BP p.l.c.

Good morning, everyone, and welcome to BP's first quarter results presentation for 2020. Similar, I'm sure, to many of you listening, we are presenting our results today while working from home. While this is a departure from the usual process, it is something we are all getting used to, and our IT team have been doing a fantastic job to provide a resilient system to support these types of events, both for internal and external purposes. Turning then to the presentation. I am joined remotely today by Bernard Looney, Group Chief Executive, Brian Gilvary, Chief Financial Officer, and Murray Auchincloss, Upstream Chief Financial Officer and CFO Designate. Let me then draw your attention to our cautionary statement. During today's presentation, we will make forward-looking statements that refer to our estimates, plans and expectations. Actual results and outcomes could differ materially due to factors we note on this slide and in our UK and SEC filings. Please refer to our annual report, stock exchange announcement and SEC filings for more details. These documents are available on our website. I'll now hand over to Bernard.

Thanks, Greg, and good morning, everyone. I hope you and your families are keeping safe and well, and thank you for joining our call. We are in a very different world today than any one of us would have imagined just a few weeks ago. The coronavirus pandemic has gripped our world. People are losing their loved ones before their time. Many more are afraid for their families, for their finances, their livelihoods, for their futures. And the question I get asked often, will life ever go back to normal? Alongside the physical and mental health impacts is the economic impact. The pandemic is having a severe impact on global economic activity, and that has consequently had a major impact on energy markets. With this backdrop, companies like BP are doing what we can to help. Not because it is expected of us, and it is, but because we want to, our teams want to, we want to make a difference. Since the pandemic began, our focus has been on three clear priorities. First, protecting the health of our people. Second, supporting our communities. And third, strengthening our finances. It is a simple frame that helps us balance complex and competing demands between keeping our people safe and running the business, helping society in a time of real need, and safeguarding the company for our shareholders. and it works well for us. We think of it as performing with purpose, and I think you will see this coming through in our results today. In a moment, Brian will look back on our performance over the first quarter, and then Murray will take you through the steps we are taking to build resilience to the new environment, including the actions we are taking to adapt our financial framework. But first, I'd like to give you an overview of the three priorities and our response to the pandemic. First and foremost, I want to say how much I am in awe of what our people are doing. Our frontline staff are making real sacrifices every day out in the field, are running our retail network, and they are getting brilliant support from everyone working from home, dealing with extra demands and all the complications that go with that. Thanks to their courage and resilience, we have had minimal disruption to our day-to-day operations. We are focused on maintaining reliable operations, keeping BP safe and keeping our people safe, safe physically and safe mentally, recognizing this pandemic is as much a mental challenge as a physical challenge. We may not all be infected, but we are all affected by it. Across BP, we are in action. In our operations, we have new protocols for people going offshore and are taking a range of measures to keep our work environment safe, like making more space for our people to carry out their activities. And we continue to adapt those measures as needed as the environment changes. At our retail sites, we are installing screens and are providing protective equipment for staff. We are also helping customers to observe social distancing and boosting cleaning and sanitizing regimes. Worldwide, we are ramping up our use of digital resources and agile ways of working so that our global workforce stays fully connected. And we have been enhancing psychological support for our employees because they are dealing with stressful demands. This pandemic is causing anxiety and job security is going to be a major concern. With that in mind, we have committed for three months to no BP employee being laid off so that we can all remain focused on what's most important during this immediate difficult period. Across BP, there has also been a huge desire to support the communities where our people live and work. The BP leadership team has been facilitating this so we can support in every way possible, diverting resources and expertise, freeing up time for our people to volunteer, and providing financial support to organizations at the forefront of the fight against the virus. Examples include providing free or discounted fuel from our retail sites for emergency services and frontline personnel in many countries, as well as offering discounted or free food and beverages, making our supercomputer in Houston available to support the pandemic research being conducted by a White House-led coalition, as well as the expertise at our Biosciences Centre in San Diego. Committing significant donations to the COVID-19 Solidarity Response Fund and MIND, the mental health charity. Helga Lund and I both believe that this is a mental health challenge as much as a physical health threat. And we are both donating 20% of our salaries for the rest of this year to mental health charities. We are all in this together. I am confident that by supporting each other collectively as a society, we will make it through this crisis and rebuild better and stronger. These actions in no way compromise our long-term commitment to shareholders. If anything, I believe they strengthen it. And we are hugely grateful for the support we have been receiving. At the same time, we are doing everything we can to strengthen our finances. Our underlying business has been performing well, but it has been a tough first quarter due to the challenging macro environment, which included impacts to our results through quarter end as a result of lower prices, lower demand for our products, and foreign exchange effects. And in the near term, things are not getting any easier given the demand destruction we are seeing which recently even led to negative pricing for WTI oil, something never seen before. It is a so-called perfect storm, but we are calling on our vast experience of navigating through difficult circumstances. We have a clear plan, we are executing it, and we're working from a strong foundation. Our operations are performing well, we are delivering on the strategy we laid out in 2017 and on track to reduce our cash balance point in 2021. To further strengthen this, we announced earlier this month a series of actions to strengthen our finances. These are underpinned by four near-term objectives. Reinforce our liquidity position, drive our cash balance point lower, strengthen our balance sheet, and enable the energy transition. On the cash balance point objective, through the actions we are taking, we now expect to drive the cash balance point in 2021 down further to less than $35 per barrel Brent, which is below our previous guidance and also assumes a lower refining margin and gas price. Together, these four objectives support our continued commitment to our investor proposition of sustainably growing free cash flow and distributions to shareholders over the long term. The board reviews the dividend every quarter, taking account of current circumstances and the outlook at the time, and has been meeting weekly given the current exceptional events. Given the underlying performance of the business in the first quarter and the actions we are taking, we today announced a dividend of 10.5 cents per ordinary share for the first quarter. Murray will update you further on the action we are taking and how we are adapting our financial framework over the near term. Considering everything going on, some have understandably questioned our commitment to our ambition and to reinventing BP. On the 12th of February, we talked about our new purpose to reimagine energy for people and our planet. We shared our new ambition to be net zero by 2050 or sooner and to help the world get to net zero. And we set out plans for reinventing BP to be more focused and more integrated. We talked about being leaner, faster moving, lower carbon. Those are all qualities we need in the crisis today. as well as the qualities we need when we come out the other side of it. I would like to think we will be helping society build back to be more resilient and sustainable. And to do that, we have to be a strong company financially, one that delivers value over the long term for our investors. As a leadership team, we believe it is more important than ever that we keep to our plans. We are still working towards sharing more detail on all of this at our Capital Markets Day in mid-September. I hope we can do that in person, but if not, we will do it like this virtually if we need to. For now, though, let me hand you over to Brian for what is his last time on the results call.

Thanks, Bernard, and good morning, everyone. Turning firstly to the environment where we have seen significant volatility, Oil markets were initially impacted in January as we started to see the coronavirus pandemic impacting commodity demand in Asia, notably in China. This situation was further compounded on the supply side following the fallout from the OPEC plus and Russia production discussions in early March, and has since dramatically deteriorated with the COVID-19 driven collapse in global demand. The impact on the global economy is severe. with the IMF now anticipating a 3% contraction in economic activity this year. This compares with a contraction of 0.1% in 2009 following the financial crisis. This economic backdrop, coupled with pre-existing supply and demand factors, has resulted in the exceptionally challenged commodity environment we see today. In March, Brent and BP's refining market margin touched levels not seen for well over a decade. while Henry Hub gas hit multi-year lows. The pandemic has sharply reduced product demand, notably in the mobility sector. Flight cancellations have spiked, and compared with a year ago, traffic congestion has fallen by 60% on average across urban areas. Together, these factors have contributed to sharp falls in refining margins and utilization. The resulting reduction in demand for crude oil and products has begun to put severe pressure on storage and logistics. The effect on prices has been substantial and has promoted volatility such as the extraordinary negative prices seen in the May WTI contract expiry last week. In April, OPEC and its partners agreed to significant supply cuts, which will help reduce the imbalance. but is unlikely to prevent material supply shut-ins by producers in the near term, some of which may be difficult to reverse. Gas markets were challenged before the pandemic following significant growth in supply over the last couple of years. The effects of the pandemic have compounded this, further lowering LNG demand and bringing liquefaction margins below operating costs in the United States. Looking forward, there remains an exceptional level of uncertainty regarding the near-term outlook for prices and product demand. There is the risk of more sustained consequences depending on the efforts of governments and the public and private sector to manage the health, economic and financial stability effects of the pandemic. Given so many unknowns, our priority is to remain resilient to the near-term uncertainty and position BP for the longer term. Moving to our results. Despite the challenging environment, our underlying businesses performed well during the first quarter. Towards quarter end, we saw the impact of demand and price declines, with our financial results impacted by period-end volatility in commodity prices and foreign exchange rates, as well as non-operating impermanence and losses on a sale of around $1.1 billion. BP's first quarter underlying replacement cost profit was $800 million, compared to $2.4 billion a year ago, and $2.6 billion in the fourth quarter of 2019. Compared to the fourth quarter, the result reflects lower oil and gas realizations, a higher effective tax rate, and a lower estimated Rosneft contribution. It also includes growing demand destruction in the downstream. The BNC result was also impacted by $200 million of non-cash underlying foreign exchange effects, including foreign exchange translation impacts of finance debt in the BP Bungi Bioenergia joint venture. Compared to a year ago, the result reflects lower oil and gas realizations, a lower estimated Rosneft contribution, a lower contribution from oil trading, and the demand destruction in the downstream. The underlying effective tax rate in the first quarter increased significantly to 55%, reflecting charges for the reassessment of deferred tax assets. The first quarter dividend payable in the second quarter remains unchanged at 10.5 cents per ordinary share. Turning to cash flow and our sources and uses of cash. Excluding Gulf of Mexico oil spill related outgoings, BP's first quarter underlying operating cash flow was $1.2 billion, which reflected a working capital build of $3.7 billion. The working capital build reflects an increase in unsold product balances in the downstream and net receivable imbalances in our supply and trading businesses, the majority of which we expect to reverse during the course of this year. Organic capital expenditure was $3.5 billion in the first quarter. Turning to inorganic cash flows, in the first quarter, divestment and other proceeds totaled $700 million, and we made post-tax Gulf of Mexico payments of $300 million. Inorganic capital expenditure was $300 million. We also completed our share buyback program to offset script dividends, buying back 120 million ordinary shares in January at a cost of $800 million. At the end of the first quarter, BP's gearing rose to 36%, largely due to the impact of the working capital build on net debt and foreign exchange impacts on equity. Adjusting for these factors, gearing would have been around 33%. Finally, on a personal note, this is my final set of quarterly results before I retire from BP after 34 years with the company and the best part of a decade as CFO. That last decade has seen our company navigate through some extraordinarily challenging events, none more so than the one we are dealing with today, which is unprecedented in our lifetime. That said, the strength of BP through times of adversity and the experience of the team under Bernard's leadership gives me huge confidence the organization is well positioned to respond. We have a strong foundation and we are taking decisive action to improve the resilience of our financial frame. Murray and I have worked together for many years and he has been leading this work to reposition the company. It's been an absolute privilege for me to serve the company, our people and our shareholders. And with that, I would like to hand over to Murray to outline the actions we are taking to position the company for the future.