TIDMBP.
RNS Number : 8128H
BP PLC
01 August 2023
Top of page 1
FOR IMMEDIATE RELEASE
London 1 August 2023
BP p.l.c. Group results
Second quarter and first half 2023(a)
--------------------------------------
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Performing while transforming
Financial summary Second First Second First First
quarter quarter quarter half half
$ million 2023 2023 2022 2023 2022
---------------------------------------------- ------- ------- ------- ------- --------
Profit (loss) for the period attributable
to bp shareholders 1,792 8,218 9,257 10,010 (11,127)
Inventory holding (gains) losses*, net
of tax 549 452 (1,607) 1,001 (4,271)
---------------------------------------------- ------- ------- ------- ------- --------
Replacement cost (RC) profit (loss)* 2,341 8,670 7,650 11,011 (15,398)
Net (favourable) adverse impact of adjusting
items*, net of tax 248 (3,707) 801 (3,459) 30,094
---------------------------------------------- ------- ------- ------- ------- --------
Underlying RC profit* 2,589 4,963 8,451 7,552 14,696
---------------------------------------------- ------- ------- ------- ------- --------
Operating cash flow* 6,293 7,622 10,863 13,915 19,073
Capital expenditure* (4,314) (3,625) (2,838) (7,939) (5,767)
---------------------------------------------- ------- ------- ------- ------- --------
Divestment and other proceeds(b) 88 800 722 888 1,903
---------------------------------------------- ------- ------- ------- ------- --------
Surplus cash flow* (269) 2,283 6,546 2,014 10,584
---------------------------------------------- ------- ------- ------- ------- --------
Net issue (repurchase) of shares (2,073) (2,448) (2,288) (4,521) (3,880)
---------------------------------------------- ------- ------- ------- ------- --------
Net debt*(c) 23,660 21,232 22,816 23,660 22,816
Adjusted EBITDA* 9,770 13,066 16,357 22,836 30,240
Announced dividend per ordinary share
(cents per share) 7.270 6.610 6.006 13.880 11.466
Underlying RC profit per ordinary share*
(cents) 14.77 27.74 43.58 42.65 75.55
---------------------------------------------- ------- ------- ------- ------- --------
Underlying RC profit per ADS* (dollars) 0.89 1.66 2.61 2.56 4.53
---------------------------------------------- ------- ------- ------- ------- --------
-- Underlying RC -- 10% increase -- Delivering resilient -- Continued progress
profit $2.6bn; in resilient dividend hydrocarbons - 2Q23 in transformation
Operating cash to 7.270 cents start-up of two to an IEC - acquisition
flow $6.3bn per ordinary share; major projects*; of TravelCenters
further $1.5bn successful commissioning of America; 4GW
share buyback announced of Cherry Point entry to German
refinery improvement offshore wind;
projects strong progress
across the five
transition growth*
engines
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.
Bernard Looney
Chief executive officer
(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
Highlights
Underlying replacement cost profit* $2.6 billion
* 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.
Operating cash flow* $6.3 billion
* 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.
Growing distributions within an unchanged financial frame
* 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%.
Strong momentum in transformation to an integrated energy company
* 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
CO(2) 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.
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.
Murray Auchincloss
Chief financial officer
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 41.
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Top of page 3
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.
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Analysis of RC profit (loss) before interest and tax and
reconciliation to profit (loss) for the period
Second 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
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)
Of which:
other businesses & corporate excluding
Rosneft (297) (90) (1,028) (387) (1,714)
Rosneft - - - - (24,033)
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)
Finance costs and net finance expense
relating to pensions and other post-retirement
benefits (859) (785) (539) (1,644) (1,183)
Taxation on a RC basis (1,724) (3,573) (3,988) (5,297) (5,681)
Non-controlling interests (161) (204) (279) (365) (593)
--------------------------------------------------- ------- ------- ------- ------- --------
RC profit (loss) attributable to bp shareholders* 2,341 8,670 7,650 11,011 (15,398)
Inventory holding gains (losses)* (732) (600) 2,146 (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 vs First
2023 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
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
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 31 March 30 June
low carbon energy(d) 2023 2023 2022
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 CO(2) emissions.
-- These events build on the progress announced in our first-quarter results, including:
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;
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 EUR1 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;
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;
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 Second First Second First First
(mb/d)
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 EUR7.5
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
Hybrid
$ million equity 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
Hybrid
$ million equity(a) 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
------- ------- ------- ----- -----
$/GBP average rate for the period 1.25 1.21 1.26 1.23 1.30
$/GBP period-end rate 1.26 1.24 1.21 1.26 1.21
$/EUR average rate for the period 1.09 1.07 1.06 1.08 1.09
$/EUR 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
Contacts
London Houston
Press Office David Nicholas Megan Baldino
+44 (0) 7831 095541 +1 907 529 9029
Investor Relations Craig Marshall Graham Collins
bp.com/investors +44 (0) 203 401 5592 +1 832 753 5116
BP p.l.c.'s LEI Code 213800LH1BZH3D16G760
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