TIDMBP.
RNS Number : 9845J
BP PLC
03 May 2022
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FOR IMMEDIATE RELEASE
London 3 May 2022
BP p.l.c. Group results
First quarter 2022
-----------------------
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Performing while transforming
Financial summary First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
------------------------------------------------------------- -------- ------- -------
Profit (loss) for the period attributable to bp shareholders (20,384) 2,326 4,667
Inventory holding (gains) losses*, net of tax (2,664) (358) (1,342)
-------------------------------------------------------------- -------- ------- -------
Replacement cost (RC) profit (loss)* (23,048) 1,968 3,325
Net (favourable) adverse impact of adjusting items*,
net of tax 29,293 2,097 (695)
-------------------------------------------------------------- -------- ------- -------
Underlying RC profit* 6,245 4,065 2,630
-------------------------------------------------------------- -------- ------- -------
Operating cash flow* 8,210 6,116 6,109
--------------------------------------------------------------
Capital expenditure* (2,929) (3,633) (3,798)
-------------------------------------------------------------- -------- ------- -------
Divestment and other proceeds(a) 1,181 2,265 4,839
-------------------------------------------------------------- -------- ------- -------
Surplus cash flow* 4,089 2,993 1,687
-------------------------------------------------------------- -------- ------- -------
Net issue (repurchase) of shares (1,592) (1,725) -
-------------------------------------------------------------- -------- ------- -------
Net debt*(b) 27,457 30,613 33,313
--------------------------------------------------------------
Announced dividend per ordinary share (cents per share) 5.46 5.46 5.25
-------------------------------------------------------------- -------- ------- -------
Underlying RC profit per ordinary share* (cents) 32.00 20.53 12.95
-------------------------------------------------------------- -------- ------- -------
Underlying RC profit per ADS* (dollars) 1.92 1.23 0.78
-------------------------------------------------------------- -------- ------- -------
-- Reported loss -- Net debt reduced -- Delivering r -- Continued progress
primarily due to to $27.5bn; further esilient hydrocarbons: in transformation
decision to exit share buyback announced major project start-up to an IEC - momentum
Rosneft shareholding in the Gulf of Mexico; in each of the
deal to create Azule five transition
Energy in Angola growth engines
In a quarter dominated by the tragic events in Ukraine and volatility
in energy markets, bp's focus has been on supplying the reliable energy
our customers need. Our decision in February to exit our shareholding
in Rosneft resulted in the material non-cash charges and headline loss
we reported today. But it has not changed our strategy, our financial
frame, or our expectations for shareholder distributions. Importantly
bp continues to perform and step-by-step we are making progress executing
our IEC strategy - producing resilient hydrocarbons to provide energy
security while investing with discipline in the energy transition .
Bernard Looney
Chief executive officer
(a) Divestment proceeds are disposal proceeds as per the
condensed group cash flow statement. See page 3 for more
information on divestment and other proceeds.
(b) See Note 10 for more information.
RC profit (loss), underlying RC profit (loss), surplus cash flow
and net debt are non-GAAP measures. Inventory holding (gains)
losses and adjusting items are non-GAAP adjustments.
* For items marked with an asterisk throughout this document,
definitions are provided in the Glossary on page 33 .
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Highlights
Reported loss of $20.4 billion, underlying replacement cost profit
of $6.2 billion
* Reported loss for the quarter was $20.4 billion,
compared with a profit of $2.3 billion for the fourth
quarter 2021. The reported result includes adjusting
items* before tax of $30.8 billion.
* Adjusting items include pre-tax charges of $24.0
billion and $1.5 billion as a result of the loss of
significant influence and bp's decision to exit its
19.75% shareholding in Rosneft and its other
businesses with Rosneft in Russia respectively. As a
result, in the first quarter the post-tax charge is
$24.4 billion and the total reduction in equity is
$14.7 billion. Adjusting items also include fair
value accounting effects of $5.8 billion. See page 3
for further details.
* Underlying replacement cost profit* was $6.2 billion,
compared with $4.1 billion for the previous quarter.
This was driven by exceptional oil and gas trading,
higher oil realizations and a stronger refining
result, partly offset by the absence of Rosneft from
the first quarter underlying result.
* For the first quarter bp has announced a dividend of
5.46 cents per ordinary share payable in June 2022.
Net debt* reduced to $27.5 billion; further $2.5 billion share buyback
announced
* Operating cash flow* of $8.2 billion includes a
working capital* build of $4.1 billion (after
adjusting for inventory holding gains* and fair value
accounting effects*).
* Capital expenditure* in the quarter was $2.9 billion.
bp continues to expect capital expenditure of $14-15
billion in 2022.
* bp received divestment and other proceeds of $1.2
billion in the first quarter and continues to expect
to receive total proceeds of $2-3 billion during
2022.
* Net debt fell to $27.5 billion at the end of the
first quarter.
* During the first quarter bp executed share buybacks
of $1.6 billion - $0.5 billion during January to
offset the expected full-year dilution of the 2022
vesting of awards under employee share schemes and a
further $1.1 billion representing progress against
the $1.5 billion programme announced with the fourth
quarter 2021 results on 8 February. This programme
was completed on 27 April.
* During the first quarter bp generated surplus cash
flow* of $4.1 billion and intends to execute a $2.5
billion share buyback prior to announcing its second
quarter results.
Progressing transformation to an Integrated Energy Company
* In resilient hydrocarbons since the start of 2022 bp
announced the start-up of the Herschel Expansion
major project* in the Gulf of Mexico; signed a final
agreement with Eni to create Azule Energy a new
independent joint venture in Angola; and advanced its
strategy in biofuels producing sustainable aviation
fuel at bp's Lingen refinery and entering into a
long-term strategic offtake and market development
agreement for low-carbon biofuels feedstock with
Nuseed.
* In convenience and mobility since the start of 2022
bp has continued to progress its EV charging strategy
- launching a strategic partnership with Volkswagen
Group and announcing plans to invest GBP1 billion in
the UK over the next decade; signed a global
strategic convenience partnership with Uber, aiming
to make more than 3,000 retail locations available on
Uber Eats by 2025; and signed a strategic
collaboration agreement with DHL Express to supply
sustainable aviation fuel.
* In low carbon energy since the start of 2022 bp has
increased its position in offshore wind with the
ScotWind lease option award of 1.45GW net; agreed to
form an offshore wind partnership with Marubeni; and
advanced its hydrogen strategy, announcing plans to
develop H2-Fifty, a 250MW gross green hydrogen plant
in Rotterdam and signing an agreement to form a joint
venture with Aberdeen City Council to develop a
hydrogen hub.
bp continues to build a track-record of delivery against its disciplined
financial frame. Net debt fell for the eighth consecutive quarter; we
are investing with discipline to advance our strategy - making significant
progress year-to-date; and we are delivering on our commitment to shareholder
distributions.
Murray Auchincloss
Chief financial officer
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 39.
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Financial results
At 31 December 2021, the group's reportable segments were gas
& low carbon energy, oil production & operations, customers
& products and Rosneft. For the period from 1 January 2022 to
27 February 2022, any net income from Rosneft is classified as an
adjusting item. The group has ceased to report Rosneft as a
separate segment in the group's financial reporting for 2022. From
the first quarter of 2022, the group's reportable segments are gas
& low carbon energy, oil production & operations and
customers & products. For more information see note 2 -
Investment in Rosneft.
In addition to the highlights on page 2:
-- Loss attributable to bp shareholders in the first quarter was
$20.4 billion compared with a profit of $4.7 billion in the first
quarter of 2021.
-- Adjusting items* in the first quarter were an adverse pre-tax
impact of $30.8 billion compared with a favourable pre-tax impact
of $0.7 billion in the same period of 2021.
-- As a result of bp's two nominated directors stepping-down
from the Rosneft board on 27 February, bp determined that it no
longer meets the criteria set out under IFRS for having
"significant influence" over Rosneft. bp therefore no longer equity
accounts for its interest in Rosneft from that date, treating it
prospectively as a financial asset measured at fair value. Combined
with bp's decision to exit its shareholding in Rosneft and the
market impact on Russian assets, an impairment assessment was
undertaken. Within the first quarter results, the loss of
significant influence and the impairment assessment led to a net
pre-tax charge of $24.0 billion classified as an adjusting item,
reducing equity by $14.4 billion. The adjusting item is made up
of(a) :
A $13.5 billion pre-tax impairment charge, representing the full
carrying value of the Rosneft investment at 27 February 2022 as,
due to sanctions and geopolitical challenges the level of
uncertainty as to the value of our shareholding means that, under
IFRS, it is not currently possible to estimate any value other than
zero.
A $11.1 billion pre-tax charge, principally arising from foreign
exchange losses accumulated from the date of the initial investment
in 2013 to 27 February 2022, that under IFRS, to that date, were
recorded directly in equity rather than in the income statement. Of
this $1.4 billion has an incremental impact on equity with $9.7
billion recorded as at 31 December 2021.
These charges are partly offset by $0.5 billion representing
bp's estimated share of Rosneft's post-tax income in the first
quarter until 27 February 2022.
-- Following bp's decision to exit its other businesses with
Rosneft in Russia, adjusting items within the first quarter 2022
results also include a $1.5 billion pre tax charge. This comprises
a $1.0 billion pre-tax charge representing the impairment of the
entire carrying value of these businesses and a further $0.5
billion of foreign exchange losses which were recorded directly in
equity since the date of initial investment has also been moved to
the income statement. These charges reduced equity in the first
quarter by $1.2 billion.
-- Adjusting items for the first quarter 2022 also include the
reversal of a $1.1 billion deferred tax liability relating to
Russian withholding tax on bp's share of Rosneft's undistributed
profit. A further $0.2 billion deferred tax charge has been
reversed through equity. No further tax impacts are expected as a
result of the above pre-tax charges.
-- Adjusting items for the first quarter 2022 also include
adverse fair value accounting effects* of $5.8 billion, primarily
due to further increases in forward gas prices compared to the end
of the fourth quarter 2021.
-- Pre-tax inventory holding gains of $3.5 billion for the first
quarter 2022 arose due to significant increases in most crude and
product prices during the quarter.
-- The effective tax rate (ETR) on RC profit or loss* for the
first quarter was -8%, compared with 26% for the same period in
2021. Excluding adjusting items, the underlying ETR* for the first
quarter was 33%, compared with 30% for the same period a year ago.
The higher underlying ETR for the first quarter reflects the
absence of equity-accounted earnings from Rosneft. ETR on RC profit
or loss and underlying ETR are non-GAAP measures.
-- Operating cash flow* for the first quarter 2022 was $8.2
billion compared with $6.1 billion for the same period last year.
The increase is driven by the increased underlying replacement cost
profit, offset by working capital movements.
-- Capital expenditure in the first quarter 2022 was $2.9
billion, compared with $3.8 billion in the first quarter of 2021
which included a $0.7 billion payment in respect of the strategic
partnership with Equinor.
-- Total divestment and other proceeds for the first quarter
were $1.2 billion, compared with $4.8 billion for the same period
in 2021. This includes divestment proceeds from the disposal of
bp's Swiss retail assets, the disposal of bp's interest in the Pike
oil sands assets and receipt of deferred consideration related to
the 2020 divestment of bp's Alaska business to Hilcorp. Other
proceeds for the first quarter consists of $0.2 billion of proceeds
from the disposal of a loan note related to the Alaska divestment.
See page 31 for further information.
-- At the end of the first quarter, net debt* was $27.5 billion,
compared with $30.6 billion at the end of the fourth quarter 2021
and $33.3 billion at the end of the first quarter 2021.
(a) Because of rounding, the total does not agree exactly with the sum of its component parts.
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Analysis of RC profit (loss) before interest and tax and
reconciliation to profit (loss) for the period
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
------------------------------------------------------------- -------- ------- -------
RC profit (loss) before interest and tax
gas & low carbon energy (1,524) 1,911 3,430
oil production & operations 3,831 3,212 1,479
customers & products 1,981 (426) 934
other businesses & corporate(a) (24,719) (369) (315)
Of which:
other businesses & corporate excluding Rosneft (686) (924) (678)
Rosneft (24,033) 555 363
Consolidation adjustment - UPII* 34 (7) 13
-------------------------------------------------------------- -------- ------- -------
RC profit (loss) before interest and tax (20,397) 4,321 5,541
Finance costs and net finance expense relating to
pensions and other post-retirement benefits (644) (751) (729)
Taxation on a RC basis (1,693) (1,350) (1,254)
Non-controlling interests (314) (252) (233)
-------------------------------------------------------------- -------- ------- -------
RC profit (loss) attributable to bp shareholders* (23,048) 1,968 3,325
Inventory holding gains (losses)* 3,501 472 1,730
Taxation (charge) credit on inventory holding gains
and losses (837) (114) (388)
-------------------------------------------------------------- -------- ------- -------
Profit (loss) for the period attributable to bp shareholders (20,384) 2,326 4,667
-------------------------------------------------------------- -------- ------- -------
Analysis of underlying RC profit (loss) before interest and
tax
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
------------------------------------------------------ ------- ------- -------
Underlying RC profit (loss) before interest and tax
gas & low carbon energy 3,595 2,211 2,270
oil production & operations 4,683 4,024 1,565
customers & products 2,156 611 656
other businesses & corporate(a) (259) 210 193
Of which:
other businesses & corporate excluding Rosneft (259) (535) (170)
Rosneft - 745 363
Consolidation adjustment - UPII 34 (7) 13
------------------------------------------------------- ------- ------- -------
Underlying RC profit before interest and tax 10,209 7,049 4,697
Finance costs and net finance expense relating to
pensions and other post-retirement benefits (486) (494) (581)
Taxation on an underlying RC basis (3,164) (2,238) (1,253)
Non-controlling interests (314) (252) (233)
------------------------------------------------------- ------- ------- -------
Underlying RC profit attributable to bp shareholders* 6,245 4,065 2,630
------------------------------------------------------- ------- ------- -------
Reconciliations of underlying RC profit attributable to bp
shareholders to the nearest equivalent IFRS measure are provided on
page 1 for the group and on pages 6-15 for the segments.
(a) From first quarter 2022 the results of Rosneft, previously
reported as a separate segment, are also included in other
businesses & corporate. Comparative information for 2021 has
been restated to reflect the changes in reportable segments. For
more information see Note 2 Investment in Rosneft.
Operating Metrics
Operating metrics First quarter vs First
2022 quarter
2021
------------------------------------------- ------------- --------
Tier 1 and tier 2 process safety events* 12 -11
Reported recordable injury frequency* 0.148 -5.7%
upstream* production(a) (mboe/d) 2,252 +1.5%
upstream unit production costs*(b) ($/boe) 6.52 -11.4%
bp-operated hydrocarbon plant reliability* 96.1% +3.1
bp-operated refining availability*(a) 95.0% +0.2
-------------------------------------------- ------------- --------
(a) See Operational updates on pages 6, 9 and 11.
(b) Reflecting higher volumes and lower costs including phasing impacts.
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Outlook & Guidance
Macro outlook
-- bp expects an ongoing elevated risk of oil price volatility.
This reflects uncertainties around the level of disruption to
Russian supply, the capacity for increased OPEC+ supply, the
ongoing impact of COVID-19 on demand and the impact of the conflict
in Ukraine on economic growth.
-- bp expects the short-term outlook for gas prices to remain
heavily dependent on Russian pipeline flows to Europe.
-- In the second quarter of 2022, bp expects industry refining
margins to remain elevated due to ongoing supply disruptions,
particularly in Russia and Europe.
2Q22 guidance
-- Looking ahead, we expect second-quarter 2022 underlying
upstream* production to be lower than first-quarter 2022, primarily
in gas & low carbon energy, reflecting base decline and
seasonal maintenance. On a reported basis, second-quarter
production will reflect additional impacts from the absence of
production from our Russia incorporated joint ventures.
-- In our customers & products business, there is an
elevated level of uncertainty due to the developing impacts from
the conflict in Ukraine and ongoing COVID-19 restrictions. In
addition, in Castrol, additive supplies are expected to remain
under pressure. In refining, we expect higher industry refining
margins, although the increase in realized margins may differ due
to market dislocations. In addition, energy prices are expected to
remain elevated and turnaround costs to be higher.
2022 Guidance
In addition to the guidance on page 2:
-- For full year 2022 we continue to expect reported upstream
production to be broadly flat compared with 2021 despite the
absence of production from our Russia incorporated joint ventures.
On an underlying basis, we expect production from oil production
& operations to be slightly higher and production from gas
& low carbon energy to be broadly flat.
-- bp continues to expect the other businesses & corporate
underlying annual charge to be in a range of $1.2-1.4 billion for
2022. The charge may vary from quarter to quarter.
-- bp continues to expect the depreciation, depletion and
amortization to be at a similar level to 2021.
-- As updated in bp Annual Report and Form 20-F 2021, the
underlying ETR* for 2022 is expected to be around 40% but is
sensitive to the impact that volatility in the current price
environment may have on the geographical mix of the group's profits
and losses. The increase from prior guidance of around 35% reflects
the exclusion of Rosneft from bp's underlying result effective 1
January 2022.
-- bp continues to expect divestment and other proceeds for the
year of $2-3 billion. Against a target of $25 billion of divestment
and other proceeds between the second half of 2020 and 2025 bp has
now received almost $14.0 billion of proceeds.
-- bp continues to expect Gulf of Mexico oil spill payments for
the year to be around $1.4 billion pre-tax and during the second
quarter expects to make a pre-tax cash payment of $1.2 billion.
-- For 2022, and subject to maintaining a strong investment
grade credit rating, bp remains committed to using 60% of surplus
cash flow* for share buybacks and intends to allocate the remaining
40% to further strengthen the balance sheet.
-- On average, based on bp's current forecasts, at around $60
per barrel Brent and subject to the board's discretion each
quarter, bp continues to expect to be able to deliver share
buybacks of around $4.0 billion per annum and have capacity for an
annual increase in the dividend per ordinary share of around 4%
through 2025.
-- In setting the dividend per ordinary share and the buyback
each quarter, the board will take into account factors including
the cumulative level of and outlook for surplus cash flow, the cash
balance point* and the maintenance of a strong investment grade
credit rating.
Adjusted EBITDA* targets and aims(a)
-- As a result of the decision to exit its shareholding in
Rosneft and excluding Rosneft from base year and future periods, on
27 February bp outlined an expectation that 2025 adjusted EBITDA
from resilient hydrocarbons and group will be around $2 billion
lower than bp's previous targets, at around $31 billion and $38
billion respectively. In addition, bp has now revised its 2030
adjusted EBITDA aims for resilient hydrocarbons and group by
lowering both by around $2 billion, to a range of $28-33 billion
and $39-46 billion respectively.
(a) At $60/bbl Brent (2020 $ real) and $3/mmBtu Henry Hub (2020
$ real) and RMM $12/bbl (2020 $ real).
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 39.
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gas & low carbon energy
Financial results
-- The replacement cost loss before interest and tax for the
first quarter was $1,524 million, compared with a profit of $3,430
million for the same period in 2021. The first quarter includes an
adverse impact of net adjusting items* of $5,119 million, compared
with a favourable impact of net adjusting items of $1,160 million
for the same period in 2021.
-- After excluding adjusting items, the underlying replacement
cost profit before interest and tax* for the first quarter was
$3,595 million, compared with $2,270 million for the same period in
2021. Adjusting items include adverse fair value accounting
effects* of $5,015 million, primarily arising from the increase in
forward gas prices during the quarter. Under IFRS, reported
earnings include the mark-to-market value of the hedges used to
risk-manage forward LNG contracts, but not of the LNG contracts
themselves. The fair value accounting effect reduces this
mismatch.
-- The underlying replacement cost profit for the first quarter,
compared with the same period in 2021, reflects higher
realizations, offset by a higher depreciation, depletion and
amortization charge, and an exceptional gas marketing and trading
result, albeit lower than in 2021.
Operational update
-- Reported production for the quarter was 966mboe/d, 6.2%
higher than the same period in 2021, mainly due to major project*
start-ups during 2021, partially offset by base decline and the
partial divestment in Oman at the end of the first quarter
2021.
-- Underlying production* was also higher, by 10.9% for the
quarter, mainly due to major project start-ups during 2021,
partially offset by base decline.
-- Renewables pipeline* at the end of the quarter was 24.9GW (bp
net). The renewables pipeline increased by 1.8GW during the
quarter, primarily as a result of bp and its partner EnBW being
awarded a lease option off the east coast of Scotland to develop an
offshore wind project with a total generating capacity of around
2.9GW (1.45GW bp net).
Strategic progress
gas
-- On 18 March bp announced it had been successful in a bid for
operatorship of deepwater offshore exploration blocks Agung I and
II offshore Indonesia. Agung I covers an area of 6,656 square
kilometres off the coast of Bali and East Java, while Agung II
spans 7,970 square kilometres offshore South Sulawesi, West Nusa
Tenggara and East Java.
-- In February 2022 bp increased its shareholding in the Shah
Deniz gas project in the Caspian Sea, offshore Azerbaijan, by 1.16%
to 29.99%.
-- On 1 February construction started on the Gas Natural Acu
(GNA) 2 power plant at the Port of Acu, Rio de Janeiro state,
Brazil. GNA 2 is expected to have an installed capacity of 1.7GW.
GNA is a joint venture among bp, Prumo, Siemens and SPIC Brasil. bp
is the exclusive LNG supplier for GNA 1 and GNA 2 which, together,
are expected to achieve 3GW of installed capacity.
-- In April bp and the Korea Gas Corporation (KOGAS) signed a
long-term agreement to supply 1.58 million tonnes of liquified
natural gas (LNG) per year from 2025 to KOGAS through a new 18-year
contract.
low carbon energy
-- On 23 March bp announced it is partnering with Marubeni to
explore a selected offshore wind development opportunity in Japan.
We have agreed to form a strategic partnership for offshore wind
and potentially other decarbonization projects. In the first phase
of the agreement bp will acquire a 49% interest in a project to
jointly bid in the Ishikari licence round.
-- On 11 March bp announced that it signed an agreement to form
a joint venture with the Aberdeen City Council that aims to deliver
a scalable green hydrogen production, storage and distribution
facility in the city powered by renewable energy.
-- On 1 February bp and partner HyCC announced plans to develop
H2-Fifty, a 250MW green hydrogen production plant in the port area
of Rotterdam. The facility could supply bp's refinery in the city
and has the potential to reduce CO emissions up to 350,000 tonnes
per year.
-- On 25 January bp submitted bids for our H2Teesside hydrogen
project and Net Zero Teesside Power project as part of the UK
government's Phase 2 of cluster sequencing for carbon capture,
usage and storage (CCUS) deployment.
Top of page 7
gas & low carbon energy (continued)
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
--------------------------------------------------- ------- ------- -------
Profit (loss) before interest and tax (1,499) 1,903 3,452
Inventory holding (gains) losses* (25) 8 (22)
---------------------------------------------------- ------- ------- -------
RC profit (loss) before interest and tax (1,524) 1,911 3,430
Net (favourable) adverse impact of adjusting items 5,119 300 (1,160)
---------------------------------------------------- ------- ------- -------
Underlying RC profit before interest and tax 3,595 2,211 2,270
Taxation on an underlying RC basis (1,009) (509) (535)
---------------------------------------------------- ------- ------- -------
Underlying RC profit before interest 2,586 1,702 1,735
---------------------------------------------------- ------- ------- -------
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
----------------------------------------------- ------- ------- -------
Depreciation, depletion and amortization
Total depreciation, depletion and amortization 1,255 1,265 854
------------------------------------------------ ------- ------- -------
Exploration write-offs
----------------------------------------------- ------- ------- -------
Exploration write-offs (2) 2 6
------------------------------------------------ ------- ------- -------
Adjusted EBITDA*
----------------------------------------------- ------- ------- -------
Total adjusted EBITDA 4,848 3,478 3,130
------------------------------------------------ ------- ------- -------
Capital expenditure*
gas 642 928 811
low carbon energy(a) 219 109 1,074
------------------------------------------------ ------- ------- -------
Total capital expenditure 861 1,037 1,885
------------------------------------------------ ------- ------- -------
(a) First quarter 2021 includes $712 million in respect of the
remaining payment to Equinor for our investment in our strategic US
offshore wind partnership and $326 million as a lease option fee
deposit paid to The Crown Estate in connection with our
participation in the UK Round 4 Offshore Wind Leasing together with
our partner EnBW.
First Fourth First
quarter quarter quarter
2022 2021 2021
--------------------------------- ------- ------- -------
Production (net of royalties)(b)
Liquids* (mb/d) 121 122 112
Natural gas (mmcf/d) 4,897 4,941 4,623
Total hydrocarbons* (mboe/d) 966 974 909
---------------------------------- ------- ------- -------
Average realizations* (c)
Liquids ($/bbl) 86.09 71.63 55.38
Natural gas ($/mcf) 7.88 6.94 3.94
Total hydrocarbons* ($/boe) 50.91 43.68 26.84
---------------------------------- ------- ------- -------
(b) Includes bp's share of production of equity-accounted
entities in the gas & low carbon energy segment.
(c) Realizations are based on sales by consolidated subsidiaries
only - this excludes equity-accounted entities.
Top of page 8
gas & low carbon energy (continued)
31 March 31 December 31 March
low carbon energy(a) 2022 2021 2021
Renewables (bp net, GW)
Installed renewables capacity* 1.9 1.9 1.6
----------------------------------------------------------- -------- ----------- --------
Developed renewables to FID* 4.4 4.4 3.3
Renewables pipeline 24.9 23.1 13.8
of which by geographical area:
========================================================== -------- ----------- --------
Renewables pipeline - Americas 16.3 16.2 7.3
Renewables pipeline - Asia Pacific 1.4 1.4 1.4
Renewables pipeline - Europe 7.0 5.3 5.1
Renewables pipeline - Other 0.2 0.2 -
=========================================================== -------- ----------- --------
of which by technology:
========================================================== -------- ----------- --------
Renewables pipeline - offshore wind 5.2 3.7 3.7
Renewables pipeline - solar 19.7 19.4 10.1
=========================================================== -------- ----------- --------
Total Developed renewables to FID and Renewables pipeline 29.2 27.5 17.1
----------------------------------------------------------- -------- ----------- --------
(a) Because of rounding, some totals may not agree exactly with
the sum of their component parts.
Top of page 9
oil production & operations
Financial results
-- The replacement cost profit before interest and tax for the
first quarter was $3,831 million, compared with $1,479 million for
the same period in 2021. The first quarter includes an adverse
impact of net adjusting items* of $852 million, which includes an
adverse impact of $1,487 million related to the planned exit from
our incorporated joint ventures in Russia, compared with an adverse
impact of net adjusting items of $86 million for the same period in
2021.
-- After excluding adjusting items, the underlying replacement
cost profit before interest and tax* for the first quarter was
$4,683 million, compared with $1,565 million for the same period in
2021.
-- The higher underlying replacement cost profit for the first
quarter, compared with the same period in 2021, primarily reflects
higher liquids and gas realizations.
Operational update
-- Reported production for the quarter was 1,286mboe/d, 1.7%
lower than the first quarter of 2021. Underlying production* for
the quarter was flat compared with the first quarter of 2021.
Strategic progress
-- On 22 February bp announced the start-up of the Herschel
Expansion major project* in the deepwater Gulf of Mexico. Phase 1
of the project comprises development of a new subsea production
system and the first of up to three wells tied to the Na Kika
platform (bp 50% operator, Shell 50%).
-- On 11 March bp and Eni signed an agreement to form a new
50:50 independent company, Azule Energy, a bp and Eni company,
through the combination of the two companies' Angolan businesses.
The agreement follows the memorandum of understanding between the
companies agreed in May 2021. The creation of Azule Energy is
subject to customary governmental approvals, and the transaction is
expected to complete in the second half of 2022.
-- On 1 April, our partner Petrobras announced the discovery of
a new oil accumulation in the southern portion of the Campos Basin,
offshore Brazil. Evaluation is ongoing (bp 50%, Petrobras operator
50%).
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
--------------------------------------------------- ------- ------- -------
Profit before interest and tax 3,832 3,212 1,494
Inventory holding (gains) losses* (1) - (15)
---------------------------------------------------- ------- ------- -------
RC profit before interest and tax 3,831 3,212 1,479
Net (favourable) adverse impact of adjusting items 852 812 86
---------------------------------------------------- ------- ------- -------
Underlying RC profit before interest and tax 4,683 4,024 1,565
Taxation on an underlying RC basis (1,912) (1,235) (729)
---------------------------------------------------- ------- ------- -------
Underlying RC profit before interest 2,771 2,789 836
---------------------------------------------------- ------- ------- -------
Top of page 10
oil production & operations (continued)
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
----------------------------------------------- ------- ------- -------
Depreciation, depletion and amortization
----------------------------------------------- ------- ------- -------
Total depreciation, depletion and amortization 1,429 1,628 1,574
------------------------------------------------ ------- ------- -------
Exploration write-offs
----------------------------------------------- ------- ------- -------
Exploration write-offs 51 45 56
------------------------------------------------ ------- ------- -------
Adjusted EBITDA*
----------------------------------------------- ------- ------- -------
Total adjusted EBITDA 6,163 5,697 3,195
------------------------------------------------ ------- ------- -------
Capital expenditure*
----------------------------------------------- ------- ------- -------
Total capital expenditure 1,254 1,272 1,319
------------------------------------------------ ------- ------- -------
First Fourth First
quarter quarter quarter
2022 2021 2021
--------------------------------- ------- ------- -------
Production (net of royalties)(a)
Liquids* (mb/d) 948 1,004 997
Natural gas (mmcf/d) 1,964 2,053 1,810
Total hydrocarbons* (mboe/d) 1,286 1,358 1,309
---------------------------------- ------- ------- -------
Average realizations* (b)
Liquids ($/bbl) 83.47 71.07 52.92
Natural gas ($/mcf) 9.40 9.27 4.11
Total hydrocarbons* ($/boe) 76.64 66.94 46.81
---------------------------------- ------- ------- -------
(a) Includes bp's share of production of equity-accounted
entities in the oil production & operations segment.
(b) Realizations are based on sales by consolidated subsidiaries
only - this excludes equity-accounted entities.
Top of page 11
customers & products
Financial results
-- The replacement cost profit before interest and tax for the
first quarter was $1,981 million, compared with $934 million for
the same period in 2021. The first quarter included an adverse
impact of net adjusting items* of $175 million, compared with a
favourable impact of net adjusting items of $278 million for the
same period in 2021.
-- After excluding adjusting items, the underlying replacement
cost profit before interest and tax* for the first quarter was
$2,156 million, compared with $656 million for the same period in
2021.
-- The customers & products result for the first quarter
reflects a significantly stronger performance compared with the
same period in 2021, with higher results in both refining and oil
trading.
-- customers - convenience and mobility result, excluding
Castrol, for the quarter was marginally lower than the same period
in 2021. The benefits of both a strong convenience performance and
higher volumes were more than offset with the impact of a volatile
environment, with increasing commodity costs and adverse foreign
exchange impacts.
Castrol result in the quarter was lower than the same period in
2021 due to ongoing additive supply shortages and higher input
costs.
-- products - the products result for the quarter was higher
compared with the same period in 2021, with refining returning to a
profit and an exceptional oil trading result. In refining, the
result included the benefit of higher realized refining margins and
utilization. This was partially offset by increased energy
costs.
Operational update
-- Utilization for the quarter was around 6 percentage points
higher than the same period in 2021 mainly due to lower COVID
related demand impacts. bp-operated refining availability* for the
first quarter was 95.0%, broadly in line with 94.8% for the same
period in 2021.
Strategic progress
-- In support of our leading convenience offers, we signed a
global convenience partnership with Uber, aiming to make more than
3,000 retail locations available on Uber Eats by 2025.
Additionally, to bring a more seamless store experience to our
customers, we announced the pilot of Mashgin's checkout-free
technology at our US convenience sites.
-- bp completed the sale of its retail assets in Switzerland to
Oel Pool AG, who will continue to operate the retail sites under
the bp brand.
-- In support of accelerating our EV charging ambition:
-- in April, bp and Volkswagen Group launched their strategic
partnership to roll-out an EV fast charging network in Europe and
UK, with the potential for up to 8,000 new charge points by end
2024. bp's growing charging network will be integrated into
Volkswagen, Skoda and Seat in-car dashboards, helping drivers
seamlessly find their nearest charger;
-- bp announced plans to invest GBP1 billion over the next 10
years to support the roll-out of fast, convenient charging
infrastructure across the UK and to nearly triple our number of UK
public charge points.
-- In biofuels, we entered into a 10-year strategic agreement
with Nuseed with plans to accelerate market adoption of Nuseed
Carinata as a sustainable low-carbon biofuel feedstock for use in
our refineries, as well as onward marketing.
-- bp's Lingen refinery in Germany became the country's first
production facility to use co-processing on an industrial scale to
produce sustainable aviation fuel (SAF), using biomass derived from
used cooking oil.
-- bp acquired a 30% stake in Green Biofuels Ltd, the UK's
largest provider of low emission hydrogenated vegetable oil fuels.
This investment will expand bp's global biofuels portfolio and its
lower carbon solutions for UK customers.
-- Air bp signed a strategic collaboration agreement with DHL
Express to supply SAF until 2026, and also signed a SAF supply
contract with Rolls-Royce in the UK and Germany.
-- Castrol and BYD, a leading new energy vehicle brand in China,
signed a strategic cooperation agreement for the supply of the
Castrol ON range of EV fluids. Additionally, Castrol signed a new
commercial agreement with Tesco, the UK's largest supermarket
chain, to stock a range of Castrol products.
-- On 5 April 2022, bp completed the previously announced
acquisition of the public units of BP Midstream Partners LP (BPMP)
which has resulted in BPMP becoming a wholly-owned subsidiary of
bp.
-- SAPREF shareholders (bp and Shell) announced that refinery
operations in South Africa will be paused for an indefinite period
from the end of March 2022. Additionally, in April, the New Zealand
Whangarei refinery, in which bp holds a share, converted to an
import-only terminal.
Top of page 12
customers & products (continued)
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
--------------------------------------------------- ------- ------- -------
Profit (loss) before interest and tax 5,456 (14) 2,539
Inventory holding (gains) losses* (3,475) (412) (1,605)
---------------------------------------------------- ------- ------- -------
RC profit (loss) before interest and tax 1,981 (426) 934
Net (favourable) adverse impact of adjusting items 175 1,037 (278)
---------------------------------------------------- ------- ------- -------
Underlying RC profit before interest and tax 2,156 611 656
Of which:(a)
customers - convenience & mobility 522 637 658
Castrol - included in customers 256 207 334
products - refining & trading 1,634 (26) (2)
Taxation on an underlying RC basis (400) (640) (133)
---------------------------------------------------- ------- ------- -------
Underlying RC profit before interest 1,756 (29) 523
---------------------------------------------------- ------- ------- -------
(a) A reconciliation to RC profit before interest and tax by business is provided on page 31.
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
----------------------------------------------- ------- ------- -------
Adjusted EBITDA*(b)
customers - convenience & mobility 848 966 982
Castrol - included in customers 295 243 373
products - refining & trading 2,025 399 419
2,873 1,365 1,401
------- ------- -------
Depreciation, depletion and amortization
----------------------------------------------- ------- ------- -------
Total depreciation, depletion and amortization 717 754 745
------------------------------------------------ ------- ------- -------
Capital expenditure*
customers - convenience & mobility 347 692 316
Castrol - included in customers 52 53 41
products - refining & trading 368 532 216
Total capital expenditure 715 1,224 532
------------------------------------------------ ------- ------- -------
(b) A reconciliation to RC profit before interest and tax by business is provided on page 31.
Retail(c) First Fourth First
quarter quarter quarter
2022 2021 2021
------------------------------------- ------- ------- -------
bp retail sites* - total (#) 20,550 20,500 20,300
bp retail sites in growth markets* 2,650 2,700 2,650
Strategic convenience sites* 2,150 2,150 1,950
-------------------------------------- ------- ------- -------
(c) Reported to the nearest 50.
Marketing sales of refined products (mb/d) First Fourth First
quarter quarter quarter
2022 2021 2021
-------------------------------------------- ------- ------- -------
US 1,113 1,151 1,016
Europe 883 936 706
Rest of World 471 496 440
--------------------------------------------- ------- ------- -------
2,467 2,583 2,162
Trading/supply sales of refined products(d) 352 395 336
--------------------------------------------- ------- ------- -------
Total sales volume of refined products 2,819 2,978 2,498
--------------------------------------------- ------- ------- -------
(d) An amendment of 22mb/d has been made to amounts presented for the first quarter 2021.
Top of page 13
customers & products (continued)
Refining marker margin* First Fourth First
quarter quarter quarter
2022 2021 2021
------------------------------------------------ ------- ------- -------
bp average refining marker margin (RMM) ($/bbl) 18.9 15.1 8.7
------------------------------------------------- ------- ------- -------
Refinery throughputs (mb/d) First Fourth First
quarter quarter quarter
2022 2021 2021
--------------------------------------- ------- ------- -------
US 758 720 725
Europe 807 833 747
Rest of World 85 91 129
---------------------------------------- ------- ------- -------
Total refinery throughputs 1,650 1,644 1,601
---------------------------------------- ------- ------- -------
bp-operated refining availability* (%) 95.0 95.4 94.8
---------------------------------------- ------- ------- -------
Top of page 14
other businesses & corporate
Other businesses & corporate comprises innovation &
engineering, bp ventures, Launchpad, regions, cities &
solutions, our corporate activities & functions and any
residual costs of the Gulf of Mexico oil spill. From first quarter
2022 the results of Rosneft, previously reported as a separate
segment, are also included in other businesses & corporate.
Comparative information for 2021 has been restated to reflect the
changes in reportable segments. For more information see Note 2
Investment in Rosneft.
Financial results
-- The replacement cost loss before interest and tax for the
first quarter was $24,719 million, compared with a loss of $315
million for the same period in 2021. The first quarter included an
adverse impact of net adjusting items* of $24,460 million, compared
with an adverse impact of net adjusting items of $508 million for
the same period in 2021. The adjusting items for the first quarter
of 2022 mainly relate to Rosneft:
A $13.5 billion pre-tax impairment charge, representing the full
carrying value of the Rosneft investment at 27 February 2022 as,
due to sanctions and geopolitical challenges the level of
uncertainty as to the value of our shareholding means that, under
IFRS, it is not currently possible to estimate any value other than
zero.
A $11.1 billion pre-tax charge, principally arising from foreign
exchange losses accumulated from the date of the initial investment
in 2013 to 27 February 2022, that under IFRS, to that date, were
recorded directly in equity rather than in the income statement. Of
this $1.4 billion has an incremental impact on equity with $9.7
billion recorded as at 31 December 2021.
These charges are partly offset by $0.5 billion representing
bp's estimated share of Rosneft's post-tax income in the first
quarter until 27 February 2022.
-- Fair value accounting effects* for the first quarter had an
adverse impact of $425 million, compared with an adverse impact of
$447 million for the same period in 2021.
-- After excluding adjusting items, the underlying replacement
cost loss before interest and tax* for the first quarter was $259
million, compared with a profit of $193 million for the same period
in 2021.
-- For other businesses & corporate excluding Rosneft, after
excluding adjusting items, the underlying replacement cost loss
before interest and tax for the first quarter was $259 million,
compared with a loss of $170 million for the same period in 2021,
reflecting lower valuation gains from bp ventures.
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
------------------------------------------------------ -------- ------- -------
Profit (loss) before interest and tax (24,719) (301) (227)
Inventory holding (gains) losses* - (68) (88)
------------------------------------------------------- -------- ------- -------
RC profit (loss) before interest and tax (24,719) (369) (315)
Net (favourable) adverse impact of adjusting items(a) 24,460 579 508
------------------------------------------------------- -------- ------- -------
Underlying RC profit (loss) before interest and tax (259) 210 193
Taxation on an underlying RC basis 23 55 19
------------------------------------------------------- -------- ------- -------
Underlying RC profit (loss) before interest (236) 265 212
------------------------------------------------------- -------- ------- -------
(a) Includes fair value accounting effects relating to the
hybrid bonds that were issued on 17 June 2020. See page 34 for more
information.
other businesses & corporate (excluding Rosneft)
Strategic progress
-- On 8 April bp and AENA signed an agreement to work on the
decarbonization of the energy and mobility system of the airports
operated by AENA, starting with Valencia airport.
-- On 19 April 2022 the Australian Federal Government announced
that bp's Kwinana Integrated Clean Energy Hub project in Perth,
Western Australia had been awarded up to A$70 million (US$52
million) of grant funding.
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
---------------------------------------------------- ------- ------- -------
Profit (loss) before interest and tax (686) (924) (678)
Inventory holding (gains) losses* - - -
---------------------------------------------------- ------- ------- -------
RC profit (loss) before interest and tax (686) (924) (678)
Net (favourable) adverse impact of adjusting items 427 389 508
----------------------------------------------------- ------- ------- -------
Underlying RC profit (loss) before interest and tax (259) (535) (170)
Taxation on an underlying RC basis 23 128 54
----------------------------------------------------- ------- ------- -------
Underlying RC profit (loss) before interest (236) (407) (116)
----------------------------------------------------- ------- ------- -------
Top of page 15
other businesses & corporate (Rosneft)
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
---------------------------------------------------- -------- ------- -------
Profit (loss) before interest and tax (24,033) 623 451
Inventory holding (gains) losses* - (68) (88)
----------------------------------------------------- -------- ------- -------
RC profit (loss) before interest and tax (24,033) 555 363
Net (favourable) adverse impact of adjusting items 24,033 190 -
----------------------------------------------------- -------- ------- -------
Underlying RC profit (loss) before interest and tax - 745 363
Taxation on an underlying RC basis - (73) (35)
----------------------------------------------------- -------- ------- -------
Underlying RC profit (loss) before interest - 672 328
----------------------------------------------------- -------- ------- -------
First Fourth First
quarter quarter quarter
2022(a) 2021 2021
------------------------------------------------------ ------- ------- -------
Production: Hydrocarbons (net of royalties, bp share)
Liquids* (mb/d) 584 879 827
Natural gas (mmcf/d) 963 1,433 1,294
Total hydrocarbons* (mboe/d) 750 1,126 1,050
------------------------------------------------------- ------- ------- -------
(a) First quarter 2022 reflects bp's estimated share of Rosneft
production for the period 1 January to 27 February, averaged over
the quarter (see Note 2).
Top of page 16
Financial statements
Group income statement
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
------------------------------------------------------------- -------- ------- -------
Sales and other operating revenues (Note 6) 49,258 50,554 34,544
Earnings from joint ventures - after interest and tax 379 243 160
Earnings from associates - after interest and tax 871 896 601
Interest and other income 194 259 82
Gains on sale of businesses and fixed assets 518 286 1,105
-------------------------------------------------------------- -------- ------- -------
Total revenues and other income 51,220 52,238 36,492
Purchases 27,808 32,089 15,656
Production and manufacturing expenses 6,975 6,397 6,858
Production and similar taxes 505 406 253
Depreciation, depletion and amortization (Note 7) 3,625 3,863 3,367
Net impairment and losses on sale of businesses and fixed
assets (Note 4) 26,031 1,223 373
Exploration expense 92 102 99
Distribution and administration expenses 3,080 3,365 2,615
-------------------------------------------------------------- -------- ------- -------
Profit (loss) before interest and taxation (16,896) 4,793 7,271
Finance costs 664 759 723
Net finance (income) expense relating to pensions and
other post-retirement benefits (20) (8) 6
-------------------------------------------------------------- -------- ------- -------
Profit (loss) before taxation (17,540) 4,042 6,542
Taxation 2,530 1,464 1,642
-------------------------------------------------------------- -------- ------- -------
Profit (loss) for the period (20,070) 2,578 4,900
-------------------------------------------------------------- -------- ------- -------
Attributable to
BP shareholders (20,384) 2,326 4,667
Non-controlling interests 314 252 233
-------------------------------------------------------------- -------- ------- -------
(20,070) 2,578 4,900
-------- ------- -------
Earnings per share (Note 8)
Profit (loss) for the period attributable to BP shareholders
Per ordinary share (cents)
Basic (104.46) 11.75 22.99
Diluted (104.46) 11.66 22.89
Per ADS (dollars)
Basic (6.27) 0.70 1.38
Diluted (6.27) 0.70 1.37
-------------------------------------------------------------- -------- ------- -------
Top of page 17
Condensed group statement of comprehensive income
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
-------------------------------------------------------------- -------- ------- -------
Profit (loss) for the period (20,070) 2,578 4,900
--------------------------------------------------------------- -------- ------- -------
Other comprehensive income
Items that may be reclassified subsequently to profit
or loss
Currency translation differences(a) (1,749) (619) (605)
Exchange (gains) losses on translation of foreign
operations reclassified to gain or loss on sale of
businesses and fixed assets(b) 10,791 36 -
Cash flow hedges and costs of hedging 222 408 (62)
Share of items relating to equity-accounted entities,
net of tax 85 104 11
Income tax relating to items that may be reclassified (102) (24) 1
--------------------------------------------------------------- -------- ------- -------
9,247 (95) (655)
-------- ------- -------
Items that will not be reclassified to profit or loss
Remeasurements of the net pension and other post-retirement
benefit liability or asset(c) 2,128 1,306 2,026
Cash flow hedges that will subsequently be transferred
to the balance sheet (1) - 2
Income tax relating to items that will not be reclassified (668) (434) (588)
--------------------------------------------------------------- -------- ------- -------
1,459 872 1,440
-------- ------- -------
Other comprehensive income 10,706 777 785
--------------------------------------------------------------- -------- ------- -------
Total comprehensive income (9,364) 3,355 5,685
--------------------------------------------------------------- -------- ------- -------
Attributable to
BP shareholders (9,678) 3,095 5,460
Non-controlling interests 314 260 225
--------------------------------------------------------------- -------- ------- -------
(9,364) 3,355 5,685
-------- ------- -------
(a) First quarter 2022 principally affected by movements in the
Russian rouble against the US dollar.
(b) See Note 2 - Investment in Rosneft.
(c) See Note 1 - Basis of preparation - Pensions and other
post-retirement benefits for further information.
Top of page 18
Condensed group statement of changes in equity
bp shareholders' Non-controlling interests Total
$ million equity(a) Hybrid bonds Other interest equity
--------------------------------------- ---------------- ------------ -------------- -------
At 1 January 2022 75,463 13,041 1,935 90,439
Total comprehensive income (9,678) 127 187 (9,364)
Dividends (1,069) - (65) (1,134)
Cash flow hedges transferred
to the balance sheet, net of
tax (1) - - (1)
Repurchase of ordinary share
capital (1,592) - - (1,592)
Share-based payments, net of
tax 175 - - 175
Share of equity-accounted entities'
changes in equity, net of tax - - - -
Issue of perpetual hybrid bonds (1) 67 - 66
Payments on perpetual hybrid
bonds - (72) - (72)
Transactions involving non-controlling
interests, net of tax 2 - - 2
---------------------------------------- ---------------- ------------ -------------- -------
At 31 March 2022 63,299 13,163 2,057 78,519
---------------------------------------- ---------------- ------------ -------------- -------
bp shareholders' Non-controlling interests Total
$ million equity Hybrid bonds Other interest equity
--------------------------------------- ---------------- ------------ -------------- -------
At 1 January 2021 71,250 12,076 2,242 85,568
Total comprehensive income 5,460 124 101 5,685
Dividends (1,068) - (51) (1,119)
Cash flow hedges transferred
to the balance sheet, net of
tax (4) - - (4)
Share-based payments, net of
tax (45) - - (45)
Payments on perpetual hybrid
bonds - (55) - (55)
Transactions involving non-controlling
interests, net of tax 366 - 190 556
---------------------------------------- ---------------- ------------ -------------- -------
At 31 March 2021 75,959 12,145 2,482 90,586
---------------------------------------- ---------------- ------------ -------------- -------
(a) In 2022 $9.2 billion of the opening foreign currency
translation reserve has been moved to profit and loss account
reserve as a result of bp's decision to exit its shareholding in
Rosneft and its other businesses with Rosneft in Russia. For more
information see Note 2.
Top of page 19
Group balance sheet
31 March 31 December
$ million 2022 2021
------------------------------------------------------- -------- -----------
Non-current assets
Property, plant and equipment 109,884 112,902
Goodwill 11,883 12,373
Intangible assets 6,352 6,451
Investments in joint ventures 9,512 9,982
Investments in associates(a) 5,476 21,001
Other investments 2,669 2,544
-------------------------------------------------------- -------- -----------
Fixed assets 145,776 165,253
Loans 912 922
Trade and other receivables 1,631 2,693
Derivative financial instruments 7,809 7,006
Prepayments 575 479
Deferred tax assets 5,516 6,410
Defined benefit pension plan surpluses 13,162 11,919
-------------------------------------------------------- -------- -----------
175,381 194,682
-------- -----------
Current assets
Loans 353 355
Inventories 30,109 23,711
Trade and other receivables 35,610 27,139
Derivative financial instruments 9,390 5,744
Prepayments 2,625 2,486
Current tax receivable 255 542
Other investments 103 280
Cash and cash equivalents 34,414 30,681
-------------------------------------------------------- -------- -----------
112,859 90,938
Assets classified as held for sale (Note 3) 7,272 1,652
-------------------------------------------------------- -------- -----------
120,131 92,590
-------- -----------
Total assets 295,512 287,272
-------------------------------------------------------- -------- -----------
Current liabilities
Trade and other payables 61,195 52,611
Derivative financial instruments 17,357 7,565
Accruals 4,389 5,638
Lease liabilities 1,737 1,747
Finance debt 5,212 5,557
Current tax payable 2,917 1,554
Provisions 5,811 5,256
-------------------------------------------------------- -------- -----------
98,618 79,928
Liabilities directly associated with assets classified
as held for sale (Note 3) 2,567 359
-------------------------------------------------------- -------- -----------
101,185 80,287
-------- -----------
Non-current liabilities
Other payables 10,385 10,567
Derivative financial instruments 9,065 6,356
Accruals 930 968
Lease liabilities 6,729 6,864
Finance debt 55,394 55,619
Deferred tax liabilities 8,498 8,780
Provisions 17,830 19,572
Defined benefit pension plan and other post-retirement
benefit plan deficits 6,977 7,820
-------------------------------------------------------- -------- -----------
115,808 116,546
-------- -----------
Total liabilities 216,993 196,833
-------------------------------------------------------- -------- -----------
Net assets 78,519 90,439
-------------------------------------------------------- -------- -----------
Equity
BP shareholders' equity 63,299 75,463
Non-controlling interests 15,220 14,976
-------------------------------------------------------- -------- -----------
Total equity 78,519 90,439
-------------------------------------------------------- -------- -----------
(a) See Note 2 - Investment in Rosneft.
Top of page 20
Condensed group cash flow statement
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
--------------------------------------------------------------- -------- ------- -------
Operating activities
Profit (loss) before taxation (17,540) 4,042 6,542
Adjustments to reconcile profit (loss) before taxation
to net cash provided by operating activities
Depreciation, depletion and amortization and exploration
expenditure written off 3,674 3,909 3,428
Net impairment and (gain) loss on sale of businesses
and fixed assets 25,513 937 (732)
Earnings from equity-accounted entities, less dividends
received (1,093) (201) (633)
Net charge for interest and other finance expense, less
net interest paid 184 74 29
Share-based payments 170 226 (46)
Net operating charge for pensions and other post-retirement
benefits, less contributions and benefit payments for
unfunded plans (146) (184) (20)
Net charge for provisions, less payments 484 194 902
Movements in inventories and other current and non-current
assets and liabilities (1,771) (1,709) (2,793)
Income taxes paid (1,265) (1,172) (568)
---------------------------------------------------------------- -------- ------- -------
Net cash provided by operating activities 8,210 6,116 6,109
---------------------------------------------------------------- -------- ------- -------
Investing activities
Expenditure on property, plant and equipment, intangible
and other assets (2,602) (2,772) (3,033)
Acquisitions, net of cash acquired (8) (132) (1)
Investment in joint ventures (294) (581) (742)
Investment in associates (25) (148) (22)
---------------------------------------------------------------- -------- ------- -------
Total cash capital expenditure (2,929) (3,633) (3,798)
Proceeds from disposal of fixed assets 468 520 551
Proceeds from disposal of businesses, net of cash disposed 549 1,745 3,613
Proceeds from loan repayments 29 36 61
================================================================ ======== ======= =======
Cash provided from investing activities 1,046 2,301 4,225
---------------------------------------------------------------- -------- ------- -------
Net cash used in investing activities (1,883) (1,332) 427
---------------------------------------------------------------- -------- ------- -------
Financing activities
Net issue (repurchase) of shares (Note 8) (1,592) (1,725) -
Lease liability payments (498) (502) (560)
Proceeds from long-term financing 2,002 648 1,956
Repayments of long-term financing (892) (2,963) (7,029)
Net increase (decrease) in short-term debt (276) 969 222
Issue of perpetual hybrid bonds 66 65 -
Payments relating to perpetual hybrid bonds (148) (100) (55)
Payments relating to transactions involving non-controlling
interests (Other interest) (5) - -
Receipts relating to transactions involving non-controlling
interests (Other interest) 7 12 668
Dividends paid - BP shareholders (1,068) (1,077) (1,064)
- non-controlling interests (65) (66) (51)
---------------------------------------------------------------- -------- ------- -------
Net cash provided by (used in) financing activities (2,469) (4,739) (5,913)
---------------------------------------------------------------- -------- ------- -------
Currency translation differences relating to cash and
cash equivalents (125) (58) (58)
---------------------------------------------------------------- -------- ------- -------
Increase (decrease) in cash and cash equivalents 3,733 (13) 565
---------------------------------------------------------------- -------- ------- -------
Cash and cash equivalents at beginning of period 30,681 30,694 31,111
Cash and cash equivalents at end of period 34,414 30,681 31,676
---------------------------------------------------------------- -------- ------- -------
Top of page 21
Notes
Note 1. Basis of preparation
The interim financial information included in this report has
been prepared in accordance with IAS 34 'Interim Financial
Reporting'.
The results for the interim periods are unaudited and, in the
opinion of management, include all adjustments necessary for a fair
presentation of the results for each period. All such adjustments
are of a normal recurring nature. This report should be read in
conjunction with the consolidated financial statements and related
notes for the year ended 31 December 2021 included in BP Annual
Report and Form 20-F 2021.
bp prepares its consolidated financial statements included
within BP Annual Report and Form 20-F on the basis of International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB), IFRS as adopted by the UK, and
European Union (EU), and in accordance with the provisions of the
UK Companies Act 2006 as applicable to companies reporting under
international accounting standards. IFRS as adopted by the UK does
not differ from IFRS as adopted by the EU. IFRS as adopted by the
UK and EU differ in certain respects from IFRS as issued by the
IASB. The differences have no impact on the group's consolidated
financial statements for the periods presented.
The financial information presented herein has been prepared in
accordance with the accounting policies expected to be used in
preparing BP Annual Report and Form 20-F 2022 which are the same as
those used in preparing BP Annual Report and Form 20-F 2021. There
are no new or amended standards or interpretations adopted from 1
January 2022 onwards that have a significant impact on the
financial information.
Significant accounting judgements and estimates
bp's significant accounting judgements and estimates were
disclosed in BP Annual Report and Form 20-F 2021. These have been
subsequently considered at the end of this quarter to determine if
any changes were required to those judgements and estimates.
Investment in Rosneft
Following bp's announcement on 27 February 2022, the significant
judgement on significant influence over Rosneft has been reassessed
and a new significant estimate has been identified for the fair
value of bp's equity investment in Rosneft. bp's segmental
reporting has also changed and comparatives have been restated to
reflect the segmental changes. See Note 2 for further
information.
Pensions and other post-retirement benefits
The group's defined benefit plans are reviewed quarterly to
determine any changes to the fair value of the plan assets or
present value of the defined benefit obligations. As a result of
the review during the first quarter of 2022, the group's total net
defined benefit plan surplus as at 31 March 2022 is $6.2 billion,
compared to a surplus of $4.1 billion at 31 December 2021. The
movement for the quarter principally reflects net actuarial gains
reported in other comprehensive income arising from increases in
the UK, US and Eurozone discount rates, partly offset by negative
asset performance and increases in inflation rates.
Other accounting judgements and estimates
All other significant accounting judgements and estimates
disclosed in BP Annual Report and Form 20-F 2021 remain applicable
and no other new significant accounting judgements or estimates
have been identified.
Top of page 22
Note 2. Investment in Rosneft
On 27 February 2022, following the military action in Ukraine,
bp announced that it will exit its 19.75% shareholding in Rosneft
Oil Company (Rosneft), a Russian oil and gas company. As of 27
February 2022, bp chief executive officer Bernard Looney also
stepped down from the board of Rosneft with immediate effect and
has submitted a letter of resignation as did the other Rosneft
director nominated by bp, former bp group chief executive Bob
Dudley.
As a result of bp's nominated directors stepping down from the
Rosneft board, bp has determined that as of 27 February 2022, the
group no longer has significant influence over Rosneft taking into
account the criteria set out in IAS 28 'Investments in Associates
and Joint Ventures'. bp therefore no longer equity accounts for its
interest in Rosneft as of that date, treating it prospectively as a
financial asset measured at fair value within 'Other investments'.
In response to sanctions imposed on Russia by a number of
countries, Russia has implemented a number of counter-sanctions
including restrictions on the divestment from Russian assets by
foreign investors and a reported temporary prohibition on
registrars and depositories from making payments on Russian
securities in favour of foreign investors. Further details
including application of these counter-sanctions are not yet fully
known. In addition, bp is not able to sell its Rosneft shares on
the Moscow Stock Exchange and is unable to ascribe probabilities to
possible outcomes of any exit process. As a result, it is
considered that any measure of fair value, other than nil, would be
subject to such high measurement uncertainty that no estimate would
provide useful information even if it were accompanied by a
description of the estimate made in producing it and an explanation
of the uncertainties that affect the estimate. Accordingly, it is
not currently possible to estimate any carrying value other than
zero when determining both the measurement of the impairment charge
and remeasurement as at 31 March 2022.
The loss of significant influence over Rosneft combined with the
market impacts on Russian assets has led to an impairment charge of
$13,479 million including $528 million which relates to estimated
earnings in the quarter prior to the loss of significant influence.
In addition, accumulated exchange losses of $10,372 million, a cash
flow hedge reserve of $651 million relating to the original
acquisition of Rosneft shares and bp's cumulative share of
Rosneft's other comprehensive income of $59 million which were
previously charged to equity were reclassified to the income
statement in the quarter in the aggregate amount of $11,082
million. The change in accounting treatment also means that bp no
longer recognizes a share in Rosneft's net income, production and
reserves from 27 February 2022.
As a result of bp's decision to exit its shareholding in
Rosneft, the group has ceased to report Rosneft as a separate
segment in the its financial reporting for 2022. Rosneft results up
to 27 February 2022 are included within other businesses &
corporate (OB&C), and 2021 comparatives have been restated to
include the Rosneft segment as per the table below.
OB&C Rosneft OB&C restated OB&C Rosneft OB&C restated
(as previously (as previously (as previously (as previously
reported) reported) reported) reported)
Fourth Fourth Fourth First First First
quarter quarter quarter quarter quarter quarter
$ million 2021 2021 2021 2021 2021 2021
----------------- --------------- --------------- ------------- --------------- --------------- -------------
Profit (loss)
before interest
and tax (924) 623 (301) (678) 451 (227)
Inventory holding
(gains)
losses* - (68) (68) - (88) (88)
------------------ --------------- --------------- ------------- --------------- --------------- -------------
RC profit (loss)
before interest
and tax (924) 555 (369) (678) 363 (315)
Net (favourable)
adverse
impact of
adjusting
items(a) 389 190 579 508 - 508
------------------ --------------- --------------- ------------- --------------- --------------- -------------
Underlying RC
profit (loss)
before interest
and tax (535) 745 210 (170) 363 193
Taxation on an
underlying
RC basis 128 (73) 55 54 (35) 19
------------------ --------------- --------------- ------------- --------------- --------------- -------------
Underlying RC
profit (loss)
before interest (407) 672 265 (116) 328 212
------------------ --------------- --------------- ------------- --------------- --------------- -------------
Also, as of 27 February 2022, bp decided to exit its other
businesses with Rosneft within Russia, which are included in the
oil production & operations segment. These businesses are also
determined to have a fair value of nil. This decision resulted in
an impairment charge of $1,043 million, including $35 million which
relates to estimated earnings in the quarter, and accumulated
exchange losses of $479 million previously charged to equity and
taken to the income statement. As with Rosneft, bp no longer
recognizes a share in these businesses' net income, production and
reserves.
The total pre-tax charge in the first quarter of 2022 relating
to bp's investment in Rosneft and other businesses with Rosneft in
Russia is $25,520 million.
Top of page 23
Note 3. Non-current assets held for sale
The carrying amount of assets classified as held for sale at 31
March 2022 is $7,272 million, with associated liabilities of $2,567
million.
On 11 March 2022, bp and Eni signed an agreement to form Azule
Energy, an independent incorporated 50:50 joint venture, through
the combination of the two companies' Angolan businesses. Subject
to all customary governmental and other approvals, the transaction
is expected to complete during the second half of 2022. Assets of
$5,514 million and associated liabilities of $2,202 million have
been classified as held for sale in the group balance sheet at 31
March 2022.
As announced in August 2021, bp and PetroChina have agreed to
establish Basra Energy Company, an incorporated joint venture,
intended to own and manage the companies' interests in the Rumaila
field in Iraq. Subject to regulatory and other approvals, the
transaction is expected to complete during the second quarter of
2022. Assets of $1,162 million and associated liabilities of $366
million are classified as held for sale in the group balance sheet
at 31 March 2022.
On 21 December 2021, Aker BP, an associate of bp, announced the
proposed acquisition of Lundin Energy for consideration in cash and
new Aker BP shares. Subject to regulatory and other approvals, the
transaction is expected to complete mid-year 2022. bp currently
holds a 27.9% interest in Aker BP. Following the transaction this
is expected to become a 15.9% interest in the combined company.
$595 million of bp's investment in Aker BP is classified as held
for sale in the group balance sheet at 31 March 2022.
Note 4. Impairment and losses on sale of businesses and fixed
assets(a)
Net impairment charges net of losses on sale of businesses and
fixed assets for the first quarter 2022 were $26,031 million
(charges of $373 million for the comparative period in 2021) and
include net impairment charges for the first quarter of 2022 of
$14,386 million (charges of $220 million for the comparative period
in 2021).
gas & low carbon energy segment
In the gas & low carbon energy segment there was a net
impairment charge of $252 million for the first quarter 2022
(charges of $122 million for the comparative period in 2021).
oil production & operations segment
In the oil production & operations segment there was a net
impairment charge of $624 million for the first quarter 2022
(charges of $99 million for the comparative period in 2021).
Impairment charges for the first quarter 2022 principally
related to the decision to exit other businesses with Rosneft
within Russia. They were offset by impairment reversals related to
producing assets due to reserves additions.
other businesses and corporate
In the other businesses and corporate segment there was a net
impairment charge of $13,479 million for the first quarter 2022
(reversal of $3 million for the comparative period in 2021) and a
loss on sale of businesses and fixed assets of $11,082 million.
The impairment charge and the loss on sale of businesses and
fixed assets for the first quarter mainly relates to bp's
investment in Rosneft - see Note 2.
(a) All disclosures are pre-tax.
Top of page 24
Note 5. Analysis of replacement cost profit (loss) before
interest and tax and reconciliation to profit (loss) before
taxation
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
-------------------------------------------------- -------- ------- -------
gas & low carbon energy (1,524) 1,911 3,430
oil production & operations 3,831 3,212 1,479
customers & products 1,981 (426) 934
other businesses & corporate(a) (24,719) (369) (315)
--------------------------------------------------- -------- ------- -------
(20,431) 4,328 5,528
Consolidation adjustment - UPII* 34 (7) 13
--------------------------------------------------- -------- ------- -------
RC profit (loss) before interest and tax (20,397) 4,321 5,541
Inventory holding gains (losses)*
gas & low carbon energy 25 (8) 22
oil production & operations 1 - 15
customers & products 3,475 412 1,605
other businesses & corporate(a) - 68 88
--------------------------------------------------- -------- ------- -------
Profit (loss) before interest and tax (16,896) 4,793 7,271
Finance costs 664 759 723
Net finance expense/(income) relating to pensions
and other post-retirement benefits (20) (8) 6
--------------------------------------------------- -------- ------- -------
Profit (loss) before taxation (17,540) 4,042 6,542
--------------------------------------------------- -------- ------- -------
RC profit (loss) before interest and tax*
US 2,277 959 1,907
Non-US (22,674) 3,362 3,634
--------------------------------------------------- -------- ------- -------
(20,397) 4,321 5,541
-------- ------- -------
(a)From first quarter 2022 the results of Rosneft, previously
reported as a separate segment, are also included in other
businesses & corporate. Comparative information for 2021 has
been restated to reflect the changes in reportable segments. For
more information see Note 2 Investment in Rosneft.
Top of page 25
Note 6. Sales and other operating revenues
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
---------------------------------------------------------- ------- ------- -------
By segment
gas & low carbon energy 8,166 14,545 8,002
oil production & operations 8,158 7,482 5,155
customers & products 42,163 37,446 27,107
other businesses & corporate 452 484 436
----------------------------------------------------------- ------- ------- -------
58,939 59,957 40,700
------- ------- -------
Less: sales and other operating revenues between segments
gas & low carbon energy 1,948 1,199 1,032
oil production & operations 7,036 7,202 4,855
customers & products 692 650 110
other businesses & corporate 5 352 159
----------------------------------------------------------- ------- ------- -------
9,681 9,403 6,156
------- ------- -------
External sales and other operating revenues
gas & low carbon energy 6,218 13,346 6,970
oil production & operations 1,122 280 300
customers & products 41,471 36,796 26,997
other businesses & corporate 447 132 277
----------------------------------------------------------- ------- ------- -------
Total sales and other operating revenues 49,258 50,554 34,544
----------------------------------------------------------- ------- ------- -------
By geographical area
US 19,152 17,927 14,491
Non-US 42,797 43,423 26,883
----------------------------------------------------------- ------- ------- -------
61,949 61,350 41,374
Less: sales and other operating revenues between areas 12,691 10,796 6,830
----------------------------------------------------------- ------- ------- -------
49,258 50,554 34,544
------- ------- -------
Revenues from contracts with customers
Sales and other operating revenues include the following
in relation to revenues from contracts with customers:
Crude oil 2,144 1,583 1,334
Oil products 31,751 29,790 19,278
Natural gas, LNG and NGLs 10,680 10,449 4,181
Non-oil products and other revenues from contracts with
customers 2,345 806 1,398
----------------------------------------------------------- ------- ------- -------
Revenue from contracts with customers 46,920 42,628 26,191
----------------------------------------------------------- ------- ------- -------
Other operating revenues(a) 2,338 7,926 8,353
----------------------------------------------------------- ------- ------- -------
Total sales and other operating revenues 49,258 50,554 34,544
----------------------------------------------------------- ------- ------- -------
(a) Principally relates to commodity derivative transactions.
Top of page 26
Note 7. Depreciation, depletion and amortization
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
-------------------------------------------------- ------- ------- -------
Total depreciation, depletion and amortization by
segment
gas & low carbon energy 1,255 1,265 854
oil production & operations 1,429 1,628 1,574
customers & products 717 754 745
other businesses & corporate 224 216 194
--------------------------------------------------- ------- ------- -------
3,625 3,863 3,367
------- ------- -------
Total depreciation, depletion and amortization by
geographical area
US 1,083 1,209 1,121
Non-US 2,542 2,654 2,246
--------------------------------------------------- ------- ------- -------
3,625 3,863 3,367
------- ------- -------
Note 8. Earnings per share and shares in issue
Basic earnings per ordinary share (EpS) amounts are calculated
by dividing the profit (loss) for the period attributable to
ordinary shareholders by the weighted average number of ordinary
shares outstanding during the period. During the first quarter 2022
300 million of ordinary shares were repurchased for cancellation
for a total cost of $1,592 million, including transaction costs of
$9 million, as part of the share buyback programme announced on 27
April 2021. Of these $500 million offset the expected full year
dilution from the vesting of awards under employee share schemes in
2022 and $1,092 million represent progress against the $1,500
million programme announced with the fourth quarter results on 8
February 2022. This programme was completed by a repurchase of a
further 80 million of shares in April 2022 at a total cost of $409
million. The number of shares in issue is reduced when shares are
repurchased. 165 million of new ordinary shares were issued in
April 2022 as non-cash consideration for the acquisition of the
public units of BP Midstream Partners LP.
The calculation of EpS is performed separately for each discrete
quarterly period, and for the year-to-date period. As a result, the
sum of the discrete quarterly EpS amounts in any particular
year-to-date period may not be equal to the EpS amount for the
year-to-date period.
For the diluted EpS calculation the weighted average number of
shares outstanding during the period is adjusted for the number of
shares that are potentially issuable in connection with employee
share-based payment plans using the treasury stock method.
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
------------------------------------------------------- ---------- ---------- ----------
Results for the period
Profit (loss) for the period attributable to bp
shareholders (20,384) 2,326 4,667
Less: preference dividend - - 1
-------------------------------------------------------- ---------- ---------- ----------
Profit (loss) attributable to bp ordinary shareholders (20,384) 2,326 4,666
-------------------------------------------------------- ---------- ---------- ----------
Number of shares (thousand) (a)(b)
Basic weighted average number of shares outstanding 19,514,477 19,800,620 20,297,585
ADS equivalent(c) 3,252,412 3,300,103 3,382,930
-------------------------------------------------------- ---------- ---------- ----------
Weighted average number of shares outstanding
used to calculate diluted earnings per share 19,514,477 19,947,023 20,388,628
ADS equivalent(c) 3,252,412 3,324,503 3,398,104
-------------------------------------------------------- ---------- ---------- ----------
Shares in issue at period-end 19,409,157 19,642,221 20,331,023
ADS equivalent(c) 3,234,859 3,273,703 3,388,503
-------------------------------------------------------- ---------- ---------- ----------
(a) Excludes treasury shares and includes certain shares that
will be issued in the future under employee share-based payment
plans.
(b) If the inclusion of potentially issuable shares would
decrease loss per share, the potentially issuable shares are
excluded from the weighted average number of shares outstanding
used to calculate diluted earnings per share. The numbers of
potentially issuable shares that have been excluded from the
calculation for the first quarter 2022 are 179,226 thousand (ADS
equivalent 29,871 thousand).
(c) One ADS is equivalent to six ordinary shares.
Top of page 27
Note 9. Dividends
Dividends payable
BP today announced an interim dividend of 5.46 cents per
ordinary share which is expected to be paid on 24 June 2022 to
ordinary shareholders and American Depositary Share (ADS) holders
on the register on 13 May 2022. The ex-dividend date will be 12 May
2022. The corresponding amount in sterling is due to be announced
on 10 June 2022, calculated based on the average of the market
exchange rates over three dealing days between 6 June 2022 and 8
June 2022. Holders of ADSs are expected to receive $0.3276 per ADS
(less applicable fees). The board has decided not to offer a scrip
dividend alternative in respect of the first quarter 2022 dividend.
Ordinary shareholders and ADS holders (subject to certain
exceptions) will be able to participate in a dividend reinvestment
programme. Details of the first quarter dividend and timetable are
available at bp.com/dividends and further details of the dividend
reinvestment programmes are available at bp.com/drip.
First Fourth First
quarter quarter quarter
2022 2021 2021
---------------------------------- ------- ------- -------
Dividends paid per ordinary share
cents 5.460 5.460 5.250
pence 4.160 4.105 3.768
Dividends paid per ADS (cents) 32.76 32.76 31.50
----------------------------------- ------- ------- -------
Note 10. Net debt
Net debt* First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
-------------------------------------------------- -------- -------- --------
Finance debt(a) 60,606 61,176 66,123
Fair value (asset) liability of hedges related to
finance debt(b) 1,265 118 (1,134)
--------------------------------------------------- -------- -------- --------
61,871 61,294 64,989
Less: cash and cash equivalents 34,414 30,681 31,676
--------------------------------------------------- -------- -------- --------
Net debt(c) 27,457 30,613 33,313
--------------------------------------------------- -------- -------- --------
Total equity 78,519 90,439 90,586
Gearing* 25.9% 25.3% 26.9%
--------------------------------------------------- -------- -------- --------
(a) The fair value of finance debt at 31 March 2022 was $59,601
million (31 December 2021 $62,946 million, 31 March 2021 $67,775
million).
(b) Derivative financial instruments entered into for the
purpose of managing interest rate and foreign currency exchange
risk associated with net debt with a fair value liability position
of $173 million at 31 March 2022 (fourth quarter 2021 liability of
$166 million and first quarter 2021 liability of $346 million) are
not included in the calculation of net debt shown above as hedge
accounting is not applied for these instruments.
(c) Net debt does not include accrued interest, which is
reported within other receivables and other payables on the balance
sheet and for which the associated cash flows are presented as
operating cash flows in the group cash flow statement.
Note 11. Statutory accounts
The financial information shown in this publication, which was
approved by the Board of Directors on 2 May 2022, is unaudited and
does not constitute statutory financial statements. Audited
financial information will be published in BP Annual Report and
Form 20-F 2022. BP Annual Report and Form 20-F 2021 has been filed
with the Registrar of Companies in England and Wales. The report of
the auditor on those accounts was unqualified, did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and did not contain a
statement under section 498(2) or section 498(3) of the UK
Companies Act 2006.
Top of page 28
Additional information
Capital expenditure*
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
---------------------------------- ------- ------- -------
Capital expenditure
Organic capital expenditure* 2,573 3,512 2,906
Inorganic capital expenditure*(a) 356 121 892
----------------------------------- ------- ------- -------
2,929 3,633 3,798
------- ------- -------
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
----------------------------------------- ------- ------- -------
Capital expenditure by segment
gas & low carbon energy(a) 861 1,037 1,885
oil production & operations 1,254 1,272 1,319
customers & products 715 1,224 532
other businesses & corporate 99 100 62
------------------------------------------ ------- ------- -------
2,929 3,633 3,798
------- ------- -------
Capital expenditure by geographical area
US 1,097 1,305 1,487
Non-US 1,832 2,328 2,311
------------------------------------------ ------- ------- -------
2,929 3,633 3,798
------- ------- -------
(a) First quarter 2021 includes the final payment of $712
million in respect of the strategic partnership with Equinor.
Top of page 29
Adjusting items*
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
------------------------------------------------------ -------- ------- -------
gas & low carbon energy
Gains on sale of businesses and fixed assets(a) 9 - 1,034
Net impairment and losses on sale of businesses and
fixed assets(b) (252) 553 (123)
Environmental and other provisions - - -
Restructuring, integration and rationalization costs 4 (4) (8)
Fair value accounting effects(c)(d) (5,015) (790) 247
Other 135 (59) 10
------------------------------------------------------- -------- ------- -------
(5,119) (300) 1,160
-------- ------- -------
oil production & operations
Gains on sale of businesses and fixed assets 249 224 168
Net impairment and losses on sale of businesses and
fixed assets(b) (1,204) (799) (209)
Environmental and other provisions 58 (235) (65)
Restructuring, integration and rationalization costs (10) (2) (4)
Fair value accounting effects - - -
Other 55 - 24
------------------------------------------------------- -------- ------- -------
(852) (812) (86)
-------- ------- -------
customers & products
Gains on sale of businesses and fixed assets 261 62 (97)
Impairment and losses on sale of businesses and fixed
assets(b) (13) (961) (43)
Environmental and other provisions - (102) -
Restructuring, integration and rationalization costs 1 24 (41)
Fair value accounting effects(d) (377) 146 459
Other(e) (47) (206) -
------------------------------------------------------- -------- ------- -------
(175) (1,037) 278
-------- ------- -------
other businesses & corporate(f)
Gains on sale of businesses and fixed assets (1) - -
Net impairment and losses on sale of businesses and
fixed assets (1) (9) (1)
Environmental and other provisions (3) (144) -
Restructuring, integration and rationalization costs 13 (2) (25)
Fair value accounting effects(d) (425) (212) (447)
Rosneft(f) (24,033) (190) -
Gulf of Mexico oil spill (19) (24) (11)
Other 9 2 (24)
------------------------------------------------------- -------- ------- -------
(24,460) (579) (508)
Total before interest and taxation (30,606) (2,728) 844
Finance costs(g) (158) (257) (148)
------------------------------------------------------- -------- ------- -------
Total before taxation (30,764) (2,985) 696
Total taxation(h) 1,471 888 (1)
------------------------------------------------------- -------- ------- -------
Total after taxation for period (29,293) (2,097) 695
------------------------------------------------------- -------- ------- -------
(a) First quarter 2021 relates to a gain from the divestment of a 20% stake in Oman Block 61.
(b) See Note 4 for further information.
(c) Under IFRS bp marks-to-market the derivative financial
instruments used to risk-manage LNG contracts, but does not
mark-to-market the physical LNG contracts themselves, resulting in
a mismatch in accounting treatment. The fair value accounting
effect reduces this mismatch, and the underlying result reflects
how bp risk-manages its LNG contracts.
(d) For further information, including the nature of fair value
accounting effects reported in each segment, see page 34.
(e) Fourth quarter 2021 includes amounts arising in relation to
the amendment of the timing of recognition of certain customer
incentives in our customers business.
(f) From first quarter 2022 the results of Rosneft, previously
reported as a separate segment, are also included in other
businesses & corporate. Comparative information for 2021 has
been restated to reflect the changes in reportable segments. For
more information see Note 2 Investment in Rosneft.
(g) Includes the unwinding of discounting effects relating to
Gulf of Mexico oil spill payables, the income statement impact
associated with the buyback of finance debt and temporary valuation
differences associated with the group's interest rate and foreign
currency exchange risk management of finance debt.
(h) Includes certain foreign exchange effects on tax as
adjusting items. These amounts represent the impact of: (i) foreign
exchange on deferred tax balances arising from the conversion of
local currency tax base amounts into functional currency, and (ii)
taxable gains and losses from the retranslation of US
dollar-denominated intra-group loans to local currency.
Top of page 30
Net debt including leases
Net debt including leases* First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
---------------------------------------------------- -------- -------- --------
Net debt 27,457 30,613 33,313
Lease liabilities 8,466 8,611 9,030
Net partner (receivable) payable for leases entered
into on behalf of joint operations 206 187 37
Net debt including leases 36,129 39,411 42,380
----------------------------------------------------- -------- -------- --------
Total equity 78,519 90,439 90,586
Gearing including leases* 31.5% 30.4% 31.9%
----------------------------------------------------- -------- -------- --------
Gulf of Mexico oil spill
31 March 31 December
$ million 2022 2021
Gulf of Mexico oil spill payables and provisions (10,496) (10,433)
-------------------------------------------------- -------- -----------
Of which - current (1,254) (1,279)
Deferred tax asset 3,438 3,959
-------------------------------------------------- -------- -----------
Payables and provisions presented in the table above reflect the
latest estimate for the remaining costs associated with the Gulf of
Mexico oil spill. Where amounts have been provided on an estimated
basis, the amounts ultimately payable may differ from the amounts
provided and the timing of payments is uncertain. Further
information relating to the Gulf of Mexico oil spill, including
information on the nature and expected timing of payments relating
to provisions and other payables, is provided in BP Annual Report
and Form 20-F 2021 - Financial statements - Notes 6, 8, 19, 21, 22,
28, and 32.
Working capital* reconciliation(a)
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
----------------------------------------------------------- ------- ------- -------
Movements in inventories and other current and non-current
assets and liabilities as per condensed group cash
flow statement(b) (1,771) (1,709) (2,793)
Adjusted for inventory holding gains (losses)* (Note
5 excluding Rosneft) 3,501 472 1,730
Adjusted for fair value accounting effects (5,817) (856) 259
------------------------------------------------------------ ------- ------- -------
Working capital release (build) after adjusting for
net inventory gains (losses) and fair value accounting
effects (4,087) (2,093) (804)
------------------------------------------------------------ ------- ------- -------
(a) Commencing with second quarter 2021 results fair value
accounting effects have been included in the working capital
reconciliation. For further information see page 34.
(b) The movement in working capital includes outflows relating
to the Gulf of Mexico oil spill on a pre-tax basis of $47 million
in the first quarter 2022, $7 million in the fourth quarter 2021
and $135 million in the first quarter 2021.
Top of page 31
Surplus cash flow* reconciliation
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
------------------------------------------------------------ ------- ------- -------
Sources:
Net cash provided by operating activities 8,210 6,116 6,109
Cash provided from investing activities 1,046 2,301 4,225
Other proceeds(a) 164 - -
Receipts relating to transactions involving non-controlling
interests 7 12 668
------------------------------------------------------------- ------- ------- -------
Cash inflow 9,427 8,429 11,002
------------------------------------------------------------- ------- ------- -------
Uses:
Lease liability payments (498) (502) (560)
Payments on perpetual hybrid bonds (148) (100) (55)
Dividends paid - BP shareholders (1,068) (1,077) (1,064)
- non-controlling interests (65) (66) (51)
Total capital expenditure* (2,929) (3,633) (3,798)
Net repurchase of shares relating to employee share
schemes (500) - -
Payments relating to transactions involving non-controlling
interests (5) - -
Currency translation differences relating to cash
and cash equivalents (125) (58) (58)
------------------------------------------------------------- ------- ------- -------
Cash outflow (5,338) (5,436) (5,586)
------------------------------------------------------------- ------- ------- -------
Cash used to meet net debt target - - 3,729
Surplus cash flow 4,089 2,993 1,687
------------------------------------------------------------- ------- ------- -------
(a) Other proceeds for the first quarter 2022 include $164
million of proceeds from the disposal of a loan note related to the
Alaska divestment. The cash was received in the fourth quarter
2021, was reported as a financing cash flow and was not included in
other proceeds at the time due to potential recourse from the
counterparty. The proceeds are being recognised as the potential
recourse reduces.
Reconciliation of customers & products RC profit before
interest and tax to underlying RC profit before interest and tax*
to adjusted EBITDA* by business
First Fourth First
quarter quarter quarter
$ million 2022 2021 2021
----------------------------------------------------------- ------- ------- -------
RC profit before interest and tax for customers &
products 1,981 (426) 934
Less: Adjusting items* gains (charges) (175) (1,037) 278
Underlying RC profit before interest and tax for customers
& products 2,156 611 656
By business:
customers - convenience & mobility 522 637 658
Castrol - included in customers 256 207 334
products - refining & trading 1,634 (26) (2)
Add back: Depreciation, depletion and amortization 717 754 745
By business:
customers - convenience & mobility 326 329 324
Castrol - included in customers 39 36 39
products - refining & trading 391 425 421
Adjusted EBITDA for customers & products 2,873 1,365 1,401
By business:
customers - convenience & mobility 848 966 982
Castrol - included in customers 295 243 373
products - refining & trading 2,025 399 419
------------------------------------------------------------ ------- ------- -------
Top of page 32
Realizations* and marker prices
First Fourth First
quarter quarter quarter
2022 2021 2021
-------------------------------------------- ------- ------- -------
Average realizations (a)
Liquids* ($/bbl)
US 70.34 65.25 45.21
Europe 104.41 80.49 61.72
Rest of World 88.84 74.19 57.48
BP Average 83.80 71.12 53.20
--------------------------------------------- ------- ------- -------
Natural gas ($/mcf)
US 3.90 4.59 3.45
Europe 33.77 32.45 6.89
Rest of World 7.88 6.94 3.94
BP Average 8.24 7.51 3.98
--------------------------------------------- ------- ------- -------
Total hydrocarbons* ($/boe)
US 52.17 51.09 36.91
Europe 134.62 118.97 55.34
Rest of World 62.38 52.93 36.06
BP Average 64.70 56.46 37.75
--------------------------------------------- ------- ------- -------
Average oil marker prices ($/bbl)
Brent 102.23 79.76 61.12
West Texas Intermediate 95.22 77.32 58.13
Western Canadian Select 79.90 59.71 46.12
Alaska North Slope 96.13 79.74 61.07
Mars 93.43 75.21 58.65
Urals (NWE - cif) 87.26 77.66 59.36
--------------------------------------------- ------- ------- -------
Average natural gas marker prices
Henry Hub gas price(b) ($/mmBtu) 4.96 5.84 2.71
UK Gas - National Balancing Point (p/therm) 232.84 226.24 49.82
--------------------------------------------- ------- ------- -------
(a) Based on sales of consolidated subsidiaries only - this
excludes equity-accounted entities.
(b) Henry Hub First of Month Index.
Exchange rates
First Fourth First
quarter quarter quarter
2022 2021 2021
------------------------------------- ------- ------- -------
$/GBP average rate for the period 1.34 1.35 1.38
$/GBP period-end rate 1.32 1.35 1.37
$/EUR average rate for the period 1.12 1.14 1.21
$/EUR period-end rate 1.12 1.13 1.17
$/AUD average rate for the period 0.72 0.73 0.77
$/AUD period-end rate 0.75 0.73 0.76
Rouble/$ average rate for the period 88.48 72.72 74.41
Rouble/$ period-end rate 82.59 74.66 76.09
-------------------------------------- ------- ------- -------
Top of page 33
Legal proceedings
For a full discussion of the group's material legal proceedings,
see pages 248-249 of bp Annual Report and Form 20-F 2021.
Glossary
Non-GAAP measures are provided for investors because they are
closely tracked by management to evaluate bp's operating
performance and to make financial, strategic and operating
decisions. Non-GAAP measures are sometimes referred to as
alternative performance measures.
Adjusted EBITDA is a non-GAAP measure presented for bp's
operating segments and is defined as replacement cost (RC) profit
before interest and tax, excluding net adjusting items*, adding
back depreciation, depletion and amortization and exploration
write-offs (net of adjusting items). Adjusted EBITDA by business is
a further analysis of adjusted EBITDA for the customers &
products businesses. bp believes it is helpful to disclose adjusted
EBITDA by operating segment and by business because it reflects how
the segments measure underlying business delivery. The nearest
equivalent measure on an IFRS basis for the segment is RC profit or
loss before interest and tax, which is bp's measure of profit or
loss that is required to be disclosed for each operating segment
under IFRS.
Adjusted EBITDA for the group is defined as profit or loss for
the period before finance costs and net finance expense relating to
pensions and other post-retirement benefits, adjusting for
inventory holding gains or losses before tax, adjusting items
before interest and tax, and adding back depreciation, depletion
and amortization (pre-tax) and exploration expenditure written-off
(net of adjusting items, pre-tax). The nearest equivalent measure
on an IFRS basis for the group is profit or loss for the
period.
We are unable to present reconciliations of forward-looking
information for adjusted EBITDA for the group, strategic themes or
transition growth businesses, because without unreasonable efforts,
we are unable to forecast accurately certain adjusting items
required to calculate a meaningful comparable GAAP forward-looking
financial measure. These items include inventory holding gains or
losses, adjusting items and exploration expenditure written off
that are difficult to predict in advance in order to include in a
GAAP estimate.
Adjusting items are items that bp discloses separately because
it considers such disclosures to be meaningful and relevant to
investors. They are items that management considers to be important
to period-on-period analysis of the group's results and are
disclosed in order to enable investors to better understand and
evaluate the group's reported financial performance. Adjusting
items include gains and losses on the sale of businesses and fixed
assets, impairments, environmental and other provisions,
restructuring, integration and rationalization costs, fair value
accounting effects, financial impacts relating to Rosneft for the
2022 financial reporting period and costs relating to the Gulf of
Mexico oil spill and other items. Adjusting items within
equity-accounted earnings are reported net of incremental income
tax reported by the equity-accounted entity. Adjusting items are
used as a reconciling adjustment to derive underlying RC profit or
loss and related underlying measures which are non-GAAP measures.
An analysis of adjusting items by segment and type is shown on page
29.
Bio-refinery is a facility that is dedicated to processing
biological materials (including waste oil and crop waste) to
produce biofuels such as bio-diesel and sustainable aviation fuel,
which may be blended to customer specifications with other
components such as hydrocarbons at co-located or adjacent terminals
and tanks.
Capital expenditure is total cash capital expenditure as stated
in the condensed group cash flow statement. Capital expenditure for
the operating segments and customers & products businesses is
presented on the same basis.
Cash balance point is defined as the implied Brent oil price for
the quarter that would cause the sum of operating cash flow
excluding Gulf of Mexico oil spill payments (assuming actual
refining marker margins and Henry Hub gas prices for the quarter)
and proceeds from loan repayments to equate to the sum of total
cash capital expenditure, lease liability payments, dividend paid,
and payments on perpetual hybrid bonds.
Consolidation adjustment - UPII is unrealized profit in
inventory arising on inter-segment transactions.
Developed renewables to final investment decision (FID) - Total
generating capacity for assets developed to FID by all entities
where bp has an equity share (proportionate to equity share). If
asset is subsequently sold bp will continue to record capacity as
developed to FID. If bp equity share increases developed capacity
to FID will increase proportionately to share increase for any
assets where bp held equity at the point of FID.
Divestment proceeds are disposal proceeds as per the condensed
group cash flow statement.
Effective tax rate (ETR) on replacement cost (RC) profit or loss
is a non-GAAP measure. The ETR on RC profit or loss is calculated
by dividing taxation on a RC basis by RC profit or loss before tax.
Taxation on a RC basis for the group is calculated as taxation as
stated on the group income statement adjusted for taxation on
inventory holding gains and losses. Information on RC profit or
loss is provided below. bp believes it is helpful to disclose the
ETR on RC profit or loss because this measure excludes the impact
of price changes on the replacement of inventories and allows for
more meaningful comparisons between reporting periods. Taxation on
a RC basis and ETR on RC profit or loss are non-GAAP measures. The
nearest equivalent measure on an IFRS basis is the ETR on profit or
loss for the period.
Electric vehicle charge points / EV charge points are defined as
the number of connectors on a charging device, operated by either
bp or a bp joint venture.
Top of page 34
Glossary (continued)
Fair value accounting effects are non-GAAP adjustments to our
IFRS profit (loss). They reflect the difference between the way bp
manages the economic exposure and internally measures performance
of certain activities and the way those activities are measured
under IFRS. Fair value accounting effects are included within
adjusting items. They relate to certain of the group's commodity,
interest rate and currency risk exposures as detailed below. Other
than as noted below, the fair value accounting effects described
are reported in both the gas & low carbon energy and customer
& products segments.
bp uses derivative instruments to manage the economic exposure
relating to inventories above normal operating requirements of
crude oil, natural gas and petroleum products. Under IFRS, these
inventories are recorded at historical cost. The related derivative
instruments, however, are required to be recorded at fair value
with gains and losses recognized in the income statement. This is
because hedge accounting is either not permitted or not followed,
principally due to the impracticality of effectiveness-testing
requirements. Therefore, measurement differences in relation to
recognition of gains and losses occur. Gains and losses on these
inventories, other than net realizable value provisions, are not
recognized until the commodity is sold in a subsequent accounting
period. Gains and losses on the related derivative commodity
contracts are recognized in the income statement, from the time the
derivative commodity contract is entered into, on a fair value
basis using forward prices consistent with the contract
maturity.
bp enters into physical commodity contracts to meet certain
business requirements, such as the purchase of crude for a refinery
or the sale of bp's gas production. Under IFRS these physical
contracts are treated as derivatives and are required to be fair
valued when they are managed as part of a larger portfolio of
similar transactions. Gains and losses arising are recognized in
the income statement from the time the derivative commodity
contract is entered into.
IFRS require that inventory held for trading is recorded at its
fair value using period-end spot prices, whereas any related
derivative commodity instruments are required to be recorded at
values based on forward prices consistent with the contract
maturity. Depending on market conditions, these forward prices can
be either higher or lower than spot prices, resulting in
measurement differences.
bp enters into contracts for pipelines and other transportation,
storage capacity, oil and gas processing, liquefied natural gas
(LNG) and certain gas and power contracts that, under IFRS, are
recorded on an accruals basis. These contracts are risk-managed
using a variety of derivative instruments that are fair valued
under IFRS. This results in measurement differences in relation to
recognition of gains and losses.
The way that bp manages the economic exposures described above,
and measures performance internally, differs from the way these
activities are measured under IFRS. bp calculates this difference
for consolidated entities by comparing the IFRS result with
management's internal measure of performance. Under management's
internal measure of performance the inventory, transportation and
capacity contracts in question are valued based on fair value using
relevant forward prices prevailing at the end of the period. The
fair values of derivative instruments used to risk manage certain
oil, gas, power and other contracts, are deferred to match with the
underlying exposure and the commodity contracts for business
requirements are accounted for on an accruals basis. We believe
that disclosing management's estimate of this difference provides
useful information for investors because it enables investors to
see the economic effect of these activities as a whole.
Fair value accounting effects also include changes in the fair
value of the near-term portions of LNG contracts that fall within
bp's risk management framework. LNG contracts are not considered
derivatives, because there is insufficient market liquidity, and
they are therefore accrual accounted under IFRS. However, oil and
natural gas derivative financial instruments (used to risk manage
the near-term portions of the LNG contracts) are fair valued under
IFRS. The fair value accounting effect, which is reported in the
gas and low carbon energy segment, reduces the measurement
differences between that of the derivative financial instruments
used to risk manage the LNG contracts and the measurement of the
LNG contracts themselves, which therefore gives a better
representation of performance in each period.
In addition, fair value accounting effects include changes in
the fair value of derivatives entered into by the group to manage
currency exposure and interest rate risks relating to hybrid bonds
to their respective first call periods. The hybrid bonds which were
issued on 17 June 2020 are classified as equity instruments and
were recorded in the balance sheet at that date at their USD
equivalent issued value. Under IFRS these equity instruments are
not remeasured from period to period, and do not qualify for
application of hedge accounting. The derivative instruments
relating to the hybrid bonds, however, are required to be recorded
at fair value with mark to market gains and losses recognized in
the income statement. Therefore, measurement differences in
relation to the recognition of gains and losses occur. The fair
value accounting effect, which is reported in the other businesses
& corporate segment, eliminates the fair value gains and losses
of these derivative financial instruments that are recognized in
the income statement. We believe that this gives a better
representation of performance, by more appropriately reflecting the
economic effect of these risk management activities, in each
period.
Top of page 35
Glossary (continued)
Gearing and net debt are non-GAAP measures. Net debt is
calculated as finance debt, as shown in the balance sheet, plus the
fair value of associated derivative financial instruments that are
used to hedge foreign currency exchange and interest rate risks
relating to finance debt, for which hedge accounting is applied,
less cash and cash equivalents. Net debt does not include accrued
interest, which is reported within other receivables and other
payables on the balance sheet and for which the associated cash
flows are presented as operating cash flows in the group cash flow
statement. Gearing is defined as the ratio of net debt to the total
of net debt plus total equity. bp believes these measures provide
useful information to investors. Net debt enables investors to see
the economic effect of finance debt, related hedges and cash and
cash equivalents in total. Gearing enables investors to see how
significant net debt is relative to total equity. The derivatives
are reported on the balance sheet within the headings 'Derivative
financial instruments'. The nearest equivalent GAAP measures on an
IFRS basis are finance debt and finance debt ratio. A
reconciliation of finance debt to net debt is provided on page
27.
We are unable to present reconciliations of forward-looking
information for net debt or gearing to finance debt and total
equity, because without unreasonable efforts, we are unable to
forecast accurately certain adjusting items required to present a
meaningful comparable GAAP forward-looking financial measure. These
items include fair value asset (liability) of hedges related to
finance debt and cash and cash equivalents, that are difficult to
predict in advance in order to include in a GAAP estimate.
Gearing including leases and net debt including leases are
non-GAAP measures. Net debt including leases is calculated as net
debt plus lease liabilities, less the net amount of partner
receivables and payables relating to leases entered into on behalf
of joint operations. Gearing including leases is defined as the
ratio of net debt including leases to the total of net debt
including leases plus total equity. bp believes these measures
provide useful information to investors as they enable investors to
understand the impact of the group's lease portfolio on net debt
and gearing. The nearest equivalent GAAP measures on an IFRS basis
are finance debt and finance debt ratio. A reconciliation of
finance debt to net debt including leases is provided on page
30.
Green hydrogen - Hydrogen produced by electrolysis of water
using renewable power.
Hydrocarbons - Liquids and natural gas. Natural gas is converted
to oil equivalent at 5.8 billion cubic feet = 1 million
barrels.
Inorganic capital expenditure is a subset of capital expenditure
on a cash basis and a non-GAAP measure. Inorganic capital
expenditure comprises consideration in business combinations and
certain other significant investments made by the group. It is
reported on a cash basis. bp believes that this measure provides
useful information as it allows investors to understand how bp's
management invests funds in projects which expand the group's
activities through acquisition. The nearest equivalent measure on
an IFRS basis is capital expenditure on a cash basis. Further
information and a reconciliation to GAAP information is provided on
page 28.
Installed renewables capacity is bp's share of capacity for
operating assets owned by entities where bp has an equity
share.
Inventory holding gains and losses are non-GAAP adjustments to
our IFRS profit (loss) and represent:
a. the difference between the cost of sales calculated using the
replacement cost of inventory and the cost of sales calculated on
the first-in first-out (FIFO) method after adjusting for any
changes in provisions where the net realizable value of the
inventory is lower than its cost. Under the FIFO method, which we
use for IFRS reporting of inventories other than for trading
inventories, the cost of inventory charged to the income statement
is based on its historical cost of purchase or manufacture, rather
than its replacement cost. In volatile energy markets, this can
have a significant distorting effect on reported income. The
amounts disclosed as inventory holding gains and losses represent
the difference between the charge to the income statement for
inventory on a FIFO basis (after adjusting for any related
movements in net realizable value provisions) and the charge that
would have arisen based on the replacement cost of inventory. For
this purpose, the replacement cost of inventory is calculated using
data from each operation's production and manufacturing system,
either on a monthly basis, or separately for each transaction where
the system allows this approach; and
b. an adjustment relating to certain trading inventories that
are not price risk managed which relate to a minimum inventory
volume that is required to be held to maintain underlying business
activities. This adjustment represents the movement in fair value
of the inventories due to prices, on a grade by grade basis, during
the period. This is calculated from each operation's inventory
management system on a monthly basis using the discrete monthly
movement in market prices for these inventories.
The amounts disclosed are not separately reflected in the
financial statements as a gain or loss. No adjustment is made in
respect of the cost of inventories held as part of a trading
position and certain other temporary inventory positions that are
price risk-managed. See Replacement cost (RC) profit or loss
definition below.
Liquids - Liquids comprises crude oil, condensate and natural
gas liquids. For the oil production & operations segment, it
also includes bitumen.
Major projects have a bp net investment of at least $250
million, or are considered to be of strategic importance to bp or
of a high degree of complexity.
Operating cash flow is net cash provided by (used in) operating
activities as stated in the condensed group cash flow
statement.
Top of page 36
Glossary (continued)
Organic capital expenditure is a non-GAAP measure. Organic
capital expenditure comprises capital expenditure on a cash basis
less inorganic capital expenditure. bp believes that this measure
provides useful information as it allows investors to understand
how bp's management invests funds in developing and maintaining the
group's assets. The nearest equivalent measure on an IFRS basis is
capital expenditure on a cash basis and a reconciliation to GAAP
information is provided on page 28.
We are unable to present reconciliations of forward-looking
information for organic capital expenditure to total cash capital
expenditure, because without unreasonable efforts, we are unable to
forecast accurately the adjusting item, inorganic capital
expenditure, that is difficult to predict in advance in order to
derive the nearest GAAP estimate.
Production-sharing agreement/contract (PSA/PSC) is an
arrangement through which an oil and gas company bears the risks
and costs of exploration, development and production. In return, if
exploration is successful, the oil company receives entitlement to
variable physical volumes of hydrocarbons, representing recovery of
the costs incurred and a stipulated share of the production
remaining after such cost recovery.
Realizations are the result of dividing revenue generated from
hydrocarbon sales, excluding revenue generated from purchases made
for resale and royalty volumes, by revenue generating hydrocarbon
production volumes. Revenue generating hydrocarbon production
reflects the bp share of production as adjusted for any production
which does not generate revenue. Adjustments may include losses due
to shrinkage, amounts consumed during processing, and contractual
or regulatory host committed volumes such as royalties. For the gas
& low carbon energy and oil production & operations
segments, realizations include transfers between businesses.
Refining availability represents Solomon Associates' operational
availability for bp-operated refineries, which is defined as the
percentage of the year that a unit is available for processing
after subtracting the annualized time lost due to turnaround
activity and all planned mechanical, process and regulatory
downtime.
The Refining marker margin (RMM) is the average of regional
indicator margins weighted for bp's crude refining capacity in each
region. Each regional marker margin is based on product yields and
a marker crude oil deemed appropriate for the region. The regional
indicator margins may not be representative of the margins achieved
by bp in any period because of bp's particular refinery
configurations and crude and product slate.
Renewables pipeline - Renewable projects satisfying the
following criteria until the point they can be considered developed
to final investment decision (FID): Site based projects that have
obtained land exclusivity rights, or for PPA based projects an
offer has been made to the counterparty, or for auction projects
pre-qualification criteria has been met, or for acquisition
projects post a binding offer being accepted.
Replacement cost (RC) profit or loss / RC profit or loss
attributable to bp shareholders reflects the replacement cost of
inventories sold in the period and is calculated as profit or loss
attributable to bp shareholders, adjusting for inventory holding
gains and losses (net of tax). RC profit or loss for the group is
not a recognized GAAP measure. bp believes this measure is useful
to illustrate to investors the fact that crude oil and product
prices can vary significantly from period to period and that the
impact on our reported result under IFRS can be significant.
Inventory holding gains and losses vary from period to period due
to changes in prices as well as changes in underlying inventory
levels. In order for investors to understand the operating
performance of the group excluding the impact of price changes on
the replacement of inventories, and to make comparisons of
operating performance between reporting periods, bp's management
believes it is helpful to disclose this measure. The nearest
equivalent measure on an IFRS basis is profit or loss attributable
to bp shareholders. A reconciliation to GAAP information is
provided on page 1. RC profit or loss before interest and tax is
bp's measure of profit or loss that is required to be disclosed for
each operating segment under IFRS.
Reported recordable injury frequency measures the number of
reported work-related employee and contractor incidents that result
in a fatality or injury per 200,000 hours worked. This represents
reported incidents occurring within bp's operational HSSE reporting
boundary. That boundary includes bp's own operated facilities and
certain other locations or situations. Reported incidents are
investigated throughout the year and as a result there may be
changes in previously reported incidents. Therefore comparative
movements are calculated against internal data reflecting the final
outcomes of such investigations, rather than the previously
reported comparative period, as this this represents a more up to
date reflection of the safety environment.
Retail sites include sites operated by dealers, jobbers,
franchisees or brand licensees or joint venture (JV) partners,
under the bp brand. These may move to and from the bp brand as
their fuel supply agreement or brand licence agreement expires and
are renegotiated in the normal course of business. Retail sites are
primarily branded bp, ARCO, Amoco, Aral and Thorntons, and also
includes sites in India through our Jio-bp JV.
Retail sites in growth markets are retail sites that are either
bp branded or co-branded with our partners in China, Mexico and
Indonesia and also include sites in India through our Jio-bp
JV.
Solomon availability - See Refining availability definition.
Strategic convenience sites are retail sites, within the bp
portfolio, which sell bp-branded vehicle energy and carry one of
the strategic convenience brands (e.g. M&S, Thorntons, Rewe to
Go). To be considered a strategic convenience brand the convenience
offer should have a demonstrable level of differentiation in the
market in which it operates. Strategic convenience site count
includes sites under a pilot phase, but exclude sites in growth
markets.
Top of page 37
Glossary (continued)
Surplus cash flow is a non-GAAP measure and refers to the net
surplus of sources of cash over uses of cash, after reaching the
$35 billion net debt target. Sources of cash include net cash
provided by operating activities, cash provided from investing
activities and cash receipts relating to transactions involving
non-controlling interests. Uses of cash include lease liability
payments, payments on perpetual hybrid bond, dividends paid, cash
capital expenditure, the cash cost of share buybacks to offset the
dilution from vesting of awards under employee share schemes, cash
payments relating to transactions involving non-controlling
interests and currency translation differences relating to cash and
cash equivalents as presented on the condensed group cash flow
statement .
For the first quarter of 2021, the sources of cash includes o
ther proceeds related to the proceeds from the disposal of a loan
note related to the Alaska divestment. The cash was received in the
fourth quarter 2021, was reported as a financing cash flow and was
not included in other proceeds at the time due to potential
recourse from the counterparty. The proceeds are being recognised
as the potential recourse reduces. See page 31 for the components
of our sources of cash and uses of cash.
Technical service contract (TSC) - Technical service contract is
an arrangement through which an oil and gas company bears the risks
and costs of exploration, development and production. In return,
the oil and gas company receives entitlement to variable physical
volumes of hydrocarbons, representing recovery of the costs
incurred and a profit margin which reflects incremental production
added to the oilfield.
Tier 1 and tier 2 process safety events - Tier 1 events are
losses of primary containment from a process of greatest
consequence - causing harm to a member of the workforce, damage to
equipment from a fire or explosion, a community impact or exceeding
defined quantities. Tier 2 events are those of lesser consequence.
These represent reported incidents occurring within bp's
operational HSSE reporting boundary. That boundary includes bp's
own operated facilities and certain other locations or situations.
Reported process safety events are investigated throughout the year
and as a result there may be changes in previously reported events.
Therefore comparative movements are calculated against internal
data reflecting the final outcomes of such investigations, rather
than the previously reported comparative period, as this this
represents a more up to date reflection of the safety
environment.
Underlying effective tax rate (ETR) is a non-GAAP measure. The
underlying ETR is calculated by dividing taxation on an underlying
replacement cost (RC) basis by underlying RC profit or loss before
tax. Taxation on an underlying RC basis for the group is calculated
as taxation as stated on the group income statement adjusted for
taxation on inventory holding gains and losses and total taxation
on adjusting items. Information on underlying RC profit or loss is
provided below. Taxation on an underlying RC basis presented for
the operating segments is calculated through an allocation of
taxation on an underlying RC basis to each segment. bp believes it
is helpful to disclose the underlying ETR because this measure may
help investors to understand and evaluate, in the same manner as
management, the underlying trends in bp's operational performance
on a comparable basis, period on period. Taxation on an underlying
RC basis and underlying ETR are non-GAAP measures. The nearest
equivalent measure on an IFRS basis is the ETR on profit or loss
for the period.
We are unable to present reconciliations of forward-looking
information for underlying ETR to ETR on profit or loss for the
period, because without unreasonable efforts, we are unable to
forecast accurately certain adjusting items required to present a
meaningful comparable GAAP forward-looking financial measure. These
items include the taxation on inventory holding gains and losses
and adjusting items, that are difficult to predict in advance in
order to include in a GAAP estimate.
Underlying production - 2022 underlying production, when
compared with 2021, is production after adjusting for acquisitions
and divestments, curtailments, and entitlement impacts in our
production-sharing agreements/contracts and technical service
contract.
Underlying RC profit or loss / underlying RC profit or loss
attributable to bp shareholders is a non-GAAP measure and is RC
profit or loss* (as defined on page 36) after excluding net
adjusting items and related taxation. See page 29 for additional
information on the adjusting items that are used to arrive at
underlying RC profit or loss in order to enable a full
understanding of the items and their financial impact.
Underlying RC profit or loss before interest and tax for the
operating segments or customers & products businesses is
calculated as RC profit or loss (as defined above) including profit
or loss attributable to non-controlling interests before interest
and tax for the operating segments and excluding net adjusting
items for the respective operating segment or business.
bp believes that underlying RC profit or loss is a useful
measure for investors because it is a measure closely tracked by
management to evaluate bp's operating performance and to make
financial, strategic and operating decisions and because it may
help investors to understand and evaluate, in the same manner as
management, the underlying trends in bp's operational performance
on a comparable basis, period on period, by adjusting for the
effects of these adjusting items. The nearest equivalent measure on
an IFRS basis for the group is profit or loss attributable to bp
shareholders. The nearest equivalent measure on an IFRS basis for
segments and businesses is RC profit or loss before interest and
taxation. A reconciliation to GAAP information is provided on page
1 for the group and pages 6-15 for the segments.
Underlying RC profit or loss per share is a non-GAAP measure.
Earnings per share is defined in Note 7. Underlying RC profit or
loss per ordinary share is calculated using the same denominator as
earnings per share as defined in the consolidated financial
statements. The numerator used is underlying RC profit or loss
attributable to bp shareholders rather than profit or loss
attributable to bp shareholders. Underlying RC profit or loss per
ADS is calculated as outlined above for underlying RC profit or
loss per share except the denominator is adjusted to reflect one
ADS equivalent to six ordinary shares. bp believes it is helpful to
disclose the underlying RC profit or loss per ordinary share and
per ADS because these measures may help investors to understand and
evaluate, in the same manner as management, the underlying trends
in bp's operational performance on a comparable basis, period on
period. The nearest equivalent measure on an IFRS basis is basic
earnings per share based on profit or loss for the period
attributable to bp shareholders.
Top of page 38
Glossary (continued)
upstream includes oil and natural gas field development and
production within the gas & low carbon energy and oil
production & operations segments.
upstream/hydrocarbon plant reliability (bp-operated) is
calculated taking 100% less the ratio of total unplanned plant
deferrals divided by installed production capacity, excluding
non-operated assets and bpx energy. Unplanned plant deferrals are
associated with the topside plant and where applicable the subsea
equipment (excluding wells and reservoir). Unplanned plant
deferrals include breakdowns, which does not include Gulf of Mexico
weather related downtime.
upstream unit production cost is calculated as production cost
divided by units of production. Production cost does not include ad
valorem and severance taxes. Units of production are barrels for
liquids and thousands of cubic feet for gas. Amounts disclosed are
for bp subsidiaries only and do not include bp's share of
equity-accounted entities.
Working capital is movements in inventories and other current
and non-current assets and liabilities as reported in the condensed
group cash flow statement.
Change in working capital adjusted for inventory holding
gains/losses and fair value accounting effects is a non-GAAP
measure. It is calculated by adjusting for inventory holding
gains/losses reported in the period and from the second quarter
onwards, it is also adjusted for fair value accounting effects
reported within adjusting items for the period. This represents
what would have been reported as movements in inventories and other
current and non-current assets and liabilities, if the starting
point in determining net cash provided by operating activities had
been underlying replacement cost profit rather than profit for the
period. The nearest equivalent measure on an IFRS basis for this is
movements in inventories and other current and non-current assets
and liabilities. In the context of describing working capital after
adjusting for Gulf of Mexico oil spill outflows, change in working
capital also excludes movements in inventories and other current
and non-current assets and liabilities relating to the Gulf of
Mexico oil spill.
bp utilizes various arrangements in order to manage its working
capital including discounting of receivables and, in the supply and
trading business, the active management of supplier payment terms,
inventory and collateral.
Trade marks
Trade marks of the bp group appear throughout this announcement.
They include:
bp , Amoco, Aral, Castrol ON and Thorntons
Top of page 39
Cautionary statement
In order to utilize the 'safe harbor' provisions of the United
States Private Securities Litigation Reform Act of 1995 (the
'PSLRA') and the general doctrine of cautionary statements, bp is
providing the following cautionary statement:
The discussion in this results announcement contains certain
forecasts, projections and forward-looking statements - that is,
statements related to future, not past events and circumstances -
with respect to the financial condition, results of operations and
businesses of bp and certain of the plans and objectives of bp with
respect to these items. These statements may generally, but not
always, be identified by the use of words such as 'will',
'expects', 'is expected to', 'aims', 'should', 'may', 'objective',
'is likely to', 'intends', 'believes', 'anticipates', 'plans', 'we
see' or similar expressions.
In particular, the following, among other statements, are all
forward looking in nature: expectations regarding the COVID-19
pandemic and the conflict in Ukraine, including the impacts and
consequences on economic growth, demand, and bp's operations and
financial performance; plans, expectations and assumptions
regarding oil and gas demand, supply or prices, the timing of
production of reserves, storage levels and decision making by
OPEC+; expectations regarding reported and underlying production
and related major project ramp-up, capital investments, divestment
and maintenance activity; expectations regarding refining margins,
refinery utilization rates and product demand; expectations
regarding bp's future financial performance and cash flows;
expectations regarding future hydrocarbon production and project
ramp-up; expectations with regards to bp's transformation to an
IEC; expectations regarding price assumptions used in accounting
estimates; bp's plans and expectations regarding the amount and
timing of share buybacks and quarterly dividends; expectations
regarding the amount of full-year dilution from the vesting of
awards under employee share schemes in 2022; plans and expectations
regarding bp's credit rating, including in respect of maintaining a
strong investment grade credit rating; plans and expectations
regarding the allocation of surplus cash flow to share buybacks and
strengthening the balance sheet; plans and expectations regarding
bp's exit of its shareholding in Rosneft and other investments in
Russia;plans and expectations with respect to the total
depreciation, depletion and amortization and business and corporate
underlying annual charge for 2022; plans and expectations regarding
investments in the UK, including in charging infrastructure and
public charge points; plans and expectations regarding debt, net
debt, and bp's intentions to strengthen the balance sheet; plans
and expectations regarding the divestment programme, including the
amount and timing of proceeds; plans and expectations regarding
bp's renewable energy and alternative energy businesses;
expectations regarding the underlying effective tax rate for 2022;
expectations regarding the timing and amount of future payments
relating to the Gulf of Mexico oil spill; plans and expectations
regarding capital expenditure, including that capital expenditure
will be within a range of $14-15 billion in 2022; expectations
regarding adjusted EBITDA for resilient hydrocarbons and the group;
and plans and expectations regarding projects joint ventures and
other partnerships and agreements, including partnerships and other
collaborations with Eni, Nuseed, Uber, Korea Gas Corporation, EnBW,
Marubeni, Aberdeen City Council, HyCC, DHL Express, BYD, Tesco,
Shell and AENA, as well as plans and expectations regarding the
Herschel Expansion project in the Gulf of Mexico, production of
sustainable aviation fuel at the Lingen refinery, the Gas Natural
Acu power plant in Brazil, the sale of bp's retail assets in
Switzerland to Oel Pool AG, bp's stake in Green Biofuels Ltd., the
completion of the acquisition of the oil and gas business of Lundin
Energy, the development of EV charge points and the completion of
the establishment of bp's Basra Energy Company joint venture with
PetroChina.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that will or may occur in the future and are outside
the control of bp.
Actual results or outcomes, may differ materially from those
expressed in such statements, depending on a variety of factors,
including: the extent and duration of the impact of current market
conditions including the volatility of oil prices, the effects of
bp's plan to exit its shareholding in Rosneft and other investments
in Russia, the impact of COVID-19, overall global economic and
business conditions impacting bp's business and demand for bp's
products as well as the specific factors identified in the
discussions accompanying such forward-looking statements; changes
in consumer preferences and societal expectations; the pace of
development and adoption of alternative energy solutions;
developments in policy, law, regulation, technology and markets,
including societal and investor sentiment related to the issue of
climate change; the receipt of relevant third party and/or
regulatory approvals; the timing and level of maintenance and/or
turnaround activity; the timing and volume of refinery additions
and outages; the timing of bringing new fields onstream; the
timing, quantum and nature of certain acquisitions and divestments;
future levels of industry product supply, demand and pricing,
including supply growth in North America and continued base oil and
additive supply shortages; OPEC+ quota restrictions; PSA and TSC
effects; operational and safety problems; potential lapses in
product quality; economic and financial market conditions generally
or in various countries and regions; political stability and
economic growth in relevant areas of the world; changes in laws and
governmental regulations and policies, including related to climate
change; changes in social attitudes and customer preferences;
regulatory or legal actions including the types of enforcement
action pursued and the nature of remedies sought or imposed; the
actions of prosecutors, regulatory authorities and courts; delays
in the processes for resolving claims; amounts ultimately payable
and timing of payments relating to the Gulf of Mexico oil spill;
exchange rate fluctuations; development and use of new technology;
recruitment and retention of a skilled workforce; the success or
otherwise of partnering; the actions of competitors, trading
partners, contractors, subcontractors, creditors, rating agencies
and others; bp's access to future credit resources; business
disruption and crisis management; the impact on bp's reputation of
ethical misconduct and non-compliance with regulatory obligations;
trading losses; major uninsured losses; the possibility that
international sanctions or other steps taken by governmental
authorities or any other relevant persons may impact Rosneft's
business or outlook, bp's ability to sell its interests in Rosneft,
or the price for which bp could sell such interests; the
possibility that actions of any competent authorities or any other
relevant persons may limit bp's ability to sell its interests in
Rosneft, or the price for which it could sell such interests;; the
actions of contractors; natural disasters and adverse weather
conditions; changes in public expectations and other changes to
business conditions; wars and acts of terrorism; cyber-attacks or
sabotage; and other factors discussed elsewhere in this report, as
well those factors discussed under "Risk factors" in bp's Annual
Report and Form 20-F 2021 as filed with the US Securities and
Exchange Commission.
Top of page 40
Contacts
London Houston
Press Office David Nicholas Megan Baldino
+44 (0) 7831 095541 +1 907 529 9029
Investor Relations Craig Marshall Graham Collins
bp.com/investors +44 (0) 203 401 5592 +1 832 753 5116
BP p.l.c.'s LEI Code 213800LH1BZH3D16G760
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