BP p.l.c.

Welcome to the BP Presentation to the Financial Community webcast and conference call. I now hand over to Craig Marshall, Head of Investor Relations.

Good morning and welcome to BP's third quarter 2020 financial results. I'm Craig Marshall, Senior Vice President, Investor Relations, and I'm joined here today by Bernard Looney, Chief Executive Officer, and Murray Auchincloss, Chief Financial Officer. In a moment, Murray will take you through the third quarter financial results. before Bernard outlines the performance of our businesses as we continue to progress the transformation of BP. There will then be time to take your questions at the end. Before I hand to Murray, let me first 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 Murray.

Thanks, Craig, and welcome, everyone. So let's begin with the macro environment. After a sharp contraction in the first half of the year, there have been some early signs of global economic recovery as countries moved to more regional or localized restrictions on movement. and governments continue to offer monetary and fiscal policy stimulus. Reflecting this, Brent averaged $43 in the third quarter, a 45% increase versus the second quarter. Gas prices were also stronger. Henry Hub averaged $2, driven by strong demand in the power sector and a higher level of U.S. LNG exports. NBP and JKM gas prices also improved quarter on quarter. However, refining margins remained weak. with an RMM of $6.20, similar to the level seen in the second quarter, reflecting lower demand due to COVID-19 and excess refining capacity. Looking ahead, the gradual recovery in oil demand seen since the spring looks set to continue, led by strengthening demand in Asia. And while the current concerns around rising cases of COVID-19 across Europe and North America is creating some uncertainty, the IEA continues to estimate an increase of around 6 million barrels a day of demand in 2021 as economies continue to open up. The OPEC Plus production cuts have played a major role in stabilizing the market, and we are already seeing a reduction in crude and product inventories. Inventories are likely to draw through next year, although the pace at which inventories normalize will depend on the strength of economic recovery and the degree of continued OPEC Plus compliance. On gas, U.S. gas supply is expected to continue on a declining trend in 2021, largely due to a drop in associated gas production. Tightening gas balances have caused the prompt price to rise to $2.80 and futures curves for Henry Hub now average above $3 for 2021. This should provide some support to pricing in Europe and Asia until more gas comes to the market. Finally, the refining margin outlook remains challenging. given the record high inventory levels and the leveling off and in demand recovery for gasoline and jet fuel due to COVID-19. It is likely to remain so until we see a recovery in demand or further reductions in refinery runs. Looking at BP's underlying results, we reported a third quarter underlying replacement cost profit of $100 million, compared to a loss of $6.7 billion in the second quarter. Compared to the second quarter, this reflects the absence of significant exploration write-offs, higher liquids realizations, and improved marketing demand. This was partly offset by a significantly lower oil trading contribution. Compared to a year ago, the result reflects lower liquids and gas realizations, lower refining margins, and a lower Rosneft contribution. This was partly offset by lower DDNA following the impairments taken in the second quarter of this year. The third quarter dividend, payable in the fourth quarter, remains unchanged at 5.25 cents per ordinary share. Turning to cash flow and our balance sheet. Reflecting the adjustment to our distribution policy communicated with second quarter results, it's worth focusing on the third quarter. In the third quarter, BP generated a cash inflow of $600 million despite the ongoing impact of COVID-19, hurricane outages of high margin production in the Gulf of Mexico, and cash outflows for acquisitions. As a result, the end of the quarter net debt declined to $40.4 billion. Supported by our actions on cost and capital discipline, in the third quarter, our cash balance point was around $42 a barrel, including acquisitions. This was in line with the average Brent oil price in the quarter, despite weak refining margins, lower gas prices, and reduced product demand. Net debt was $11 billion lower than at the end of the first quarter, including the proceeds of hybrid bond issuance during the second quarter. This represents substantial progress towards our objective of deleveraging to $35 billion. In summary, we have a disciplined capital allocation framework which has the dividend as the first priority. We are deleveraging to support a resilient balance sheet and a strong investment-grade credit rating. We remain focused on operational delivery, cost and capital discipline, and progressing our divestment program. And Bernard will talk more about this in a moment. Turning lastly to the outlook and our guidance. Looking at the fourth quarter, in the upstream, we expect reported production to be slightly lower than the third quarter due to maintenance activity. While in the downstream, we expect continued pressure on industry refining margins and for marketing volumes to remain impacted by COVID-19 restrictions. Looking at our full-year guidance, we continue to expect upstream production to be lower than 2019 and organic capital expenditure to be around $12 billion. We now expect 2020 full-year D&D and A to be around 15 percent lower than 2019, reflecting the impact of impairments taken in the second quarter. We expect the post-tax charge for the Gulf of Mexico oil spill payments to be around $1.5 billion in 2020 and the other business and corporate underlying quarterly charge is expected to be around $350 million. Consistent with the reInventBP program, we expect to incur people-related costs, including redundancy payments, of around $1.4 billion over the next one to two years, with the majority in 2020. Finally, as a reminder, we will start reporting under our new organizational structure on a post-tax segmental basis effective January 1, 2021. We intend to provide pro forma numbers to assist in modeling the new organization shortly after our fourth quarter results and well ahead of our reporting our first quarter on this new basis. I will now hand over to Bernard, who's going to speak more about our operational and financial progress.