BP p.l.c.

Well, good morning, everyone. I'm Craig Marshall, BP's head of investor relations. And thanks for joining us today. I've got Bernard Murray and obviously myself here today. We've got a slightly extended presentation. In a moment, I'll hand over to Bernard to introduce and cover the full year highlights. And then to Murray, who will take you through our fourth quarter results. Then we'll turn to strategy, and Bernard and Murray will update you on the progress and financial frame. And then following that, we'll make sure we've got plenty of time for the questions, which I'm sure you'll all have. Before we begin, as usual, I'd like to draw your attention to the cautionary statement, which is included in the presentation slide deck. During today's presentation, we will make forward-looking statements, including those that refer to our estimates, plans, targets, aims, and expectations. Actual results and outcomes could differ materially due to these factors and those noted in our cautionary statement, as well as in our UK and SEC filings. please refer to those filings which are available on our website for more details. On that note, over to you, Bernard.

Great. Well, thanks, Craig. And good morning to everyone joining us on the phone and on the web. And of course, I'm also delighted that we're able to host a small audience here in person in St. James this morning. And that includes my leadership team. with the exception of Anya, who will join us on the 1st of March, which we're all very excited about, I have to say. We do have Joaquin here. Joaquin, stand up for a moment. Joaquin runs our gas and low carbon business in the meantime, until Anya arrives. I also want to introduce, and is doing a brilliant job, by the way, I want to introduce two new members of the team. Leanne, Leanne Russell, who takes over from David Iton, who is leaving the company after 40 years. And Dominic and Emeka. Where's Emeka? Emeka, who takes over from Dominic Emery, who is also leaving the company after close to 40 years. And all of those moves take effect on March the 1st. And for those of you who are on the web, you can see the team on the slide here. Murray, I think that's a very smiley photograph of you, but... Shouldn't smile, I see. That's a full-on smile, that one. The last time we held an in-person event was two years ago. And actually, I was just remarking this morning, this is actually my first time doing a results call in person in my new role. So it's amazing how time has passed. And it's hopefully a sign of progress and a sign of confidence in the future. And I promise it won't take as long as we did at BP week. So we will come back to that later. Now, in the two years since laying out our ambition, our new ambition, we've been through obviously a period of significant change. And at the same time, the world around us has changed as well. Covid, volatility in the energy markets and, of course, the accelerating energy transition. And with this backdrop, it felt like it would be a good time to pause just for a moment and reflect on the journey so far. And the BP that we see today is a company that has successfully, we would argue, completed a period of significant change. One that sees clear and compelling growth opportunities presented by the transition and one that is 100% focused on delivering the plan that we have laid out. and what you know by now we call performing while transforming. And before we get started, we love a video or two. We're going to show a short video just to share some of the highlights with you. So over to the video. It's not just because society wants us to do this and needs us to do this. It's because our employees want us to do it and indeed our shareholders. Today, that becomes BP's new purpose. To be a net zero company by 2050 or sooner. From IOC to IEC. So I think it's pretty cool in my language to see what we've delivered and it's the team around BP that has delivered it and to think that that was done virtually, most of it, and during a pandemic is, I think, it's extraordinary. And I hope it gives you a little confidence, some confidence in our ability to get stuff done. So let's get into that in a bit more detail, starting with the full year results for 2021. We delivered underlying replacement cost profit of 12.8 billion. We delivered operating cash flow of $23.6 billion, including a working capital build of $5.3 billion. And we delivered return on average capital employed of 13.3%, the highest level for a decade. In addition, we delivered our target of $2.5 billion of cash cost savings on a run rate basis relative to 2019 ahead of schedule, six months ahead. We reduced our net debt by over $8 billion, seven quarters in a row of net debt reduction. We raised our dividend per ordinary share in the second quarter by 4%, including the $1.5 billion share buyback that we've announced today. We will have delivered share buybacks from 2021 surplus cash flow totaling $4.15 billion. next to our progress in transforming BP. Since we announced the strategy to become an integrated energy company, we've been building momentum across each of our three strategic focus areas. In resilient hydrocarbons, we started up 11 major projects since the start of 2020. thereby delivering our 2016 target. Some of you will remember us talking about this with Gordon and Baku actually in 2016. Our target then was to bring on 900,000 barrels a day of new high margin production. In convenience and mobility, we've grown margin share from convenience and electrification by 4% since 2019, demonstrating the strength of our customer offers. and increased the number of EV charge points to over 13,000 across the UK, Europe, India and China. And finally, in low carbon energy, we have entered offshore wind with a pipeline of 5.2 gigawatts net to BP today following the recent Scott Wind lease option award. We built a renewables pipeline, which at the end of 2021 stood at 23 gigawatts net, a fourfold increase since the end of 19. And we've made exciting progress in hydrogen, having grown a hopper of between 0.7 and 1.3 MTPA. Progress like this, as well as the pace at which the world is moving, leads us to believe that we can accelerate our plans in some areas and reinforces our confidence in delivering our 2025 targets. But before we get into the detail around that, let's bring in Murray, who is chomping at the bit over there, to go through our fourth quarter results. Murray, over to you.

Great. Thanks, Bernard. Good morning, everyone. Nice to see all of you in person, finally. As usual, I'll start with the macro environment. During the fourth quarter, Brent rose by 8% to average $80 per barrel, its highest level in seven years. To date in 2022, Brent has moved above $90 with supply disruptions, easing concerns around Omicron, and the expectation of continued declines in inventories. Looking ahead, we expect supply and demand to move back towards balance through 2022. However, with lower levels of spare capacity price volatility is likely. Turning to gas during the quarter, seasonal demand saw Henry Hub rise by 10% to an average of $4.70. International prices rose sharply, with NBP and JKM around 90% higher than in the third quarter. This was caused by low inventory levels and concerns about the availability of supply during the winter months. With ongoing geopolitical uncertainty and low storage levels, we see the potential for continued price volatility. Turning to refining, industry margins remain broadly flat compared to the third quarter, and we expect them to remain at similar levels during the first quarter. Local margins may and are being impacted by lockdowns. Moving to our results, in the fourth quarter, we reported an underlying replacement cost profit of $4.1 billion compared to $3.3 billion last quarter. Compared to the third quarter, in gas and low-carbon energy, the result benefited from higher gas realizations and higher production due to major project ramp-up. After an exceptional first nine months, it was an average quarter for gas marketing and trading. In oil production and operations, the result reflects higher liquids and gas realizations. This includes the benefit of very strong NBP prices. The result also reflects higher production, including a recovery in the Gulf of Mexico from the impact of Hurricane Ida. And in customer and products, the product's result was impacted by significantly lower oil trading results and higher energy costs. The customer's result reflects resilient retail and convenience performance despite seasonality and COVID-19 impacts. In Castrol, volumes were higher, although results continued to be impacted by high base oil prices and additive shortages. For the fourth quarter, BP has announced a dividend of 5.46 cents per ordinary share, payable in the first quarter. Turning to cash flow, operating cash flow was $6.1 billion in the fourth quarter. This included a working capital build of $2.2 billion. Capital expenditure was $3.6 billion for the fourth quarter, and disposal proceeds were $2.3 billion. This includes $1.5 billion related to the sale of our Alaska business to Hillcorp in 2020. With proceeds of $7.6 billion received during 2021, we have received $12.8 billion of proceeds against a target of $25 billion by 2025. Strong cash flow generation enabled us to deliver surplus cash flow of $3 billion in the quarter and $6.3 billion for the full year. This underpinned a further reduction in net debt and supports our continued share buybacks. During the quarter, net debt fell for the seventh consecutive quarter to reach $30.6 billion at year-end. A share buyback of $1.752 billion was executed. This included the $1.25 billion announced with third quarter results and $475 million to complete the program announced with second quarter results. And we intend to execute a further $1.5 billion share buyback prior to announcing first quarter 2022 results. Now let me summarize the progress made during 2021 against our frame. We have a clear set of priorities. First, a resilient dividend. We announced a 4% increase in the dividend per share with second quarter 2021 results. Second, a strong investment-grade credit rating. During 2021, we achieved our $35 billion net debt target around a year earlier than expected and reduced net debt by over $8 billion. Third, disciplined investment allocation. 2021 capital expenditure was $12.8 billion, including in organics, in line with guidance of around $13 billion. And fourth, share buybacks. For the year, we announced $4.15 billion of buybacks from surplus cash flow. That takes us to total announced shareholder distributions of $8.4 billion for the year, around the level of the annual dividend distributions in 2019. I'll update you on our 2022 plan shortly. But for now, back to Bernard.