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, everyone, and welcome to BP's fourth quarter and full year 2020 results presentation. I'm Craig Marshall, Senior Vice President, Investor Relations, and I'm joined today by BP's Chief Executive Officer, Bernard Looney, and our Chief Financial Officer, Murray Auchincloss. Before we begin today's presentation, 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 Bernard.

Thanks, Greg. And hello. And I hope everyone is managing to stay safe and well. And my best wishes go out to all of you and your families. I think it's fair to say that we are reporting on a tough quarter at the end of a tough year for everyone. A year in many ways, unlike any we've ever had. The COVID pandemic has been first a human tragedy. It's taken lives and challenged our mental health. It has also impacted the global economy significantly, and we've seen the impact in our sector, where road and air travel are down significantly as our demand for products and commodity prices. But looking forward, as we must do, I'm optimistic, particularly given the vaccines, but also because of the actions that we have taken across the company. Before we discuss that future, let me take a moment to reflect on 2020, It was a pivotal year for BP. We set a new direction, launched a net zero ambition, introduced a new strategy to transition from an international oil company to an integrated energy company, and started to execute on it on multiple fronts, including entering offshore wind in the United States. Began reinventing BP, reshaping it to support the delivery of our strategy. And through all of this, we focused on performance, Our operational teams have kept the energy flowing with fewer injuries and fewer safety incidents compared to 2019. And that levels of efficiency and reliability that are, I think, remarkable given the additional challenges. We have brought four major oil and gas projects online and seen the completion of a three and a half thousand kilometer gas supply pipeline. And we have strengthened our finances, taking out costs, and closing some major divestments. This is great delivery by our team, all the more so given the year that we've just had. And as always, we have more to do. We'll update you on that today and also address some of the big questions we've been asked since our Capital Markets Day in September. In a minute, Murray will take you through our latest results and the financial frame. But first, let me recap on some of the key areas of progress. Turning firstly to our performance in 2020, starting with safety, as we always do, it's our core value and it's at the heart of performance across BP. We had fewer tier one and tier two process safety events compared with 2019 and fewer people injured at work, an achievement we are proud of, but there is always more to do. And it is not just about having fewer incidents, but also supporting the welfare of our people, particularly at such a difficult time. Later this quarter, we will release our 2020 sustainability report, and we expect to report a decrease in our scope one and two greenhouse gas emissions. We also expect a reduction in the estimated scope three greenhouse gas emissions from the carbon in our upstream production, reflecting our strategy to high grade and focus our hydrocarbons business, turning to our financial performance. For the full year, we delivered a $5.7 billion underlying replacement cost loss with underlying operating cash flow of $13.8 billion. The result reflects lower oil and gas prices, significant non-cash exploration write-offs taken in the second quarter, resulting from a review of our long-term strategic plans and lower refining margins and depressed demand due to the pandemic. During the year, we took a series of decisive actions to strengthen our finances and create a strong foundation from which to advance our strategy. In April, we outlined measures to support our cash flow, resulting in a 28% reduction in total capital expenditure and a 12% reduction in cash costs. In June, we revised our long-term price assumptions. Later that month, we issued our first hybrid bond, We received $6.6 billion of divestment and other proceeds during the year. And as part of our new financial frame, we introduced a new distribution policy, including a reset dividend. As a result of these actions, at the end of the year, our net debt reduced to $38.9 billion, and we remain confident in reducing this further to our target of $35 billion. And Murray will talk about this more shortly. Turning now to our operational and strategic delivery, where we continue to focus on performing while transforming. I'd like to draw out a few examples that I think really highlight the progress we have made. Starting with resilient and focused hydrocarbons, where we delivered four major projects in the year. Since 2016, we have brought 28 major projects online, delivered on average, on schedule and under budget. On Raven, wells are online and we are in the live commissioning phase. Once ramped up, major project capacity is expected to approach 900,000 barrels of oil equivalent a day, with four more projects scheduled to start up in 2021. On the 31st of December, First gas flowed from the Chactonese field in the Caspian Sea through the Southern Gas Corridor Pipeline to customers in Europe. This project was delivered ahead of schedule and 25% under budget, an enormous achievement for one of the most complex energy projects in the world. Responding to the environment in the upstream, we delivered 20% lower capital spending than in 2019 with a continued focus on capital efficiency. An example is our Mad Dog 2 project where we completed six wells using 218 fewer rig days and delivered just over $280 million of savings compared to the sanction case. On Mad Dog Phase 2, sale away of the Argos FPU from the Samsung yard in Korea is imminent, an important milestone for a key project. And with all pre-first oil wells drilled, This further underpins our confidence in delivery. We have also taken steps to focus and high-grade our portfolio that create value for BP, completing the divestment of our Alaska and petrochemicals businesses, both of which did not compete for capital inside our portfolio. Taking the decision to convert our Kwinana refinery in Australia to an import terminal as we focus our portfolio on top quartile assets, And just yesterday, we announced a divestment of a 20% stake in Oman's Block 61 for a total consideration of $2.6 billion, while retaining a 40% interest and operatorship. In convenience and mobility, we continue to make strategic progress, unlocking access to a key growth market with GOBP, our Indian mobility joint venture with Reliance, growing the number of EV charging points to over 10,000, now with more than 1,400 in China through our joint venture with Didi, adding around 300 strategic convenience retail sites and increasing our convenience gross margin by 6%. In low carbon, effective last week, we completed the formation of a strategic partnership with Equinor to pursue offshore wind opportunities in the United States. The partnership initially intends to develop 4.4 gigawatts gross of offshore wind power across four projects, and we've already made great progress. Last month, two projects were selected to provide New York State with power earlier than expected, and subject to contract means three of four projects will have secured offtake. LightSource BP continues to grow. It developed 1.4 gigawatts gross to final investment decision, or FID, in the year. It also added around 6 gigawatts gross to its pipeline. And elsewhere, we are pursuing opportunities to partner with corporates, cities, and industries looking to decarbonize. We have announced partnerships with Microsoft and Amazon and with the cities of Aberdeen and Houston. And last week, we announced our first decarbonisation strategic partnership in the aviation sector with Qantas. Together, we will seek to reduce carbon emissions and contribute to the development of a sustainable aviation fuel industry in Australia. These examples highlight the real value we place on partnerships. Building strong and enduring relationships with partners around the world is part of our heritage and integral to the success of our strategy. By working together with partners who bring complementary skills, we can accelerate our low carbon transition. Let me now hand over to Murray to take you through our results and financial frame. Thanks, Bernard. Good morning, everyone.

Turning first to the environment in 2020, without a doubt, a challenging year. Oil demand fell by around 9 million barrels a day. Production cuts from OPEC Plus helped slow the buildup of inventories and cushion crude oil prices. which averaged $42 in 2020, 35% lower than 2019. Refining margins were extremely weak, with BP's RMM averaging $6.70 in the year, compared with $13.20 in 2019. Gas demand fell by an estimated 2.5% globally in 2020. All regional gas prices dropped, notably in the second quarter when JKM and NBP prices fell close to Henry Hub levels. discouraging US LNG exports. Looking ahead, the oil price has ridden steadily since the end of October, supported by vaccine rollout programs and continued supply management by OPEC+. We expect prices to remain supported by active supply management and improving demand as we see the expected benefits of the vaccination rollout and further virus control measures. In gas, Tightening LNG markets at the end of the year have supported a strong recovery of NBP and JKM prices. U.S. gas markets are likely to benefit from lower production and a recovery in the international LNG demand driven by Asia. And in refining, with a projected demand recovery and several third-party refinery closure announcements, we see a gradual improvement in the refining margin in 2021 once the stock overhang is absorbed by the market. Moving then to BP's underlying results. In the fourth quarter, we reported an underlying replacement cost profit of $100 million. Compared to the third quarter, downstream performance was significantly impacted by lower marketing performance, with volumes remaining under pressure due to COVID and the continuing pressure on refining margins and utilization. In addition, the result was impacted by a significantly weaker result in gas marketing and trading and higher exploration write-offs, partially offset by a higher Rosneft contribution and a lower underlying tax charge. The fourth quarter dividend, payable in the first quarter, remains unchanged at 5.25 cents per ordinary share. Turning to cash flow and the balance sheet. Excluding oil spill related outgoings, underlying operating cash flow for the fourth quarter was $2.4 billion. Compared to the third quarter, this reflected the significant impact of lower marketing volumes in the downstream and a significantly weaker contribution from gas marketing and trading. The absence of the working capital release in the third quarter and other working capital effects. the absence of the Rosneft dividend, and severance payments for reInventBP, partially offset by lower tax payments. Organic capital expenditure was $2.9 billion in the fourth quarter and $12 billion for the year, at the lower end of our targeted range. Supported by divestment proceeds, including $3.5 billion from the sale of our chemicals business to INEOS, net debt fell by $1.4 billion in the fourth quarter. At the end of 2020, net debt was $38.9 billion, benefiting from the issuance of $11.9 billion in hybrid capital in June. This represents substantial progress from $51.4 billion at the end of the first quarter and brings us closer to our targeted $35 billion. With that summary of 2020, I now want to focus on what comes next. As laid out last year, we have a new financial frame with three firm principles. a clear set of priorities, and business plan. Together, this is expected to drive strong growth, improve returns, and a sustainable reallocation of our capital employed towards the energy transition. You should be very clear about what to expect from us. In 2021, we plan to pay a resilient dividend, deleverage towards our $35 billion net debt target, drive further cash cost efficiencies through our ReinventVP program, invest in a disciplined manner to advance our strategic objectives, including increased investment into the energy transition, and deliver on our commitment to commence share buybacks once our net debt target is reached and subject to maintaining a strong investment grade credit rating. Let me talk into each of these elements in more detail. Starting with our disciplined approach to expenditure. We have a disciplined approach to capital allocation across all our businesses, testing for strategic fit, affordability within a rigorous capital frame, and quality against stringent hurdle rates. In 2021, we expect capital expenditure to be around $13 billion, including in organics. We have flexibility within this frame should the environment deteriorate. We plan to invest around $2 billion in low carbon, around $2 billion in convenience and mobility, and around $9 billion into our oil, gas, and refining operations. We are also driving efficiency in our cost base. As Bernard mentioned, 2020 cash costs were down around 12% relative to 2019. And there's further to go as BP's reInvent program and associated cost reductions gain momentum. Total headcount was reduced by around 11% in 2020, as a result of the re-invent program, net divestments and other efficiencies. Of the expected headcount reduction of approximately 10,000 associated with the re-invent program, more than half have already left BP and the remainder will depart during 2021 and early 2022. We expect a total provision of around $1.4 billion associated with the re-invent program and expect the majority of the cash outflow to be incurred during the first half of 2021. Delivery of this program supports our confidence in delivering on our cash cost reduction targets. We now expect to achieve a pre-tax savings run rate of $2.5 billion relative to 2019 during 2021 ahead of our prior guidance of end 2021. And we continue to expect $3 to $4 billion pre-tax cost savings from reInvent by 2023 relative to 2019. I now want to update you on our plans to reduce net debt and how this underpins our approach to committed distributions. During 2021, we expect to continue to reduce our net debt. Divestments and other proceeds will be an important contributor. With yesterday's announcement of a 20% divestment of Oman's Block 61, we have now completed or announced transactions totaling over half our target of $25 billion of proceeds by 2025, and We expect to deliver between 4 to 6 billion of proceeds in 2021, of which around 4 billion have already been announced or completed. We expect the realization of proceeds to be weighted towards the second half of the year. Turning to net debt, we continue to expect to reach our 35 billion net debt target sometime around 4Q 2021 and 1Q 2022. This assumes oil prices in the range of 45 to 50 a barrel and BP planning assumptions for RMM and gas prices. In the first half of the year, we expect net debt to increase as operating cash flow is expected to recover from the fourth quarter, benefiting from stronger oil prices, slightly higher production, and a recovery in trading performance. However, we expect a heavier weighting of cash outflows in the first half of the year as we incur the majority of the severance payments associated with the reinvent program, make our annual GOM oil spill payment, and make the final payment relating to our U.S. offshore wind JV with Equinor. In the second half of the year, net debt is then expected to fall, supported by the absence of first half specific outflows already noted, a further improvement in operating cash flow supported by upstream delivery, easing of COVID impacts on downstream performance, and further cost savings from reInvent, and with the receipt of the second half weighted divestment proceeds. As a reminder, on reaching 35 billion net debt, this will trigger our commitment to commence buybacks from at least 60% of surplus cash flow, subject to maintaining a strong investment-grade credit rating. This creates direct exposure to the delivery of our business plan and higher commodity prices. Subject to the Board's decision each quarter, we intend to maintain a fixed dividend of 5.25 cents per ordinary share per quarter, our first call on funds. Together with our buyback commitment, this means that in aggregate, across 2021 to 2025, we expect to deliver per share distributions equivalent to over 10 cents per quarter at around $55 Brent and BP planning assumptions, with upside to higher prices. Taken together, these measures underpin our financial frame and business plan. This slide summarizes the progress that we've made toward our key points of guidance and targets. You should think of this as our annual financial scorecard and part of our commitment to transparency. Further detail on our guidance for 2021, including the first quarter, can be found in today's SEA and are summarized in the appendix to this presentation. And finally, that scorecard will be underpinned by a significant evolution in our external disclosures. As of January 1st, 2021, our new organizational structure became effective and we start reporting on this basis with 1Q 2021 results. This matrix reminds you of where our businesses sit within the new reporting structure and how they map to our strategic focus areas. In early March, we plan to release restated financial and operational data for the new business, including two years of historical data, together with supporting materials to help you understand our new disclosure framework. Disclosures will include certain elements below the business group level to help model and benchmark our business. The disclosures will help you track our strategic progress, and we believe will enhance the understanding of and provide transparency around how to model and value our business. Now, let me hand you back to Bernard.

Thank you, Murray. I'm now going to spend a bit of time addressing some of the questions we've received following our capital markets day in September last year. In doing so, I'm going to focus on each of our three strategic themes in turn, highlighting some of the key messages we provided, outlining the progress we've made during 2020, and explaining what you can expect from us in 2021. I want to start with resilient and focused hydrocarbons, the cash engine of BP. A distinctive part of the strategy we have outlined is our intention to shrink our oil and gas production and refining footprint over this decade. This is expected to help us deliver absolute emissions reductions, reallocate capital, and focus on value. But some of you have expressed concern about what this means for our ability to deliver the cash flow the group needs to transform. So I want to be very clear. we expect to grow EBITDA to 2025, both headline and underlying, from a high-graded, higher margin, and smaller portfolio. So why should you have confidence in this statement? Well, the answer lies in three things. Number one, a 20% expansion in oil and gas unit margin. Number two, delivery of cost synergies. And number three, a high-graded refining portfolio. Starting with the 20% margin expansion, we expect to deliver this through project delivery, investment decisions, operational improvements, and portfolio choices. Taking each in turn, we continue to deliver from high-margin major projects. Twenty-eight major projects are currently online, with the 29th, Raven, in the live commissioning phase. During 21, we expect a further four startups and to ramp up Gazir and Raven, underpinning confidence in reaching the 900,000 barrels of oil equivalent a day for major projects. And with Mad Dog Phase 2, Tangoo expansion, and Cassia compression planned to start in 2022, we expect to sustain that level of production until at least 2025. We plan to drive value through our investment decisions as we focus on near-field opportunities and optimize a deep and low-cost resource base. Within this resource base, there are 20 years of investment choices identified at an average development cost of just $9 a barrel. This compares to a 2020 unit DD&A rate of over $14 a barrel. Simply put, we can do more with less, driving capital productivity as we concentrate on near-field opportunities and manage our business towards a lower, more efficient R2P ratio of around eight years. We plan to drive value through improved plant reliability with a goal of reaching 96% by 2025. And finally, we intend to divest lower margin assets which don't compete for capital within our focused investment frame. We're not in a rush, and we'll do this when we can secure the right value. The result will be a more focused, higher margin portfolio. By 2025, we expect eight core positions to account for over 80% of production and EBITDA. Moving to number two, cost synergies. We're changing the way we work. We're becoming more centralized, more digitally enabled, and more agile, lowering costs and speeding up cycle times. We are on track. to deliver 1.5 billion of savings from re-invent from our hydrocarbon business by 2023, around half from oil and gas operations and the remaining from our refining portfolio. And we are already close to our production cost target of $6 a barrel, a level we aim to maintain. Finally, number three, refining. We already have a concentrated high quality portfolio operating with high levels of availability. But there is more we can do. We intend to high-grade the portfolio, drive synergies from our new operating model, and continue to pursue an unrelenting focus on operational excellence. Taken together, these actions support our plan to move our portfolio to top quartile net cash margin by 2025. This will strengthen our resilience and increase leverage to an expected improvement in the refining environment over the medium term and as the world emerges from the COVID pandemic. I hope this helps you see why we have confidence in this plan. Turning next to convenience and mobility. With a continued focus on the customer, this business is an important contributor to our growth and returns objectives. By 2030, we aim to nearly double the $5 billion of EBITDA delivered in 2019, while generating Roachi of between 15 and 20%. Some have asked why we believe we can do this, especially given the transition in the energy system and uncertainty around oil product demand. Here is how I think about that question. First, we are building on a strong foundation. This is a business with scale and a track record of growth. We realize around $5 billion of EBITDA in 2019 around 7% per annum EBITDA growth between 2014 and 2019. Resilience. 2020 was a tough environment with around $900 million of COVID-19 impacts. Despite this, we achieved a record year in our convenience business, growing gross margin by 6%. We expect COVID impacts to reverse over time as restrictions are lifted. And looking ahead, we see further opportunities to build resilience as we digitize the business to drive efficiency and grow margin. And excellent returns. We have consistently generated ROACHI of 20% or more. Second, our strategic focus areas offer real growth potential. We plan to scale up our differentiated offers in growth markets, redefine convenience in key focus markets, and scale up next generation mobility solutions, including electrification, sustainable fuels, and hydrogen. We are confident about this because we have businesses which are adaptable and can thrive in the energy transition and leverage our quality brands, partnerships, global scale, and deep know-how. Third, we've made good progress in the last 12 months, more than doubling the number of retail sites and growth markets growing the number of strategic convenience sites to more than 1,900, delivering a record $1.3 billion of convenience gross margin, and increasing the number of electric charge points to more than 10,000. Taken together, this gives us confidence in our growth plans to 2025 and beyond. Looking to 2021, you should expect another strong year of strategic progress. We will continue to expand in growth markets, rolling out GOBP branded stations in India with 5,500 stations expected in this market by 2025. We plan to increase investment in our Castrol brand, drive growth and value, and further expand our 28,000 strong network of branded independent workshops. We expect to grow our margin from convenience and electrification, supported by a planned further expansion of around 10% in our network of strategic convenience sites and the continued rollout of ultra-fast charge points across our retail sites in the UK and Germany. And we will evolve and personalize our customers' experience by further enhancing our digital and loyalty offers. Finally, as Murray mentioned, we plan to provide enhanced disclosures in early March This will allow you to better understand why we think these businesses are so valuable. Moving finally to low carbon electricity and energy, we are very clear about where we can add value here, and we have four focus areas, low carbon electricity, integrated gas, bioenergy, and hydrogen and CCUS. Since unveiling our strategy, you've raised some questions about low carbon electricity. In particular, whether we can meet both our volume and our returns objectives. So today I'm going to focus on three questions that we've heard. The chart here shows BP's projects pipeline and hopper on a net basis. So question one, will we really put value over volume? The answer is emphatically yes. Capital discipline is central to our growth agenda. We are clear that value creation will come from the quality of the opportunities that we mature through our hopper into our development pipeline. And we will only pursue opportunities that we believe can generate disciplined project returns of at least eight to 10%. Let me give you an example. In the second half of 2020, our teams evaluated an option to acquire a pipeline of solar assets in the United States. This opportunity had real scale and could have significantly added to our existing pipeline. But despite making it to the final few bidders, we withdrew because the purchase price did not underpin our returns expectations. In the fourth quarter alone, we took the decision not to advance over 12 gigawatts of opportunities. Question two, are there projects available that meet our returns hurdles? Absolutely. At the end of 2020, we had developed a total of 3.3 gigawatts net. This includes projects in our strategic joint venture, LightSource BP, which has developed around 30 projects to FID with weighted average expected returns in the range of 8 to 10%. And with our U.S. offshore wind joint venture, we reached a major milestone with the announcement of the power offtake agreements. These significantly de-risk the projects, reducing cycle time and creating certainty over future revenues early in the investment cycle. This means we are even more optimistic about the value opportunity than when we entered the agreement in September. Question three, can you find enough projects to meet your volume objective? We're making great progress. On top of the 3.3 gigawatts I've just described, we have a strong pipeline of around 11 gigawatts of options being developed. We have projects in our pipeline across nine countries. Our developed assets plus pipeline grew by around 90% in 2020, and we have a hopper of a further 20 gigawatts of active opportunities under evaluation. In addition, the formation of our strategic partnership with Equinor has completed, and I believe has a great future. leveraging the capability and experience of both companies. As I said earlier, the partnership intends to develop 4.4 gigawatts gross of offshore wind power from four initial projects in the United States. In January, two projects were selected to provide 2.5 gigawatts of power to the state of New York. This means that alongside an 800 megawatt agreement already in place and subject to negotiation of a purchase and sale agreement, we will have secured offtake for 3.3 gigawatts across three projects, significantly de-risking the investment opportunity. Beyond the initial four projects, the partnership expects to participate in future developments in the United States. Turning to solar, Dev Sanyal calls LightSource BP an execution powerhouse, and I agree. This partnership brings together the global reach of BP and the project development experience of LightSource. In the last three years, LightSource BP has expanded its global presence from 5 to 14 countries and grown its pipeline from 1.6 to 17 gigawatts. And in the last three months alone, it has developed almost 400 megawatts to FID across four projects in the U.S. and U.K. and has just completed construction on Project Impact in Texas. bringing 260 megawatts to the U.S. market through a long-term trading contract with our trading and shipping division, a great example of integration. As well as this, in just the last two weeks, LightSource BP has acquired a one-gigawatt pipeline from RIC Energy and signed a deal with Verizon to build a 152-megawatt Bellflower solar project in Indiana, which will add to our active projects and pipeline mentioned earlier. Many of you have asked for tangible examples. Here's one. Based in the Zaragoza province, Vendemia is a cluster of five solar plants and is LightSourceBP's first major project in Spain. The project was developed to FID at the end of 2019 and is currently under construction. It is expected to come online in a few months, evidence of the execution capability and the speed at which LightSourceBP can complete solar projects. Once online, it is expected to bring 247 megawatts of renewable generating capacity to the region, providing clean energy to around 50,000 homes. As you would expect, the project uses efficient structured financing. But what is really exciting is the seven-year PPA locked in with our trading and shipping business, a great example of how we are using the power of integration to optimize returns across the value chain. And LightSource BP intends to continue its growth in Spain through the recently announced acquisition of a one gigawatt development pipeline from which it hopes to mature projects towards FID in the near future. In summary, I hope that by highlighting our discipline when approaching new projects alongside the momentum in solar and offshore wind, I've given you confidence in our ability to grow our renewables business while maintaining disciplined returns. Let me then briefly sum up before we take your questions. This has certainly been a challenging quarter at the end of a difficult year, but today's presentation also shows just how far we have come in reinventing BP. We are focused on executing our plan step by step, day by day, all while focusing on performing while transforming. Through extraordinary circumstances, we have delivered safe and reliable operations, strong operational delivery, and comprehensive progress on our strategy and our plan to reinvent the company. We recognize that we are a transitioning company, one of many across the economy and one of several in our sector. We have the ambition to become a net zero company, but our transition will not happen overnight. We are not yet green, but we are greening, and we are committed, not just because it's the right thing to do for the world, but because it is a tremendous business opportunity. And we believe one that will deliver long-term shareholder value. Thank you, everyone. And over to you for questions.

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Okay, thank you again, everybody, for listening. We're going to turn to questions and answers. As we've done over the past several quarters, we are working remotely, so please bear with us, both on the lines and with the questions, just in case there's any delay. And a reminder, as usual from me, please limit your questions to only two. We've got a long list of people to get through this morning. So on that note, we're going to take the first question from John Rigby at UBS. John.

Thanks, Craig. Hi, Bernard. Hi, Murray. Two questions, please. The first is on some of the proposed changes in federal regulation in the U.S. And I'm particularly interested in your offshore water Gulf of Mexico position, because I think historically you've developed a very successful drill to fill. strategy around the hubs that you have. So I just wanted to understand maybe how much inventory you have out there that sits on your existing leases and licenses, and then how much drilling you have to do each year within that sort of perimeter to keep that strategy on course. Just some color around that, please. And then the second is, and I think I may have to apologize to Murray in advance on this, I'm interested because you obviously talk to an absolute net debt number. I had a bit of a struggle this morning reconciling that, and it appears to be the impact of some hedge effects around the debt. Can you just talk a little bit about that? What creates that change? And then maybe extend that to the cash flow statement, whether there's any other sort of hedging effects that are running through cash. At the moment, I'm very aware it's been a very unusual situation. macro environment.

Thanks. John, good morning. Good to hear your voice. And Murray is all set to take your question and help you with your struggle this morning. So I'll let him do that in a moment. On the question regarding the plans in the United States, you know, first of all, I think we just say that we look forward to to working with the administration as they go about their climate and their energy agenda. We're obviously delighted, I think many people are, that the U.S. has rejoined Paris. I think these are all good things. And, you know, and I would add that, you know, one of the things in their climate agenda is around doubling offshore wind in the United States. And we look forward to participating and helping on that journey. As regard leases... I think you probably know, but less than 1% of our onshore acreage is federal. None of the Permian is federal acreage. So I think no real impact there. Offshore to the Gulf of Mexico, I think we need to learn a little bit more. It is a pause for now. We need to understand whether it applies to new leases, existing leases, whether it's permitting versus the letting of leases. We need to understand that. And we'll be working with the relevant agencies over the coming months to understand that. In terms of the near-term impact, we don't expect any. We've got enough sort of permits to do what we need to do, I think, over the next one to two years. Importantly, Mad Dog Phase 2, which I think will, by the way, will leave Korea very, very soon. Delighted to see that milestone. All the wells are pre-drilled for Mad Dog Phase 2, so no issues there. So no near-term impacts in the gum, John, or the next year or two, I would say. And really, before we can give you an assessment of the impact beyond that, we need to really understand what the details would be and what they are, and we'll be working to understand them, I think, obviously there's going to be a period of engagement now. So hope that helps. Murray, over to you on cash and net debt.

Yep, great.

Hi, John. Thanks for the accounting question again.

Love it. So I guess first of all, just on net debt, our financial frame remains intact. We said we'd had five priorities. First priority is paying a resilient dividend. Second is drawing our net debt down to $35 billion. Then investing into the transition program. investing into the hydrocarbons and then commencing share buybacks with at least 60% of cash flow once we hit our $35 billion net debt target. Nothing has changed around that over the past quarter, and we continue to estimate, as we did last quarter, that we will reach that $35 billion target somewhere in 4Q, 1Q of 2022. So no change to guidance. Hopefully that helps that bit of the question. On the second bit of the question, maybe you're asking about 4Q cash flow and what's happening there. Maybe it's easy just to think about it from 3Q and then into next year. So from 3Q to 4Q, 4Q is a pretty difficult quarter, very difficult environment with COVID, very difficult environment with oil price at 44, RMM around 6, gas prices suppressed, and demand very, very difficult in the downstream business. So that's why cash flow is so low. If you thought about the BRICS along the way, it's obviously EBITDA down. It's obviously no Rosneft dividend. It's obviously a working capital disadvantage. We had an inflow in 3Q and basically flat in 4Q. We had severance payments. We had a pet chems divestment. And then, as you're hinting at, we had some moves in derivatives, where on gas and the hybrid, we had exchange rates. traded derivatives outflowing cash given the high spike in gas during the quarter. Looking forward to the first half of next year, things improve pretty significantly on an underlying basis. If you think about 4Q versus 1Q right now, oil price is up 11 bucks quarter to date from 44 to 55 quarter to date. The Gulf of Mexico is producing well. It's recovered from its hurricanes, shot a knees, ramping back up as we fill up gas to to Italy. Oman is ramping up as well, and downstream is recovering slightly, and trading should we get back to a normal quarter. So I think, John, I hope that helps explain it.

Is that okay, John? Thank you. Yeah. Look, I think a lot of questions around... cash understandably in the fourth quarter. I think if we step back, you know, in September of last year, Murray said, we said that we would reach our net debt target of 35 billion by the end of 2021, which is now this year in the beginning of 2022. These results change none of that. So there's no change from the position that we laid out in September. The key is that the underlying business continues to perform really well. reliable operations, costs coming out of the business, trading is looking good in January, safety is good, projects are coming online and ramping up, and on top of that, we're making real strategic progress. So I recognize that 4Q was a difficult environment. The numbers are a little bit messy, at least for a driller they are, but the fundamentals are unchanged, and we're very optimistic actually as we look into the year and confident in the underlying business and in the plans that we laid out, particularly around net debt that we talked to in September. So no change from that guidance. Craig.

Yeah, thanks, John. We'll take the next question from Alistair Syme at Citi. Alistair, good morning.

Thanks, Craig. Good morning, everyone. Can I just ask two questions? What about asset values? In the annual report last year on fair value analysis, there were some scenarios outlined on the long-term oil prices, and the most aggressive said that there might be $45 billion of impairments, and in 2020, you ended up impairing $10 billion. And your notes now say there's another $45 billion of assets that carry low headroom. So, look, I appreciate I'm asking a possibly difficult question on oil prices, but you are a company that inherently believes in a more rapid transition than many of your peers, and yet your oil price forecasts are still pretty similar to what your peers are using. So the question really is, you know, how do investors get confidence around the risk to your bulk value from here? And then the second question, a little bit shorter, you know, you're moving to post-tax reporting as part of your reporting chain. So I was a little surprised to see the EBITDA waterfall charts and so on resilient hydrocarbons. Can you just confirm that the changes in cash flow expectations will be in line with EBITDA or are there some tax considerations to consider? Thank you.

Very good. Murray, I'll let you take both of Alistair's questions.

Yep, great. So post-tax reporting, that's a future attraction to come. In early March, we'll publish the new segmentation, including the move from pre-tax to post-tax. So that's something to come. As far as pre- versus post-tax, you saw a signal that we're back to around 40% or slightly higher on effective tax rate moving forward. So I think give us a little bit of time. We'll restate history. We'll show you new projections moving forward on a post-tax basis. And, Alistair, that should help clarify those issues. But you should have seen guidance in the details of what our tax charge should be in 2021. As far as book values, obviously, during 2020, given the effects of COVID and given the effects of what we were seeing with the world, we reset our price deck. Additionally, we also decided not to pursue a significant number of exploration opportunities, and that's what saw the big write-offs during the year. I probably don't need to repeat those numbers for you. So that's really what caused the change in book value during 2020. The price bands that you're talking about, they suggest, I think from memory, about a 15% movement, and they showed 5% of impairment. What we ended up actually doing was a much bigger move in price and 10% of impairment. So I don't think that was particularly inconsistent with what we provided last year. Moving forward, what's our best view of price? Right now, no change. It seems like a pretty reasonable set of assumptions we've got. You can see the details inside, I think it's note one, Craig, and we've given you that sensitivity as well, and I think it works relative to what happened last year as well. I hope that helps, Alistair. Is that okay, Alistair?

Yes, thank you.

Great. Thanks for the question. Good to hear your voice. Greg.

Okay, we'll take the next question from Lydia Rainforth at Barclays. Good morning, Lydia.

Thanks, Greg, and good morning. Two questions, if I could. The first one, just to clarify, on that chart around unit margin expansion, that 20% increase in unit EBITDA for the upstream, is that before or after the cost synergies? In fact, I'm just trying to get to is it just a mixed volume effect or is there then cost synergies on top of that? And then secondly, and probably for Bernard, just going back to that reinventing BP program, obviously you have now got to the stage of splitting out the or integrating the upstream and the downstream operations together. Can you just walk us through how that's going and whether you're seeing the progress that you wanted to at this stage? Thanks.

Hey, Lydia, good morning. Good to hear your voice as well. On the 20%, it's before cost, because I think if I'm reminded correctly on that chart, you'll also see a separate cost synergy. brick, so to speak. So it's purely volume and margin and mix. So it's before cost. And then on Reinvent BP, I mean, Reinvent BP, this is work that we're doing internally as well, is more than just the restructuring of the company. It gets more into some of the things that you saw when you've been with us in in Oman, around digitization, around becoming a more digital company, becoming a more agile company, centralizing work, and creating a culture that is more in line with the future direction of the world than maybe one that we've come from. Restructuring is a big part of Reinvent BP. We've made great progress on that. The team has done, I think, personally, I think, an absolutely amazing job. This is the largest restructuring project In the company's history, we changed over from the old structure to the new structure on January the 1st. The management of change exercise that was needed to do that was massive in terms of MOCs by individuals across the world. We said that up to 10,000 people would leave the company. More than half of those people have already left by the end of the year, and we're continuing with that. Really, it's Europe that's remaining where we have various works councils that we need to partner with to finalize that work this year. We're seeing the costs coming through. The two to three billion dollars, as we said, by the end of 2021 is now looking like the middle of this year. The three to four billion that we said by 2023, I'm very confident in. And Murray and I and the team will be working as hard as we can to bring that forward. There's unquestionably benefits to how we work. If I look at what we can learn from the refineries, where I think they're very good at managing things like turnarounds, we can bring that into the upstream from the old upstream. I think a lot of work done on inspection and inspection technologies that we can take to the downstream. So today it feels very natural that all of the operations of the company would be run in one place, and that's what Gordon's role is. So we're only just getting going. We've set Gordon's organization up in an agile structure. I think it's the first agile structure in oil and gas that I'm aware of, and I think we'll look forward to learning as the year goes on. We won't get everything right. I'm sure we'll make some mistakes along the way that we'll correct, but hugely optimistic about the potential that lies ahead And you'll see it in multiple dimensions. You'll see it hopefully in engagement of staff, which we're focusing on heavily this year. You'll also see it in the cost line. I think we're below $20 billion now. And I think, Craig, it's probably one of the first times we're below $20 billion in cash costs in probably 20 years, maybe even since the Amoco mergers. So lots of progress. And I'm really excited about what lies ahead because I think we haven't even touched the surface of what's possible with this new organization yet. Hope that helps, Lydia.

Yeah, great. Thank you.

Cheers.

Good. Thank you, Lydia. Yeah, we're going to jump to the web, actually. We'll take the next question, which I'll pose on behalf of Jason Kenny at Santander. Jason asks, can you talk to the relative positions Oman Gas versus East Coast US Wind, please? Which position do you see as more supportive of CFFO in 2025 and or 2030?

Jason, thanks for the question. First of all, in Oman, why did we divest 20% of Oman? Well, as you all know, we have the $25 billion divestment target out there. I think we've announced about $14 billion of the 25. Why do we sell 20% of Oman? We're not in a rush. We've got four years to do the rest. We're certainly not in a rush. And what we've always been clear with you is and with shareholders is that we will divest for value. We will only divest when we see value. And we see value in this case. This is a good price for a good asset. So we're pleased with that. We remain at 40%, which is a significant equity position. We remain as operator. We will explore in Oman. So I think it's the right thing to do. That won't be the case for every asset that's on the market today. across the industry, but it was the case in the specific circumstance for Oman Gas, and we're very pleased, as is the Oman government, I believe, with this transaction. Offshore wind in the United States, it's a longer cycle business, obviously, compared to solar, so you won't be looking at cash flow from operations from that business in 2025, but you will be looking at it in 2030. The good news is we're ahead of schedule already, I think. That project is going very, very well. And as I think I said, that investment looks better today than it just did a few months ago. And that's around pace. So our compliments to the team at Equinor. And we're looking forward to building that joint venture in the months ahead. Very excited about it. But you get out to 2030 and this is going to be a material brick of cash flow that will go on for 20 years out to 2050. You start thinking about the need over time for hydrocarbons to be decarbonized. That's obviously not a threat that will face that business. And we head out into the 2030s and 2040s, carbon price and so on and so forth. So, you know, very, very comfortable with, delighted actually with the entry into the U.S. offshore wind business, delighted with early progress. I'm sure there'll be plenty of things ahead of us in the coming years and very pleased that we got a very good price for a very good asset in Oman. I hope Jason gets to the essence of your question.

Okay, thanks for the question, Jason. We're going to move to the States. Two questions in the States, obviously up bright and breezy this morning. Thank you for joining. The first one from Paul Cheng at Scotiabank. Paul.

Two questions. One, on Russnet, I'm still trying to figure out why long-term, I mean, right now that the price is probably not good for you to sell it, but why long-term it is statistically integral to the rest of your business or why it's important for you to own it? And I know that, Murray, that you're going to provide more information in March, but just curious that in the fourth quarter, what is the low-carbon business cash flow or EBITDA, any kind of rough estimate that you can provide? Thank you.

Paul, good morning and thank you for your question. The question around Rosneft, let me take that and Murray will take the fourth quarter question. The first thing that I would say, maybe make four points if I may on Rosneft. The first point that I would make is, I think as you well know, we have three parts to our strategy. One is around low carbon electricity and energy. One is around convenience and mobility, both of which we're going to grow. And the other is around resilient hydrocarbons. And Rosneft has some of the most resilient hydrocarbons in the world. Our production costs per barrel in BP, I think, are about 670 on their way to 6. Rosneft's lifting costs are $3 a barrel. So the first thing is it's actually consistent with strategy in terms of resilient hydrocarbons. The second thing that I would say is that from an environmental performance perspective, I think it's important that people look at the facts. And the facts are maybe surprising to some people, Rosneft's greenhouse gas intensity per barrel of oil produced is below 30. In fact, it's below many of the majors, including BP. They have reduced fugitive emissions in 2019 by 73% versus 2018. And they've just announced a new carbon plan. And they're going to target a methane intensity of 0.25%, which is good. And they're going to drive that greenhouse gas intensity down by a further 30%. The third thing around Rosneft is the financial aspects of the investment. Since 2013, we have received $4 billion in dividends. And in 2020, we received $400 million in dividends from Rosneft. So it's a good financial investment. And then finally, I would just say, if I can, Paul, that it's a strategic partnership for BP. Rosneft's an excellent operator. They are committed to sustainably developing their resources. We have a lot to learn from each other. They can learn from us. We can learn from them. We're about to sign a strategic cooperation agreement in the next few days around carbon. So I think that hopefully gives you a sense of how we think of Rosneft and how it fits within our portfolio. Murray, 4Q cash numbers from a growth business. So go ahead.

Yeah, great. Thanks. Hi, Paul. Nice to know. Thanks for the question. As far as EBITDA comes from low-carbon companies, That isn't really something we're focused on right now, to be honest. We're in build mode. So if you think about the planks we have, plank one is offshore wind. Obviously, that's about access right now, accessing acreage, so we can build out the portfolio in the 2030 timeframe plus, as Bernard just described. The second bit's on solar, where we're very, very focused on building gigawatts right now. Why? Why? So we can get offtake into our business. So light source BP really isn't focused on EBITDA, they're focused on construction and flipping and making sure that we expand that market so that we've got energy for retail providers. Bungay, a third plank obviously in biofuels in Brazil, is about efficiency and gradually expanding that business as well. So sitting in the fourth quarter of 2020, we're not really focused on near-term EBITDA. You'll see a number for EBITDA shortly. It's not going to wow you. It's not intended to wow you, but it's intended to be transparent. I don't know, it's probably somewhere, rounds around 100 million would be my guess, but let's see in March when we do that. And as we disclosed on August 4th and as we disclosed in September as well, we're not expecting a ton of EBITDA from low carbon by 2025 either. This is really a longer wavelength business that starts to replace earnings from the historic hydrocarbon business in the late 2020s and early 2030s. and we're balancing the portfolio to maximize the value from hydrocarbons over the next decade, growing CNP ratably across the decade, especially in the convenience space, and then gradually building up low carbon. But like the market, I'd just encourage us to focus on growth as opposed to a particular appetite, because that's the phase of the strategy that we're in.

Great. Thanks, Murray. Thanks, Paul.

Thank you. Thanks, Paul. And we'll stay in the States and move to Dan Boyd at Mitsuo. Dan.

Hi, thanks. Good morning, guys. I had a question on BPX. You know, I know when you gave your strategy update, it's one of the few areas where the sort of pre-coronavirus or pre-pandemic targets are still intact of more than doubling the liquids production by 2025. So just wanted to get a little bit more of a roadmap from you on the ability to hit that target. You know, you're only running one rig, understandably, given everything that's going on. You were previously running 13. So Is there a path to get back to a double-digit recount at BPX and to ramp up to that number?

Dan, good morning. Thanks for your question. Murray's a bit of an expert, so I'll ask him to come in as well. But BPX is going really well. Cost synergies are ahead of plan. I think we said $350 million. They've been delivered early. And we're upgrading that target to $400 million. The rocks look really, really good, better than we had hoped. So that's very good news. And capital productivity and cost productivity continues to come through under Dave and Jack's leadership. So we're very happy with the overall process. As you say, we did cut the rigs right back from double digit to one or two by the right in the first quarter, I think. And that's one of the advantages of that business, as you well know. I've been looking at some of the profiles for that business over the coming years. we're not focused on production. We're focused on growing free cash flow. And that's what you should expect from us. I think the numbers that I looked at, Murray will correct me if I'm wrong, but showed more of a flat production over the coming years, but a growing free cash flow profile. Double digit rigs, maybe not, but certainly high single digit, low double digit is very possible as we head into the year. So This is a business that is focused on cash, cash generation, strong returns. I think thousands of locations with returns that are well in excess of 20 percent at the current sort of prices. So good quality business. We're not trying to grow it in a volume sense. We are trying to grow it in a free cash flow sense. And that's what we focus on. Murray, anything I missed?

It's cash flow positive at current strip prices during 2021. So that's good news. And we see that growing over time. We've gone from one rig to five rigs and we'll be probably having about eight rigs in 2021. They'll be spread across the basins. Given the current prices, we'll be focused on the oil side as opposed to the gas side this year. We have four basins, two gas, two oil slash liquid. So we can move back and forth between those as we need. And it just stands the chance to grow cash flow very radibly through time if we invest on a continuous basis as opposed to going up and down. But as Bernard said, it remains a great investment case. There's been some noise out there on benchmarking suggesting maybe we're not as good a driller as we think we are, but we're going to go try to clarify that stuff. Everything we look at on benchmarking shows their first quartile across the Permian and across the Eagle Ford. Some people might be getting confused that Devon actually doesn't drill and complete those wells in the Eagleford. So that's just something for the back of your mind. But we remain very, very confident in that business and look at it as a nice source of ratable cash flow growth over time.

Great. Thanks, Murray. Thanks, Dan.

Very helpful.

Thanks. Thank you. Thank you, Dan. We'll take the next question from Thomas Adolph at Credit Suisse. Thomas, good morning.

Good morning, guys. Two questions for me as well, perhaps both for Murray. The first one is just on U.S. offshore wind regarding Empire Wind 2 and Beacon 1. Can you comment on pricing, especially how it compares to Empire 1? And the second question is on the balance sheet and the credit rating. Perhaps you can remind us of the importance of having at the minimum a single acre minus credit rating and the impact the business would face should you get a downgrade, and why BP doesn't want to create a bigger buffer, lower the target net debt following the new ratio guidelines via rating agencies. Thank you.

Thomas, good morning to you. I'll surprise you. I'll actually take one of the questions, but no prizes for judging which one. I'll let Murray handle the questions. the credit rating agencies and the balance sheet. On offshore wind, no, we can't disclose those prices at this time. Further work to do, but we will when the time is right. Murray, over to you.

Thanks, Bernard. Thomas, I'd just add on the offshore wind cycle times, everything. Everything's about accelerating the pace to first electron. You've heard us say that on the upstream side. It's even more important on offshore wind. So just that's something that's really pleasing for us to see that move forward. On the credit rating, let me wind you back to August 4th. This will probably be a longer answer than you want, Thomas, but why not? So if you go back to August 4th when we laid out the financial frame, we talked about the five priorities. You know the first priority was the resilient dividend. The second priority, just to expand on it a bit, was to reduce our net debt to $35 billion, and then we'll retire that, and then we'll move to measuring ourselves with a strong investment-grade credit rating. And we told you that it would be supported or indicated through a range of FFO over adjusted debt of 30% to 40%. So that was a good indicator for you to look at. Nothing's changed on that. Yes, we've had a ratings move by S&P on the sector. What they've said is we've moved from A- stable to A- negative. And with that type of rating, they're saying that if you don't get to 35% to 40% FFO over adjusted debt over the next couple of years, that you'll be downgraded. And what I'd say is that's totally consistent with what we told you on August 4th, that we'd have a range of 30% to 40%. Now, I remain confident that we'll get to that range of 35% to 40%. Why am I confident? We're starting to see oil price pick up, obviously. We're seeing RMM over time will pick up as the vaccines come into place. Natural gas is holding firmly around $3, which is good news. As you look forward in the first half of the year, obviously, barrels come back online from the Gulf of Mexico. We get growth in our major projects from Chardonnay to Oman. Raven will come online. And then really importantly, in 2022, two of the very best highest margin projects in our portfolio, Mad Dog Phase 2 and Tango Train 3 come online, and Cassia in Trinidad as well. At the same time that's happening, C&P is growing. Convenience looks like it's doing really well. Costs are coming down. You know, we're well on track for the two and a half by end of 2021 we talked about. We'll beat that early. And you know, Bernard, my passion on cost. I'm sure we'll do better than we're suggesting. Costs coming down, production volumes coming through, big projects ramping up, and I don't feel particularly concerned about hitting that 35 to 40 target that S&P talks about. Last comment I'd make is there are three ratings agencies, you know, not just one. And I think Moody's has us on A1, Fitch has us on A, and obviously S&P has moved us to A minus negative. And as you look at those three things, that sure feels like strong investment, great credit rating to me, Thomas. So no change. I saw a note somebody produced, maybe it was you, Thomas, that there was a risk on trading if we moved to below A minus. That's not right. If we were triple B plus or something like that, the traders can still trade. That's not an issue for us. And we adapt structures to make sure that we can manage that type of risk. Hope that helps, Thomas.

The only thing that I'd add, Murray, Thomas, Murray, is – just around our strategy, really. And I think as we continue to enact our strategy, which is ultimately a decarbonization and a diversification strategy, I think that takes away risk rather than adds risk to the company. And I think we're seeing that in the commentary from, I think, Fitch, Craig, I think it was, who had some positive commentary on the agenda that we have and Moody's around the direction that we're taking. So I've always said that I think the strategy that we've laid out and that we're executing on is a de-risking strategy, as well as a decarbonization strategy, as well as a diversification strategy, and as well as a strategy that we think will create long-term value. So I also believe that over time that will be taken into account as well. Having said that, to Murray's point, we're not relying on that. We're relying on the fundamentals that he just laid out. So thanks for the question. I think Alexia also had a question online on that, and hopefully we've answered Alexia's question there as well. Craig, back to you.

Thanks, Bernard. We'll take the next question from Christian Malik at J.P. Morgan. Christian.

Hi, thanks, gentlemen. Hi, Mari. Hi, Bernard. Two questions, if I may. First, on return of the aspirations and the renewables, You mentioned you declined 12 gigawatt opportunities given they don't meet your threshold returns. Can you explain what exactly you did differently versus what seems to be an ever-growing number of participants? Is there any confidence you can secure enough renewables projects to deliver 8-10% returns and fulfil your pipeline, especially in the context of the rating agencies who are putting more pressure on your balance sheet, leaving you arguably less competitive versus the traditional players? The second question is if all your guest prices do indeed hold, or move higher, how does that affect your net debt target being achieved sooner by launching the biotech CNQ3? And if oil prices move materially higher, would you consider raising capex above the low end of the range this year? Thank you.

Very good. Thank you very much, Christian. Good to hear your voice. I'll let Murray take the lovely question around accelerating oil prices, accelerating reduction in net debt, and what do you do with all the money. On the what are we doing with – On the return side, well, the first thing that we're doing is we're being disciplined. And, you know, many of you and many shareholders have said, you know, actually, we are a little anxious about this volume target and we're worried that you will go off to the races on that. Why don't you tell us about some of the things that you don't do? And by the way, there are many, many things, especially in that space. It's a hyperactive space, I would say. and we're looking at all sorts of things all the time. And it was important that we laid out for you that we do walk from things, and we walk from them for a fundamental reason, that we believe that in that particular instance it's got too heated and we're not going to be able to deliver our returns. And there was one opportunity that we looked quite closely in America. It would have been very material. It had lots of sort of color to it that would have been quite attractive, But we got down to the last two or three, and we couldn't make the numbers work, and we walked away. Conversely, at the same time, LightSource BP is continuing to do projects, and they've done 30 now that have averaged 8% to 10% over that time period. And what we're doing is continuing to do the things that we've talked about. I would not underestimate what we bring on our operating capability. I think we've added 1% of availability to our wind business, our onshore wind business in the United States through Onyx, which is a BP-owned company that does data analytics and predictive maintenance. I wouldn't underestimate what we can do on construction. We benchmark five out of six in five out of six categories, best in class. If you look at offshore wind, these are massive projects, billions of dollars, multi-year, as Murray said. And what we have today is Ewan Drummond, who is the vice president of Shaktanese, who built a project through seven countries over mountains, under the sea, bringing gas from the Caspian to Europe, 25% under budget, on schedule. He is now sitting in that joint venture, on top of that joint venture with Equinor BP, bringing his experience. Integration, you'll see two deals that we've done now. We're at a trading division of BP. is on the purchasing end, both in Spain and in Texas, and that helps us manage returns across the cycle. So there's lots that we can do. The customers that are demanding the things that we want, you've seen the deals that we've done with Microsoft and Amazon. There's going to be more in that space to come. So, you know, all I can keep telling you is, you know, sharing examples like we've done with the project in Spain, where we get the 8% to 10%, what it looks like, sharing examples of where we've walked away, And we've done that in the fourth quarter, and I have no doubt we'll continue to do that. And sharing examples where we bring things to that part of the business that we think can enhance returns. And what I would tell you is that, you know, the Equinor BP joint venture in the U.S., even after a few months, because of pace, because of cycle time, is already looking better. And it had met our threshold and is now looking better than what it did several months ago. So we're going to be disciplined, and if we can't make the returns work, we won't do the deals. I hope that helps. We'll continue to give you more evidence, more proof, quarter on quarter, at these results and whenever we talk of the examples on both sides. Murray?

Great. Hi, Christian. I'm going to bore you to death with this answer, if you don't mind, but I'm going to go back to financial frame. Five priorities, resilient dividend, debt down to 35, invest into the transition, invest into resilient, and then surplus cash. at least 60% to shareholders. The answer to your question really lies in that. We have laid out our capital stall for 2021. It's around $13 billion. We're not going to change that because we're above $35 billion net debt. I think if we hit $35 billion net debt earlier, we're not going to change our CapEx this year. We're around $13 billion, and that's the right thing to do to show discipline for shareholders. And then as you move forward, obviously what we said is once we've hit our $35 billion net debt target, our capital range becomes 14 to 16, and that includes in organics. So I just encourage all of you to look back at the financial frame. We're following the rules tightly on that. And, you know, Christian, cross fingers, if some institutions are right and we see some price upside, then both ourselves and our shareholders will enjoy that immensely, as at least 60% of those surplus funds will go towards share buybacks. Hope that helps, Christian.

Great. Thanks, Murray. Thank you. I think the last thing in the world investors would want us to do right now is start changing our mind on capital depending on the oil price. So hopefully that helps that question. Christian, thanks for both of those. Craig?

Yeah, we'll take the next question from Irene Hamona at Societe Generale. Irene.

Thank you. Good morning. I had two questions for you. First of all, going back to BPX, the quarterly disclosures show quite a steep 20% step up in the Q4 unit production cost to $8.10. I wonder what drove that, if it was something non-recurring, if it is seasonal, and importantly, what could we expect for BPX costs in 2021? And then secondly, in relation to the targeted 79% growth in per share EBITDA, You don't actually disclose that figure historically. Are you prepared to tell us what it was for 2020, or do we need to wait for the March news closures?

Thank you. Irene, good to hear your voice. Murray, over to you on both.

On BPX, the lifting cost or production cost per barrel going up, Irene, is really about production volumes. So cash costs were relatively stable across the time period, but an awful lot of that production comes from natural gas. Places like the Haynesville, et cetera, there's steep decline on those when you don't invest in it, obviously given the low-price environment. We pulled our rigs down from I think it was 16 down to 1, and a natural consequence of that is gas volumes decline and unit costs go up. So that's probably nothing surprising there to you as I describe it. The absolute cost they run, Dave's part of the – Dave Lawler, who runs the business, is part of the overall reInvent program. He has his own efforts on reInvent as well, going and digitizing, et cetera, et cetera. So I would continue to assume that they will continue to drive cost efficiency into that business. And over time, it should get a little bit better as we get back to drilling with the five rigs and then eight rigs as we drive up production gradually. Craig, do you want to tackle that other question?

Yeah, Irene, on the EBITDA per share, it is actually disclosed on our medium-term financial frame slide in the materials. You can see what we did in 2019 and 2020. There's a reconciliation for that in our supplementary information if you get to that point of your review. And then I think the last thing is going forward with our new disclosure framework, we will publish that as well going forward. So I think all the information is there for you.

Great. Great to get Craig in on a question. Irene, thank you very much.

Craig, back to you. Okay, we'll take the next question from Oz Clint at Bernstein. Oz, good morning.

Yes, hi, good morning. 300 strategic convenience sites and 2,500 EV chargers added in 2020. I just want to get – are they attracting customers? Are they attracting the footfall that you might expect? And really I ask because – you know, we've seen this deal from Custard looking for Car 4, which is a very different format. And I guess if I was being cynical, you could interpret that as being they see some threat to longer-term fuel retailing as a business model. So I wanted to see, Bernard, what you would say to that. And then secondly, it's also probably a bit of a high-level question, but, you know, you've been busy. I've seen lots of panels here with prime ministers and heads of large fund managers and actually future kings as well. So, you know, a lot of information in there. As you put all that together and think about that, do you still feel your pace of change, your pace of transition is right? Or, you know, because some might say it's too fast. It's certainly faster than others within your group. That's the second question. Thank you.

Great. Oz, I'm going to actually let Murray take your first question around consumers and mobility, a business that he is passionate passionate about. He's got his own views on what Emma should do with our coffee, but I'll let him share that in a moment. I don't know if that was a question or feedback for me on the panels that I'm on, but no, look, it's, you know, what can I say? I read your, I think it was your survey that you did of investors, and I think it was 40% of people said our Strategy was too ambitious. Thirty percent said it was thirty five percent, I think, said it was just about right. And about whatever the balance is, 30 percent said it wasn't fast enough. So I think, you know, there is a mixed views out there on it. My own view, having talked to people like like those and, you know, we've been fortunate to be given access to some of these dialogs. which, by the way, I think is a hugely important part of our future because if you're in the dialogue, if you're in the debate, you can shape some of these things and help them get to a good place. So it's been great being part of these dialogues. You know, my sense is I walk away honestly feeling incredibly encouraged about the direction that we're taking. I certainly don't walk away thinking, that is too aggressive. That is not something that I leave those conversations on. You know, it's only 12 months since we, almost to the day, we announced our net zero ambition. What a change in 12 months, something that was considered, I won't say outrageous back then, but certainly at the ambitious edge of ambitious. Look at what has happened in the last 12 months. So, you know, this world is changing. It continues to change around us. We need to keep in step I like the strategy that we have. I do believe that it's increasingly being understood and embraced. You know, I keep coming back to the fundamentals. You know, we offer a fixed and resilient dividend. We offer a commitment to buybacks once that net debt target is reached. And I do believe that we offer long term value growth. And that's the reason to be in BP. So I'm, you know, I'm more encouraged now. probably more optimistic, more confident than I was probably as I headed into the end of the year, as we start the year. Now, that isn't code for this is all about hype. We have to be focused on the business. We have got to deliver each and every day. That's why safety matters. That's why reliability matters. That's why we need to take cost out of that system. These are the basics of running a good business, and it is those basics that give us the permission to to transform the company, which is why we say perform while transform. And Murray and I and the rest of the leadership team and the organization are all over it, but encouraged about the direction and focused on the job at hand, Oz, is how I would put it. Murray, convenience and mobility.

Yeah, convenience and mobility. Oz, good to hear your voice. I think I'll parse this one. So just starting with convenience, probably the best year for convenience earnings for us despite COVID environment. So footfall is obviously down with COVID, but margins are up, absolute levels are up. So that's awfully good news. You know, if I personally reflect on it, I prefer convenience now more than I did before. That's just a result of COVID, and I think consumers such as myself, yourself, maybe feel that way. So we think the convenience offer is a good one. We think it's got good, strong growth. I think the statistics are the world expects 5% growth in convenience moving forward, so there's no reason to play into that. On electrification, strong growth in electrification as well. Obviously, you just quoted the stats to us. It's really focused on three countries, UK, Germany, and China. In the UK and Germany, this is all about starting to put pulse in the UK or in the Aral stations in Germany, close to our retail offers and close to our fuel offers. And I suspect you'll see a gradual substitution of those over time. And I think that's a pretty powerful business model. When you can get a five-minute charge on your electric vehicles, you know, that's a fantastic way. Go get 100 or 200 kilometers after five minutes. Go get a coffee. Bernard and I will debate what kind of coffee you should get. Go get a snack. And, you know, that's where you make the money for a business such as ours. So we think that's a nice nexus that comes together. And then the last bit is fleets. And Didi is an example of fleets and Uber here in London is an example of fleets where we'll build out charging stations for fleets of Uber drivers or Didi drivers. And we'll become their natural place to rest, charge, gradually get convenience over time and enhance that offer as well. And so I think those fleet deals we do are super, super important and maybe not something some of the other guys are talking about that you mentioned, Oz. And certainly we're seeing that indeed in China given the pace of growth there. So I think our premise is convenience is more desired. It's a higher growth rate. We can couple it with our fuel for now and convenience offers, and that will make great money and great growth. And we also think the fleets are a winning way. And let's see how we get on in London and let's see how we get on in China. But we do think it's the right thing to do, and we do think it creates a radical growth over time.

Murray's encouraging them not to make the charging too fast so that you still have to go and get your cup of coffee. But we'll see where that goes. Very interesting, if you look at Oswald online, Didi has, I think, just manufactured the world's first vehicle that's dedicated for ride-hailing. Ride-hailing, ride-hailing, ride-hailing. Pretty impressive. So the car is basically not meant for private ownership. And it's the first in the world. It's a D1 or something worth looking out online. But, you know, it's just a reminder of the pace of change in the world. This is what, you know, I love being in part of these things because, you know, the world's moving. And, you know, cars are going to get built no longer for private owners but for fleets. And we've got to make sure we leverage that, and we will. So, great. Oz, back to you, Craig.

Yeah, thanks, Oz. We'll take the next question from Peter Lowe at Redburn. Peter, good morning.

Hi, thanks for taking my question. The first was just a clarification. Is the Equinor wind acquisition included in the $13 billion CapEx guidance for 2021? And then can you clarify how much of that $13 billion in 2021 will be allocated to renewables and low carbon more generally? The second question was on the downstream business. Can you help us better understand some of the moving parts in the fuel result in the quarter? In the release, you say that the marketing business was resilient and delivered significant profit despite the weaker volumes. That would obviously imply a significant loss in refining and trading, given the net negative result. Is that the right way to think about it? And is there anything you can do to stem those refining losses given the continuing weak margin environment? Thanks.

Peter, very good. Excellent questions. Very, very clear. And Murray will take the first one. On the second one, I think the way you think about it is correct. You know, it's been a difficult quarter in the refining industry. Thankfully. I think average utilization of refineries worldwide is about 78%. Ours, I think we're in the mid 80s in the fourth quarter. And that's a reflection of the fact that we have top quartile refineries. But as you can see from one of the bricks in our resilient hydrocarbons plans out to 25, we believe that there is more that we can do around availability and cost in those refineries to make them even better. And that's what we're very much focused on and Obviously, given the environment, we're very focused on that today. You will also have seen us take the decision to convert refinery in Australia into a terminal. I think these are important portfolio rationalization decisions that we're taking as well. So good to see refining margins improve here in January a little bit, strengthening a little bit, which is good, but still a long ways off what historical results. numbers would be. Murray, anything you would add and the question on the capital?

Yeah, and Peter, thanks for the question. The new disclosures in early March will show you the refining and trading number together and convenience and mobility separate from that. So you'll be able to see that number, but you've got the direction of travel right. I won't tell you the numbers until we get clear on them. As far as CapEx goes, yes, $13 billion includes organics and inorganics. So we've changed the nature of how we guide to make sure that those two things are all in. So it is included. And, yes, the Equinor deal is included in those figures. And I think if you go back to my script of the $13 billion, we said nine would go into upstream, downstream, and refineries. Two would go into convenience and mobility. And around two would go into low-carbon energy. So I hope that helps clarify everything, Peter.

Thank you. Pleasure. Okay, thanks, Peter. We'll take the next question from Chris Coupland at Bank of America. Good morning, Chris.

Good morning, and thanks for taking my questions. Two, please. The first one, and I appreciate I think this is not usually part of your quarterly reporting, but whether you could give us a bit of a sneak preview on your annual report and sustainability reporting. in terms of how 2020 shapes up regarding your carbon footprints measured on various measures. Do you have some preliminary data that you can share with us? That'd be quite interesting. And of course, equally interesting to hear whether you've got commentary around where that's going to go for 2021. My second question is, of course, going back to disposals. I was interested to hear that you are targeting to sell assets from your lower margin pile. And I just wondered whether you could look back I'm not going to ask you which assets you are going to sell, but whether you can just help us putting your Oman asset and Alaska asset into these EBITDA margin buckets that you've highlighted, Bernard, and how you feel those transactions sit with what we should expect going forward in terms of your disposal strategy. Thank you.

Morning, Chris. Thank you. Good to hear your voice. I'll let Murray take the second question. I think we should wait until we publish our sustainability report. I'm glad you're interested in it. That's great. I think what we did say in our messaging today is that, you know, you should expect a decrease in both scope one and scope two emissions. And importantly, you'll see a decrease in our scope three emissions. greenhouse gas emissions that comes from the carbon content of our upstream production. And that's something that I think over time will come to the question on divestments that you can continue to expect to see on our way to the targets that we laid out for 2030. So they're probably the most significant things. I think it will be. Julia is doing a lot of work with the team on that report at the moment. And I think, Greg, we're going to have an event tomorrow. of some sort around that on sustainability and we will follow up at that point. Anything you want to say on that, Greg?

Yeah, I think be looking for the sustainability report, as we said, around the end of the first quarter and be looking for an ESG event off the back of that sometime middle of April. I think that's what we're looking at. But we will confirm that to the market in due course.

Great. Thanks on that. And Murray, divestments and then EBITDA and margins and

Yep. Hey, Chris, thanks for the question. So if you think back about the ones that we've completed, those would be Alaska and then a lot of the ones in BPX. BPX, given gas price, will be at the lower end of that margin table. So you can go calculate the volumes there, San Juan, Wamsutter, et cetera, et cetera. So that's something that I think you'd be able to see with the transparency we've given. Alaska's at the bottom end of that range as well, just given the level of production, et cetera. Oman's probably middle of the pack would be my answer. But, you know, Bernard's already talked about why we decided to diversify our portfolio with that one. So looking forward, you should expect more high grading at the lower end of the barrel where we can get value.

Thanks, Barry. Thanks, Chris. Thanks, Chris. We'll take the next question from Michele Della Vigna at Goldman Sachs. Michele.

Thank you. Thank you for the presentation and the time. Two questions, if I may. On the timing for your financial de-gearing, you're assuming a quite conservative oil price, 45 to 50. We're about $10 higher than that. I was wondering if you were to input those higher $10 per barrel and assume they can stay there for the full year. How would that change the pace of your de-gearing? And then I was wondering, once you go through the $35 billion of net debt, and let's say, again, the oil price is somewhere between 55 and 60, how quickly can you get to the 10 cents per quarter of dividend plus buyback? Is that a... phased approach or can effectively we get there quite quickly given your free cash regeneration? And then last, a quick question. I saw your liquids pricing was quite weak in the fourth quarter and didn't increase with the oil price. I was wondering if there was any specific factor there and if it could reverse in Q1. Thank you.

McKellie, thank you for the optimistic questions. Great to have some optimism about what if. And I know that I think the Goldman Sachs reports are saying $60 to $70 in the second half of the year. I'll let Murray take the last two. But on the first one, look, I think we shouldn't get into trying to do what ifs. There are three factors at play. One is the oil price. One is the refining margin. And one is the gas price. And I think, you know, oil today seems stable at the moment. It seems underpinned. We see inventories coming back to around the five year average here in the second quarter, middle of the year, which is why I think some of your people think that it could be stronger in the second half of the year. Refining, I think, is more challenged at the moment. Congestion data is down in the United States and Europe between 15 and 40 percent, depending on what country. We are seeing some strengthening, though, and we are seeing that demand recover. And undoubtedly, as the vaccines roll out, that will be the case. And for gas, weather matters. Stocks are getting low in Europe. That should help underpin prices. So, you know, there's definitely upside. It would move the the curve forward, but rather than getting into the specifics of how much forward, I think we will just concentrate on executing that plan that we have and reporting quarter on quarter. And like you, we hope that there's some upside. And I think the thing for me is that we're very well poised to take advantage of that upside. We should not underestimate the cost reduction, the capital discipline, so the company continues to get healthier on an underlying basis, the projects that are coming on such that if that price were to come, we're really well positioned to take advantage of it.

Murray? Thanks, Bernard. Hey, Michele. You cheated a little bit with three questions there, so I'll be brief on the third, which is lagged pricing. We have lagged pricing inside the upstream, and so you just see a bit of a lag. And this one, it tends to suppress versus the marker a little bit. On your question on when do we get to the 10 cents, I'm afraid I'm not really going to answer the question. It's across a range of years, as described in my speaking points. But probably the best way for you to think about it is to think about the evolution of the portfolio. So we've told you low carbon really doesn't play into big earnings across the next five years. We've told you CNP is ratable growth across the next five years. And you've got hints from Bernard and I about what the big milestones are on cash flow for the upstream. So you've got Raven will come online this year. You've got Mad Dog Phase 2, Tangu next year, Cassia next year. Those will be the big inflection points as those start to come online and driving higher cash flow. And then, of course, you've got cost coming down as we forecast. So I think I'd just encourage you to plug those. assumptions into your model. You choose what price you have as we do it. We're just quoting it as a figure across the time span, but it'll largely be driven by underlying results. So I'm sorry, I'm not giving you a direct answer, Michele, but I hope I gave you enough input to think about it.

And we appreciate the questions, Michele. Back to you, Craig.

That's great. We'll jump across the pond to Jason Gableman in Cowan in the States. Jason, good morning.

Yeah, hey, thanks for taking my question. You mentioned You have some downward flex in CapEx next year from $13 billion. I'm wondering, one, what that floor is, and two, where the first reductions would come from if you look to reduce CapEx. And then my second question is, you mentioned four areas in the low-carbon business where you're growing, including hydrogen and CCS. Obviously, a lot of continued focus in the market. on hydrogen right now. Um, how far away is that from becoming, do you think an economic solution and potentially a material part of the business? Um, and, and how much can that realistically grow within the business? Thanks.

Great. Uh, Jason, thank you. Um, in terms of flex on capital, we probably have between, I don't know, one and 2 billion Murray. Um, and the place you'd start is, uh, in your home country there in the onshore United States, which is what that business affords us. So probably one to two billion of flex. And, you know, it all depends, doesn't it, on the day and on how brutal that environment would be. So we can flex down that much. And that's where we'd start in the onshore U.S. In terms of hydrogen and CCS, you know, in terms of material parts of the company, you are really looking at 2030 plus. You are looking at that decade. We believe in hydrogen. The world needs CCS. We need to get after building these projects. We've got a hydrogen project in Lingen in a refinery in Germany. We've got looking at the potential for export of ammonia out of Australia. We're exploring many different options in this space. It is definitely a gas, a fuel of the future There's no question about that. But it's not something that's going to happen overnight in terms of being a material part of BP's portfolio. The best example we have is what we're doing here in the UK at Teesside, where we will build, we hope in the coming years, with our partners, a power station. We'll capture the carbon. We'll take it offshore. We'll stuff it underground. Taking the carbon back is what I like to describe it as. We'll hook it up with some local steel and fertilizer and ammonia factories up there and help them with their hydrogen production. This will be, I think, one of the world's first net zero industrial sites in the northeast of the UK here. We need much more of these opportunities being built around the world so that we can get the scale that will lead to the cost production that will lead to the economics of these things working. But I think it is... In terms of materiality, it's 2030 plus as opposed to before 2030. Hopefully that helps, Jason.

Thanks. Okay, thanks, Jason. And I think there was a question online from James Lowen at J.O. Hambro. James, I hope that answered your question as well in that space. We'll take the next question from the phones from Lucas Herman at Exxon. Lucas.

Craig, thanks very much, and Bernard. Murray, really nice to hear your voices again. Two, if I might. One pretty straightforward. You mentioned eight core regions in the upstream, I think, Bernard. Forgive me, I've probably forgotten what they are, but perhaps you could remind me. And secondly, just staying with power and renewables. I mean, we keep pestering you on returns, but is asking around returns just the wrong question in that the models that most of you seem to be adopting is resource projects, we source, you know, finance debt and delever. We then sell down equity, and that supports the 8% to 10% we're targeting. So to the extent you can sell down equity, you should always be able to push yourself to a position where the return on equity is actually pretty attractive. But unfortunately, you know, the absolute capital invested almost becomes de minimis. It's an observation, but I just wondered, Murray, Bernard, whether you could comment on it, because, you know, the time when returns from projects are clearly... falling in ways given the competition for the resource or the opportunity. It does feel as though the equity you're going to be able to invest or the capital you can put in and therefore the absolute cash you can drive really isn't going the right way. And that feels very much as though it's been light sources model. Find projects, find someone to finance, retain an element of decent return. It's not meant as an insult. It's just an observation on achieving returns. That's the question.

Very good. Thank you. We'll get you the eight core regions here in a moment. I think on the returns question, I think farming down, which is I think what you're referring to, is certainly in the solar world an accelerator of returns. It is one of the levers that you can choose to exercise. You are correct. It is something that LightSource BP does. And, of course, we've seen it happen in other parts of the sector as well. I think as we look at offshore wind, there will be choices that lay ahead as to whether that is the right model or not. As you quite rightly say, by the time you leverage, by the time you have a partner, by the time that you then do farm down, the question is what earnings and what EBITDA do you actually begin to generate over the long term and and that's certainly something that we're very very focused on so i think these are choices that lay ahead um particularly in the offshore wind space the good news is that we're securing uh and have secured in the united states today good acreage good access 50 equity and choices around what you're discussing uh will lie ahead of us um we have got the capital to put behind it up to five billion dollars by the end of the uh the decades, so it's not a shortage of investment that will force us. It will be what we think is the right thing to do from an economic model standpoint. Murray, anything you'd add on that and the eight regions?

Yeah, nothing to add on that one, Bernard, very clear. Lucas, the eight regions that make the majority of cash flow, which is not to be confused with portfolio decisions that we make in the future. Gulf of Mexico, Angola, North Sea, Asia, BPX, AGT, Middle East, North Africa, and a partridge in a pear tree. Thanks very much.

Sorry, thank you. I did have a third, which is what is your favorite coffee.

Exactly.

He better say wild bean or he won't be allowed. His badge will be deactivated tonight, which is the number one coffee in New Zealand of all places. So if you ever get a chance to travel again in your life, Lucas, it tastes very good there, apparently. So back to you, Craig. Great.

Great. Thanks very much. We'll take the next entertaining question from Biraj Bokatari at RBC.

Hi, thanks for taking my questions. Murray, you called out a few changes to production as you're moving into 2021. I just noted that gas production in Trinidad is down quite a bit from the start of the year to the end. Could you just talk a little bit about any specifics there? Is it just the impact of storms or maintenance? And can you just comment on whether that production is back closer to kind of normal levels in early 2021? And then the second question is on the Permian. When you acquired the BHP assets, I believe the flaring intensity was at the higher end of the kind of Permian operator range. And Bob Dudley used the phrase, you know, we're going to get after it. Obviously, this would be a function of overall volumes, and gas volumes are down 50%-ish year on year. But can you provide an update on where you are now and the progress that's been made in the last couple of years? Thank you.

Baraj, good morning. Thanks for the questions. I'll let Murray handle Trinidad on flaring. Thank you. Bob would be proud of us. We are indeed after it. We're actually all over it. And I think flaring has gone from 14% or 15% down to 4%, from 15% down to 4% over a 12-month period. That's not a function necessarily of a passive approach to that. That's an active approach to that in terms of what we're doing, in terms of investing into how those Permian wells are developed. So great progress, but 4% isn't good enough. We have a goal to get to zero routine flaring in Texas, and that's what we're focused on. So I'm really proud of the team for getting from 15 to 4. 15 is not what we want to be at and not what we stand for. We need to do better than 4, and as Bob said, we're on it. So Murray, Trinidad.

Yeah. Hi, Brosh. Good to hear your voice. On Trinidad, Really, the two things going on, big tar and then obviously cassia compression we were planning on having online this year. It's been delayed due to COVID, COVID issues inside the yard that we couldn't move construction forward. Trinidad's really characterized by a conveyor belt of projects that come in and sustain gas production over time. So unfortunately, COVID damaged us on that trajectory of the big projects. But hopefully that's clearing up. We get Cassia compression online in 2022, and then we'll move on to the string of next projects across that with discoveries from ILX drilling that's happened over the past few years. Thanks, Baraj.

Craig. Thank you. Thank you, Baraj. We'll take the next question from Bertrand Odie at Kepler. Bertrand.

Yes. Hello, everyone. Thank you for taking my question. I just wanted to come back on the Q4 cash flow and the understanding the building blocks here. Can you disclose what was the severance payment cash made in Q4, possibly also during 2020, and what is the severance cash payments you expect to make in 2021? That would be helpful to understand the underlying cash flow.

Great, Bertrand, good to hear your voice. I thought you'd be asking about Mad Dog Phase 2. You used to always ask me about that back in the day. But Murray, correct me if I'm wrong on restructuring. We've taken a $1.4 billion charge, $500 million of outflow in cash terms up to date, and we expect to see the majority of the remainder in the first half of this year. $500 through 2020, yeah. Hope that helps Bertrand.

Yeah, thank you.

Thank you. Okay, we'll take the penultimate question from Martin Ratz at Morgan Stanley. Martin.

Ah, yeah, okay. I've got two. Frankly, admittedly, they're sort of a bit at the margin, but... I wanted to build on the question that Oswald asked a little while ago about some of the targets, particularly in convenience and mobility. Because two of these targets that always stand out to me are the number of EV charging points, where there is a large growth ahead, and also the number of retail sites and growth markets, where there's also not quite a tripling ahead, but very strong growth over the next five years. And these are numbers targets. But it would be really helpful to have an understanding what the sort of average typical EBITDA contribution of an EV charging point actually is, or the average typical EBITDA contribution of a retail site in a growth market. I find that really difficult to figure out independently. But if these numbers are going to increase over the next couple of years, it would be helpful, at least on our side, that if we see these numbers go up, that we can also sort of have some sort of an idea of what the EBITDA is. impact of that is. If there's anything to say about that sort of quantitatively, I'd hugely appreciate it. And then finally, from one of the slides on the reporting segment, do I understand that you'll be reporting oil production and gas production in different reporting segments? Do I have that correct?

Martin, good to hear your voice. I'll let Murray take both questions. They're not at the margin, I think. But Murray, over to you.

Yes, Martin, you've got it. Oil in one column. Sorry, I can't remember what slide it is in the presentation, but that's the second time we've shown you that. So, yes, oil in one section and gas and low carbon in the other. So, absolutely, that's what's happening. I guess you guys will be happy because you get more transparency into the historic upstream being able to divide out the oil and the gas. On convenience and marketing. So I think on EVs, this is kind of a changing market, if I'm honest, Martin. And what I could say is that on the latest chargers that charge in around five minutes, if you get to 18% occupancy, you start making money. So that's all you need during a day to do it. If you're sitting here in the UK, you can drive by the Hammersmith site. And you'll see that it's pretty hard to get in because they're almost always occupied. So I think that gives you a sense of what's valuable inside the electrons. Of course, the margin, though, comes more from the convenience side rather than the electric charging. So I think the way I personally relate to it is you've got retail, you've got fuel sales, you've got electric sales, and you've got convenience offer. By providing electricity in places like Germany and the UK, where government mandates are driving towards electrification, this becomes a stopping point for a fast charge and a snack. And the margin obviously comes in the snack and the coffee that we've talked about earlier. But that little stat that I told you, 18%, that's a snapshot right now. That'll change significantly over time, I'm sure quite significantly as we move through time as technology improves. It's pretty hard to believe how fast it's moving these days. So that's probably what I can give you on EV for now. And we're thinking more and more about how we can start to describe this to you better in the future. As far as growth markets, you're right, it's massive growth. I think the big ones, obviously, in India, where we're planning to go from something like 1,400 sites to 5,000 sites. So that's the vast majority of the growth inside that. And let's wait for March 2nd, if you don't mind, Martin. and we'll see if there's more we can disclose inside that space. I don't have a number at my fingertips right now, but we'll come back and we can maybe answer some questions in that space in March when we start to expose more of this stuff. Great.

Reasonable question, and I don't have a number either, so we'll come back in March. Craig.

Okay, great. Thank you, Baraj. We'll take the final question from Anish Kapadia at Policy. Anish.

Hi, Ian. Thanks for taking the question. Just a couple of questions, please. Firstly, you disclosed a substantial gain in non-operating businesses, I think from one of your venture capital stakes. I was just wondering, is that your, sorry, I don't think it was a sale. I think it was a revaluation. Was that potentially the Palantir stake? Or if not, could you give a bit more details on what that was? and just kind of thinking of that in the context of are there opportunities to realize some of those gains over the course of the year. And then just a second quick one. On your marketing, I think you revealed for 2019 about $2.7 billion of earnings. I was wondering if you could just give the comparable figure for 2020. Thanks. Marie.

Marie. We'll come back on your second question on March 2nd. I just don't want to misquote anything, so we'll come back on March 2nd with the year-over-year in that particular area. And, yeah, you've got it right on where it came from in 4Q and OBNC. It's equity on Palantir, as you say. So that's something for the future.

Very good, Anish. Thank you.

Okay, that's the end of the questions. Again, thank you, everybody, for listening. As usual, IR are available to answer any follow-up questions, and we do look forward to talking to you. As Murray and Bernard had described, we look forward now to early March and the update around our disclosures. There'll be more information in due course around that. But maybe on that note, let me hand over to Bernard for some closing remarks. Thank you.

Very good. Well, thanks, Craig. Thanks, Murray. And thanks to you all for taking the time to join us. A difficult quarter with some difficult numbers and complexity to explain. But I think if you step back from all of that, the plan that we have laid out remains the plan. Our business is running well. The world will recover and is recovering. And we're very well positioned to take advantage of that. And we're executing on our strategy, step by step, day by day, in a very disciplined fashion. So all the while focused on the basics of running a good business. So we appreciate your interest. We appreciate your questions. And I'm sure we'll be following up with you in the hours and days and weeks and months ahead. And I wish all of you and your families well. a safe and healthy 2021. So take care and we'll be in touch. Thanks.