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 first quarter 2023 results presentation. And I'm here today with Murray Auchincloss, our Chief Financial Officer. Before we begin today, let me draw your attention to our cautionary statement. During today's presentation, we will make forward-looking statements including those 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 will now hand over to Murray.

Thanks, Craig. Hello, everyone, and thanks for joining us. We're here today to report on BP's first quarter 2023 results. First, we continue to deliver resilient operational and financial performance. For the first quarter, underlying earnings were $5 billion, and we reduced net debt to $21.2 billion. Second, we are executing against our disciplined financial frame, including the announcement of a further $1.75 billion share buyback. And third, we are advancing at pace with our transformation to an integrated energy company. Since reporting fourth quarter results, We have made progress toward our 2025 oil and gas production target with a safe startup of Mad Dog Phase II in the Gulf of Mexico. In addition, the KGD6MJ project offshore India is in the final stages of commissioning with two wells open to flow gas and full startup expected later this quarter. We have also further strengthened our resilient oil and gas portfolio. Announcing our intention to form a JV with ADNOC, focused on gas development and international areas of mutual interest, including the eastern Mediterranean. BP expects to contribute assets to form the JV and has made a non-binding offer with ADNOC to acquire 50% of new met energy. Advancing our Casquita project in the Gulf of Mexico to concept selection and agreeing to acquire Shell's 27% interest in the BROWS project, offshore Australia, subject to approvals. We have agreed to acquire Travel Centers of America, which is expected to almost double our convenience gross margin and provide growth opportunities across four of our five transition growth engines. We have continued momentum in executing our fast, on-the-go and fleet CV charging strategy, This includes a strategic collaboration agreement with eBedrola, with plans to accelerate the rollout of EV charging infrastructure in Spain and Portugal, and a new global mobility agreement with Uber. And in low carbon energy, our hydrogen and CCS strategy is progressing, with the UK government selecting three BP-led projects to proceed to the next stage of development. Turning to results, in the first quarter, we reported a headline profit of $8.2 billion. Allowing for post-tax adjusting items of $3.7 billion and an inventory holding loss of $500 million, our underlying replacement cost profit was $5 billion, despite the backdrop of lower average commodity prices. Turning to business group performance compared to the fourth quarter, in gas and low carbon energy, the result benefited from an exceptional gas marketing and trading result, partly offset by lower gas realizations. In oil production and operations, the result reflects lower liquids and gas realizations. In customers and products, the product's result reflects a lower level of turnaround activity and a very strong oil trading result, partly offset by lower refining margins. The customer's result reflects lower retail fuel margins, partially offset by a higher result in Castrol. For the first quarter, BP has announced a dividend of 6.61 cents per ordinary share payable in the second quarter. Moving to cash flow. Operating cash flow was 7.6 billion in the first quarter. This includes a working capital build of 1.4 billion after adjusting for inventory, holding losses, fair value, accounting effects, and other adjusting items. The working capital outflow includes the impact of timing of annual incentive payments to employees. Capital expenditure was 3.6 billion and disposal proceeds were 800 million. During the quarter, we repurchased 2.4 billion worth of shares. and the $2.75 billion program announced with fourth quarter 2022 results was completed on April 28th. Despite the working capital build, surplus cash flow was $2.3 billion and net debt was reduced to $21.2 billion. Taking into account the cumulative level of and outlook for 2023 surplus cash flow, BP intends to execute a further $1.75 billion buyback prior to announcing second quarter results. Looking ahead in the second quarter, we will make a scheduled payment of $1.2 billion relating to the Gulf of Mexico oil spill settlement, and subject to shareholder approval, we expect to complete the $1.3 billion acquisition of Travel Centers of America. Turning to our disciplined financial frame, where our five priorities and our guidance for 2023 are unchanged. A resilient dividend remains our first priority. This is underpinned by a cash balance point of $40 per barrel, Brent, $11 RMM and $3 Henry Hub. Our second priority is to maintain a strong investment grade credit rating. We intend to allocate 40% of 2023 surplus cash flow to further strengthening the balance sheet. Recognizing the significant progress made, we are now on positive outlook with S&P, Moody's and Fitch. Third and fourth, we will continue to invest with discipline in our transition growth engines and in our oil, gas and refining businesses. Our guidance of 16 to 18 billion capital expenditure for 2023 is unchanged. And as a reminder, this includes inorganic capital expenditure. And fifth, we remain committed to returning 60% of 2023 surplus cash flow to buybacks subject to maintaining a strong investment grade credit rating. At around $60 per barrel and subject to the board's discretion each quarter, we continue to expect to be able to deliver share buybacks of around $4 billion per annum at the lower end of the $14 to $18 billion medium-term capital expenditure range and have capacity for an annual increase in the dividend per ordinary share of around 4%. Looking ahead, we remain focused on delivery with strong momentum across our business. First, today's results show that we are performing operationally. We expect around 200 MBOED of high margin production from nine major projects by 2025. Mad Dog Phase 2 and KGD6MJ are expected to underpin over one third of this volume as they ramp up during 2023, with further startups expected this year. BPX is on track to start up Bingo, its second major Permian processing facility, in 3Q23. This will double BP's operated Permian oil and gas processing capacity, de-risking future volume growth. And we expect to grow our equity LNG liquefaction capacity in 2023, supported by major project startup with further increases in supply driven by third-party off-takes from Coral, Venture Global, and the restart of Freeport. Second, we are transforming, executing our strategy with discipline. We expect the acquisition of Travel Centers of America to close in the second quarter and target around 800 million of Abbott Daw in 2025. In EV charging, we expect around a twofold increase in energy sold in 2023 compared to 2022, supported by EV charging infrastructure rollout, increasing utilization of our charge points, and strategic partnerships. In bioenergy, during 2023, we expect to advance one of our five biofuels projects to final investment decision, with a further three moving into front-end engineering and design. And in biogas, we are proceeding with the integration of archaea energy and executing our project pipeline. Finally, in hydrogen and renewables and power, we are progressing our global portfolio projects. We are on track to nearly double our hydrogen pipeline by year end from 1.8 MTPA at the end of 2022 to around 3.5 MTPA. And we continue to grow our renewables pipeline. Third, we continue to apply our financial frame with discipline and predictability, remaining focused on delivering long-term value for you, our shareholders. Thank you for your time. Now let's turn to your questions.