,975
|
|
Add back:
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
3,923
|
3,800
|
3,512
|
|
7,723
|
7,137
|
|
Exploration expenditure written off
|
|
241
|
50
|
79
|
|
291
|
128
|
|
Adjusted EBITDA
|
|
9,770
|
13,066
|
16,357
|
|
22,836
|
30,240
|
Reconciliation of customers & products RC profit before
interest and tax to underlying RC profit before interest and tax*
to adjusted EBITDA* by business
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
$ million
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
RC profit before interest and tax for customers &
products
|
|
555
|
2,680
|
3,531
|
|
3,235
|
5,512
|
|
Less: Adjusting items* gains (charges)
|
|
(241)
|
(79)
|
(475)
|
|
(320)
|
(650)
|
|
Underlying RC profit before interest and tax for customers
& products
|
|
796
|
2,759
|
4,006
|
|
3,555
|
6,162
|
|
By business:
|
|
|
|
|
|
|
|
|
customers
– convenience & mobility
|
|
701
|
391
|
679
|
|
1,092
|
1,201
|
|
Castrol – included in customers
|
|
171
|
161
|
223
|
|
332
|
479
|
|
products
– refining & trading
|
|
95
|
2,368
|
3,327
|
|
2,463
|
4,961
|
|
|
|
|
|
|
|
|
|
|
Add back: Depreciation, depletion and amortization
|
|
894
|
797
|
715
|
|
1,691
|
1,432
|
|
By business:
|
|
|
|
|
|
|
|
|
customers
– convenience & mobility
|
|
448
|
341
|
315
|
|
789
|
641
|
|
Castrol – included in customers
|
|
42
|
39
|
38
|
|
81
|
77
|
|
products
– refining & trading
|
|
446
|
456
|
400
|
|
902
|
791
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA for customers & products
|
|
1,690
|
3,556
|
4,721
|
|
5,246
|
7,594
|
|
By business:
|
|
|
|
|
|
|
|
|
customers
– convenience & mobility
|
|
1,149
|
732
|
994
|
|
1,881
|
1,842
|
|
Castrol – included in customers
|
|
213
|
200
|
261
|
|
413
|
556
|
|
products
– refining & trading
|
|
541
|
2,824
|
3,727
|
|
3,365
|
5,752
|
Top of page 33
Realizations* and marker prices
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
Average realizations(a)
|
|
|
|
|
|
|
|
|
Liquids* ($/bbl)
|
|
|
|
|
|
|
|
|
US
|
|
60.53
|
62.66
|
89.80
|
|
61.59
|
80.41
|
|
Europe
|
|
75.14
|
79.26
|
113.92
|
|
77.06
|
108.72
|
|
Rest of
World(b)
|
|
79.35
|
82.55
|
106.77
|
|
80.98
|
97.82
|
|
BP
Average(b)
|
|
69.76
|
72.58
|
100.94
|
|
71.17
|
92.41
|
|
Natural gas ($/mcf)
|
|
|
|
|
|
|
|
|
US
|
|
1.58
|
2.47
|
6.28
|
|
2.01
|
5.12
|
|
Europe(c)
|
|
12.46
|
26.83
|
26.78
|
|
19.80
|
30.73
|
|
Rest of World
|
|
5.53
|
7.41
|
8.42
|
|
6.49
|
8.15
|
|
BP
Average(c)
|
|
4.91
|
7.20
|
8.77
|
|
6.06
|
8.52
|
|
Total hydrocarbons* ($/boe)
|
|
|
|
|
|
|
|
|
US
|
|
40.84
|
45.00
|
69.71
|
|
42.89
|
61.21
|
|
Europe(c)
|
|
74.20
|
107.07
|
129.12
|
|
90.00
|
132.87
|
|
Rest of
World(b)
|
|
45.97
|
54.63
|
71.65
|
|
50.37
|
66.98
|
|
BP
Average(b)(c)
|
|
46.27
|
54.96
|
74.65
|
|
50.62
|
69.73
|
|
Average oil marker prices ($/bbl)
|
|
|
|
|
|
|
|
|
Brent
|
|
78.05
|
81.17
|
113.93
|
|
79.66
|
107.94
|
|
West Texas Intermediate
|
|
73.56
|
75.97
|
108.77
|
|
74.76
|
101.99
|
|
Western Canadian Select
|
|
60.07
|
56.67
|
90.25
|
|
58.37
|
85.08
|
|
Alaska North Slope
|
|
78.26
|
79.02
|
112.17
|
|
78.64
|
104.15
|
|
Mars
|
|
73.17
|
74.24
|
105.27
|
|
73.70
|
99.35
|
|
Urals (NWE – cif)
|
|
54.56
|
46.19
|
77.29
|
|
50.24
|
82.40
|
|
Average natural gas marker prices
|
|
|
|
|
|
|
|
|
Henry
Hub gas price(d) ($/mmBtu)
|
|
2.09
|
3.44
|
7.17
|
|
2.77
|
6.06
|
|
UK Gas – National Balancing Point (p/therm)
|
|
83.18
|
130.81
|
130.11
|
|
107.76
|
182.73
|
(a)
Based on sales of consolidated subsidiaries
only – this excludes equity-accounted
entities.
(b)
A
minor amendment has been made to the first quarter of
2023.
(c)
Realizations
calculation methodology has been changed to reflect gas price
fluctuations within the North Sea region. Second quarter 2022 and
first half 2022 were restated. There is no impact on financial
results.
(d)
Henry
Hub First of Month Index.
Exchange rates
|
|
|
Second
|
First
|
Second
|
|
First
|
First
|
|
|
|
quarter
|
quarter
|
quarter
|
|
half
|
half
|
|
|
|
2023
|
2023
|
2022
|
|
2023
|
2022
|
|
$/£ average rate for the period
|
|
1.25
|
1.21
|
1.26
|
|
1.23
|
1.30
|
|
$/£ period-end rate
|
|
1.26
|
1.24
|
1.21
|
|
1.26
|
1.21
|
|
|
|
|
|
|
|
|
|
|
$/€ average rate for the period
|
|
1.09
|
1.07
|
1.06
|
|
1.08
|
1.09
|
|
$/€ period-end rate
|
|
1.09
|
1.09
|
1.05
|
|
1.09
|
1.05
|
|
|
|
|
|
|
|
|
|
|
$/AUD average rate for the period
|
|
0.67
|
0.68
|
0.71
|
|
0.68
|
0.72
|
|
$/AUD period-end rate
|
|
0.66
|
0.67
|
0.69
|
|
0.66
|
0.69
|
|
|
|
|
|
|
|
|
|
Top of page 34
Principal risks and uncertainties
The principal risks and uncertainties affecting bp are described in
the Risk factors section of bp Annual Report and Form 20-F
2022 (pages 73-75) and are
summarized below. There are no material changes in those principal
risks and uncertainties for the remaining six months of the
financial year.
The risks and uncertainties summarized below, separately or in
combination, could have a material adverse effect on the
implementation of our strategy, our business, financial
performance, results of operations, cash flows, liquidity,
prospects, shareholder value and returns and
reputation.
Strategic and commercial risks
●
Prices and markets
– our financial performance is
impacted by fluctuating prices of oil, gas and refined products,
technological change, exchange rate fluctuations, and the general
macroeconomic outlook.
●
Accessing and progressing
hydrocarbon resources and low carbon opportunities
– inability to access and
progress hydrocarbon resources and low carbon opportunities could
adversely affect delivery of our strategy.
●
Major project* delivery
– failure to invest in the best
opportunities or deliver major projects successfully could
adversely affect our financial performance.
●
Geopolitical
– exposure to a range of
political developments and consequent changes to the operating and
regulatory environment could cause business
disruption.
●
Liquidity, financial capacity
and financial, including credit, exposure – failure to work within our financial
framework could impact our ability to operate and result in
financial loss.
●
Joint arrangements and
contractors – varying
levels of control over the standards, operations and compliance of
our partners, contractors and sub-contractors could result in legal
liability and reputational damage.
●
Digital infrastructure, cyber
security and data protection – breach or failure of our or third
parties’ digital infrastructure or cyber security, including
loss or misuse of sensitive information could damage our
operations, increase costs and damage our
reputation.
●
Climate change and the
transition to a lower carbon economy – developments in policy, law, regulation,
technology and markets, including societal and investor sentiment,
related to the issue of climate change and the transition to a
lower carbon economy could increase costs, reduce revenues,
constrain our operations and affect our business plans and
financial performance.
●
Competition – inability to remain efficient, maintain a
high-quality portfolio of assets and innovate could negatively
impact delivery of our strategy in a highly competitive
market.
●
Talent and capability
– inability to attract, develop
and retain people with necessary skills and capabilities could
negatively impact delivery of our strategy.
●
Crisis management and business
continuity – failure to
address an incident effectively could potentially disrupt our
business.
●
Insurance – our insurance strategy could expose the
group to material uninsured losses.
Safety and operational risks
●
Process safety, personal
safety, and environmental risks – exposure to a wide range of health,
safety, security and environmental risks could cause harm to
people, the environment and our assets and result in regulatory
action, legal liability, business interruption, increased costs,
damage to our reputation and potentially denial of our licence to
operate.
●
Drilling and production
– challenging operational
environments and other uncertainties could impact drilling and
production activities.
●
Security – hostile acts against our employees and
activities could cause harm to people and disrupt our
operations.
●
Product quality
– supplying customers with
off-specification products could damage our reputation, lead to
regulatory action and legal liability, and impact our financial
performance.
Compliance and control risks
●
Ethical misconduct and
non-compliance – ethical
misconduct or breaches of applicable laws by our businesses or our
employees could be damaging to our reputation, and could result in
litigation, regulatory action and penalties.
●
Regulation – changes in the law and regulation could
increase costs, constrain our operations and affect our strategy,
business plans and financial performance.
●
Trading and treasury trading
activities – ineffective
oversight of trading and treasury trading activities could lead to
business disruption, financial loss, regulatory intervention or
damage to our reputation and affect our permissions to
trade.
●
Reporting – failure to accurately report our data
could lead to regulatory action, legal liability and reputational
damage.
Top
of page 35
Legal proceedings
The following discussion sets out the material developments in the
group’s material legal proceedings during the first half of
2023. For a full discussion of the group’s material legal
proceedings, see pages 258-259 of bp Annual Report and Form 20-F
2022.
Other legal proceedings
Climate change BP p.l.c., BP
America Inc. and BP Products North America Inc. are co-defendants
with other oil and gas companies in over 20 lawsuits brought in
various state and federal courts on behalf of various governmental
and private parties. The lawsuits generally assert claims under a
variety of legal theories seeking to hold the defendant companies
responsible for impacts allegedly caused by and/or relating to
climate change. Underlying many of the legal theories are
allegations regarding deceptive communication and disinformation to
the public. The lawsuits seek remedies including payment of money
and other forms of equitable relief. If such suits were successful,
the cost of the remedies sought in the various cases could be
substantial. Over the last several years, defendants removed each
lawsuit to federal court and the removals were contested by
plaintiffs, eventually resulting in multiple decisions by several
Circuit Court of Appeals rejecting defendants’ attempts to
have the cases moved to federal court. The US Supreme Court
recently declined to review the various Circuit Court of Appeals
decisions. Accordingly, the cases will proceed in the various state
courts. Due to these jurisdictional challenges, the lawsuits all
remain at relatively early stages. While it is not possible to
predict the outcome of these legal actions, bp believes that it has
valid defences, and it intends to defend such actions
vigorously.
Glossary
Non-IFRS 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-IFRS measures are sometimes referred to as
alternative performance measures.
Adjusted EBITDA is a non-IFRS
measure presented for bp's operating segments and is defined as
replacement cost (RC) profit before interest and tax, excluding net
adjusting items* before interest and tax, and 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. A reconciliation to IFRS information is provided
on page 32 for the customers
& products businesses.
Adjusted EBITDA for the group is defined as profit or loss for the
period, adjusting for finance costs and net finance (income) or
expense relating to pensions and other post-retirement benefits and
taxation, inventory holding gains or losses before tax, net
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. A reconciliation to GAAP information
is provided on page 32 for the
group.
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-IFRS measures. An analysis of adjusting items by segment
and type is shown on page
29.
Blue hydrogen – Hydrogen
made from natural gas in combination with carbon capture and
storage (CCS).
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 2021 real to balance bp’s
sources and uses of cash assuming an average bp refining marker
margin around $11/bbl and Henry Hub at $3/mmBtu in 2021 real
terms.
Consolidation adjustment – UPII is unrealized profit in inventory arising on
inter-segment transactions.
Convenience gross margin is a
non-IFRS measure. It is calculated as RC profit before interest and
tax for the customers & products segment, excluding RC profit
before interest and tax for the refining & trading business,
and adjusting items* (as defined above) for the convenience &
mobility business to derive underlying RC profit before interest
and tax for the convenience & mobility business; subtracting
underlying RC profit before interest and tax for the Castrol
business; adding back depreciation, depletion and amortization,
production and manufacturing, distribution and administration
expenses for convenience & mobility (excluding Castrol);
subtracting earnings from equity-accounted entities in the
convenience & mobility business (excluding Castrol) and gross
margin for the retail fuels, EV charging, aviation, B2B and
midstream businesses. bp believes it is helpful because this
measure may help investors to understand and evaluate, in the same
way as management, our progress against our strategic objectives of
convenience growth. The nearest IFRS measure is RC profit before
interest and tax for the customers & products
segment.
Top of page 36
Glossary (continued)
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-IFRS 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-IFRS 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.
Fair value accounting effects are non-IFRS 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. 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.
These include:
●
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.
●
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, represents the change in value
of LNG contacts that are being risk managed and which is reflected
in the underlying result, but not in reported earnings. Management
believes that this gives a better representation of performance in
each period.
Furthermore, the fair values of derivative instruments used to risk
manage certain other oil, gas, power and other contracts, are
deferred to match with the underlying exposure. The commodity
contracts for business requirements are accounted for on an
accruals basis.
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
Top of page 37
Glossary (continued)
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.
Gas & low carbon energy segment comprises our gas and low carbon
businesses. Our gas business includes regions with upstream
activities that predominantly produce natural gas, integrated gas
and power, and gas trading. Our low carbon business includes solar,
offshore and onshore wind, hydrogen and CCS and power trading.
Power trading includes trading of both renewable and non-renewable
power.
Gearing and net debt are
non-IFRS 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 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 IFRS 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 an IFRS
estimate.
Gearing including leases and net debt including leases
are non-IFRS 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 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.
Hydrogen pipeline –
Hydrogen projects which have not been developed to final investment
decision (FID) but which have advanced to the concept development
stage.
Inorganic capital expenditure is a subset of capital expenditure on a cash basis
and a non-IFRS 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 IFRS 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-IFRS 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.
Top of page 38
Glossary (continued)
Liquids – Liquids
comprises crude oil, condensate and natural gas liquids. For the
oil production & operations segment, it also includes
bitumen.
Low carbon activity – An
activity relating to low carbon including: renewable electricity;
bioenergy; electric vehicles and other future mobility solutions;
trading and marketing low carbon products; blue or green hydrogen
and carbon capture, use and storage (CCUS).
Note that, while there is some overlap of activities, these terms
do not mean the same as bp’s strategic focus area of low
carbon energy or our low carbon energy sub-segment, reported within
the gas & low carbon energy segment.
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.
Organic capital expenditure is
a non-IFRS 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 IFRS 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 IFRS 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
IFRS 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 IFRS 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.
Solomon availability –
See Refining availability definition.
Top of page 39
Glossary (continued)
Strategic convenience sites are
retail sites, within the bp portfolio, which sell bp-branded
vehicle energy (e.g. bp, Aral, Arco, Amoco, Thorntons, TravelCenters of
America and bp pulse) and either carry one of the strategic
convenience brands (e.g. M&S, Rewe to Go) or a differentiated
convenience offer. To be considered a strategic convenience site,
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.
Surplus cash flow does not
represent the residual cash flow available for discretionary
expenditures. It is a non-IFRS financial measure that should be
considered in addition to, not as a substitute for or superior to,
net cash provided by operating activities, reported in accordance
with IFRS. bp believes it is helpful to disclose the surplus cash
flow because this measure forms part of bp's financial
frame.
Surplus cash flow 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 second quarter and first half of 2022, 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
recognized 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.
Transition growth –
Activities, represented by a set of transition growth engines, that
transition bp toward its objective to be an Integrated Energy
Company, and that comprise our low carbon activity* alongside other
businesses that support transition, such as our power trading &
marketing business and convenience.
Underlying effective tax rate (ETR) is a non-IFRS 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-IFRS 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 IFRS 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 an IFRS estimate.
Underlying production –
2023 underlying production, when compared with 2022, 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-IFRS measure and is RC profit or loss*
(as defined on page 38) 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.
Top of page 40
Glossary (continued)
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 IFRS information is provided
on page 1 for the group and
pages 6-15 for the
segments.
Underlying RC profit or loss per share / underlying RC profit or
loss per ADS is a non-IFRS
measure. Earnings per share is defined in Note 8. 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.
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, fair value accounting effects relating to
subsidiaries and other adjusting items is a non-IFRS measure. It is
calculated by adjusting for inventory holding gains/losses reported
in the period and fair value accounting effects relating to
subsidiaries reported within adjusting items for the period. From
2022, it is adjusted for other adjusting items relating to the
non-cash movement of US emissions obligations carried as a
provision that will be settled by allowances held as inventory.
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.
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, bp pulse, Castrol
and Thorntons
Top of page 41
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: plans, expectations and assumptions
regarding oil and gas demand, supply, prices or volatility;
expectations regarding reserves; expectations regarding upstream
production and bp’s customers & products business;
expectations regarding refining margins; expectations regarding
turnaround and maintenance activity, including those in refining;
expectations regarding production from oil production &
operations and from gas & low carbon energy; expectations
regarding bp’s business, financial performance, results of
operations and cash flows; expectations regarding future project
start-ups; expectations with regards to bp’s transformation
to an IEC; expectations regarding price assumptions used in
accounting estimates; bp’s plans and expectations regarding
the amount and timing of share buybacks and quarterly and interim
dividends; plans and expectations regarding bp’s credit
rating, including in respect of maintaining a strong investment
grade credit rating; plans and expectations regarding the
allocation of surplus cash flow to share buybacks and strengthening
the balance sheet; plans and expectations with respect to the total
depreciation, depletion and amortization and the other businesses
& corporate underlying annual charge for 2023; plans and
expectations regarding the factors taken into account in setting
the dividend per ordinary share and buyback each quarter; plans and
expectations regarding investments, collaborations and partnerships
in electric vehicle (EV) charging infrastructure; plans and
expectations related to bp’s transition growth engines of
bioenergy, convenience, EV charging, hydrogen and renewables and
power, including expectations regarding convenience gross margin;
expectations relating to bp’s development of its wind
pipeline; plans and expectations regarding the amount or timing of
payments related to divestment and other proceeds, and the timing,
quantum and nature of certain acquisitions and divestments,
including the amount and timing of proceeds; expectations regarding
the underlying effective tax rate for 2023; 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 around
$16-18 billion in 2023; expectations regarding greenhouse gas
emissions; expectations regarding legal proceedings, including
those related to climate change; plans and expectations regarding
bp-operated projects and ventures, and its projects, joint
ventures, partnerships and agreements with commercial entities and
other third party partners.
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 any competent authorities or any other
relevant persons may limit or otherwise impact 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, including under “Principal risks and
uncertainties,” as well as those factors discussed under
“Risk factors” in bp’s Annual Report and Form
20-F 2022 as filed with the US Securities and Exchange
Commission.
This announcement contains inside information. The person
responsible for arranging the release of this announcement on
behalf of BP p.l.c. is Ben Mathews, Company Secretary.
Top of page 42
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Contacts
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London
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Houston
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Press Office
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David Nicholas
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Megan Baldino
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+44 (0) 7831 095541
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+1
907 529 9029
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Investor Relations
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Craig Marshall
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Graham Collins
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bp.com/investors
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+44 (0) 203 401 5592
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+1 832 753 5116
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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.
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BP
p.l.c.
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(Registrant)
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Dated: 01
August 2023
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/s/ Ben
J. S. Mathews
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------------------------
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Ben J.
S. Mathews
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Company
Secretary
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