BP p.l.c.

Well, good morning everyone and welcome to BP's second quarter 2023 results presentation. I'm here today with Bernard Looney, Chief Executive Officer, and Murray Ockenclus, 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 that refer to our estimates, plans and expectations. Actual results and outcomes could differ materially due to the 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 detail. These documents are available on our website. I'll now hand over to Bernard.

Well good morning. Thanks Craig and good morning to everyone. Thanks for joining us, either physically in the room here or online. Earlier this morning, we reported our second quarter 2023 results and I hope that you see continued evidence of our strategy in action, a strategy that is focused on delivering long-term shareholder value. We've now been in action for over three years. We set our direction in 2020. We completed our restructuring in 2021. We have been in action since then and since then we have been focused on delivery and on execution. Let me highlight a few things if that's okay before I turn it over to Murray. First we delivered resilient operational and financial performance in the second quarter with good cash delivery. During a period where significant turnaround activity and weaker margins impacted our refining business, the underlying business continued to perform well. And looking forward, the outlook for the second half of the year, which I'm sure we'll talk about, remains strong and I will talk a little bit more in a few moments about that. Second we are progressing our strategy at pace. We are investing in today's energy system and not or, something that you will hear repeatedly from us because it defines our strategy and not our strategy, and not or we are investing with discipline across our five transition growth engines to help accelerate the energy transition. This continued progress underpins our confidence in delivering our 2025 targets. Third we are growing distributions for our shareholders. Today we have announced a 10% increase in the quarterly dividend per ordinary share and a further 1.5 billion share buyback. These decisions are consistent with our continued focus on disciplined delivery against our unchanged financial frame. And they reflect the confidence in our performance, the confidence in the outlook for cash flow and the progress that we have made in reducing our share count. And Murray will obviously return to this later. Let me say a few more words about performance, starting with the strong momentum in resilient hydrocarbons. For the first half of 2023 BP operated upstream plant reliability was 95% and compared to the first half of 2022 our upstream production grew by over 3% while at the same time unit production costs fell 9%. We had two project start-ups in the first half, Mad Dog Phase 2 in the Gulf of Mexico and KGD6MJ in India. Together they are expected to add around 90,000 barrels a day of oil equivalent net production by 2025. Two more start-ups are expected in the second half of this year, Tengoo Expansion where start-up is now actually in progress and Seagull and GTA Phase 1 is now expected to start up during the first quarter of 2024. All in all we remain confident in delivering around 200,000 barrels a day of oil equivalent of high margin production from new projects by 2025. In BPX first half production was around 9% higher year on year and in the third quarter we expect the start-up of our second central processing facility in the Permian, further de-risking our target of -40% production increase by 2025 relative to 2022. Looking to the future in oil and gas we are strengthening our resource base. In the Gulf of Mexico we progressed our Cascada project to concept selection and are also evaluating options to progress the Tiber project. Both of them are 100% BP, both of them are in the Paleogene. We also acquired 36 leases in the recent Gulf of Mexico lease sale and drilled a successful appraisal well in the southwest part of the Mad Dog Field. We continued building growth optionality in our global gas portfolio including agreeing to acquire a further 27% interest in the Browse project. In LNG we are growing supply. Our third party off takes have made good progress with 15 cargoes loaded from Coral and from Freeport which is now back to full contractual off take. And with additional volumes expected from the start-up of Tango Train 3 we remain confident of delivering our 25 million tons per annum of supply in 2025. And finally we're upgrading our refining infrastructure including successfully commissioning two improvement projects at Cherry Point in the US which are expected to improve availability, reduce costs and reduce emissions. They say a pitcher is worth a thousand words and they are also saying this one certainly does that. And Murray and I saw this and we said we've got to get this in the pack. This is our Tango expansion project in Indonesia and you can see the third train there right in the center of the photograph. And it's a great example we think of us delivering on our strategy, what I like to call another shovel in the ground. This major project adds a third LNG train and around 3.8 million tons per annum of producing capacity to the existing 7.6 million tons per annum facility. Construction and commissioning of the project have been completed and as I said earlier start-up is now in progress in the facility. And it's an important delivery milestone contributing towards our target of 200,000 barrels of oil equivalent per day of high margin production from new major projects in 25 and our LNG target of 25 million tons of supply per annum in 2025. And having recently extended the production sharing contract in Tango to 2055 and we work underway to further grow our gas production and make Tango one of the lowest carbon intensity LNG facilities, we're really excited for the future of this key asset. Now turning to the progress, significant progress I think we've made in building our five transition growth engines, what we call our TGEs during the first half. First to the growth in our convenience business. In May we completed the acquisition of Travel Centers of America, TA, adding a network of 288 sites strategically located on major highways across the United States. Mecca gave me a map of this that I have on my desk and it really is phenomenal to look at because you see the extensive highway network in America and now we have dots and sites on virtually every one of them in 44 states. And TA is expected to almost double BP's global convenience growth margin and bring growth opportunities in four of our five transition growth engines. And in the first half excluding TA we delivered record convenience growth margin with around 7% year on year growth, that's on top of I think Emma 9% per annum over the previous three years. In EV charging we're rapidly building scale and demonstrating emerging profitability. For the first half energy sold rose by over two times. Murray and I say it's actually close to three times year on year, supported by a 70%, so almost three times increase in power, a 70% increase in the number of EV charge points which obviously means that utilization is going up. And in the second quarter our JV with Didi in China, which is our largest market and our business in Germany, we're both EBITDA positive. And we recently sanctioned $500 million of investment in the United States over the next two to three years to begin infrastructure build out there, including at the sites that I just mentioned at TA. In bioenergy, you guessed it, we are growing. In biofuels we produce more than 10% growth year on year and we continue to target final investment decisions on the first of our five biofuels projects by year end. And in biogas we continue to work on safely integrating our care energy into BP. We continue to grow our pipeline in hydrogen projects, underpinned by new projects in the United States and in Oman, the pipeline has increased by 60% since the end of 2022 to reach 2.8 million tons per annum, well on the way to delivering our target of doubling our pipeline by the end of the year. And finally we have strengthened our renewables and power pipeline, growing our renewables pipeline to 43.6 gigawatts net to BP. And that includes our recent offshore wind award in Germany. So let me say a little bit more about that one. We have been awarded the rights to develop two offshore wind projects in the recent German tender round, marking our entry into offshore wind in continental Europe. Now these two projects have a total potential generating capacity of four gigawatts and they grow our offshore wind pipeline globally to 9.3 gigawatts net to BP. Now importantly in Germany and in the region, BP has a demand of around 5 to 10 gigawatts just from our own operations of renewable power in the 2030s. And that's as we scale up green hydrogen, as we scale up biofuels production, as we scale up EV charging and as we decarbonize the two refineries that we have on the ground there. So the first thing is we have a large electricity demand ourselves, 5 to 10 gigawatts. At the same time the region is, and we forecast it to be, short of green electrons in that time period. And we expect this offshore wind capacity to one, provide us secure access to the electrons we need and two, to do it cheaper than we can buy them on the market. And as our focus is on securing access to renewable power as opposed to full long term asset ownership, we will pursue a very capital light delivery approach, bringing in a partner through farm down around the point of final in a financial investment decision. And we expect of course to leverage the project with financing. We're confident, as you would expect, very confident I would say, in achieving 6 to 8% unlevered returns. And that's before integration benefits. And we will enhance these returns further through integrating across the energy value chain, leveraging Carol's trading and shipping business to optimize value. And we believe our bid benchmarked positively compared to other lease auctions, acknowledging of course the importance of the timing of payments and other factories like the delivery of the offshore grid connection. And as a reminder, and I'm sure probably everyone in this room already knows, but as a reminder, the structure of the bid payments limit our financial exposure with 678 million euros up front. And then that's 10% of the bid amount that's paid by the middle of next year. And the remaining 90% starts when production starts in the 2030s and beyond and is paid over a 20 year period when the projects become operational. And then in Germany, the grid connection is provided by the transmission systems operator with compensation to the developer for any grid delays. So we're delighted, we're really excited about this win. It's fully aligned with our integrated energy strategy. It's in a core market for BP where we intend to continue to grow our business. So taken together across resilient hydrocarbons and the TGEs, I hope you will agree, I hope you might agree that what you see from BP is evidence of our strategy in action, underpinning the confidence we have in the operational and financial momentum we expect through the rest of the year, and as we work towards achieving our 2025 targets. And with that, enough from me. Let me hand over to Murray to take you through the second quarter results.

Murray. Super. Thanks, Bernard. And good morning, everybody. Let me start with our second quarter results. We reported an underlying replacement cost profit of $2.6 billion compared to $5 billion last quarter. Compared to the first quarter in gas and low carbon energy, the result reflects an exceptional gas marketing and trading result, albeit lower than the first quarter and lower gas realizations. In oil production operations, the result reflects lower realizations. And in customer and products, the product's result reflects significantly lower realized refining margins, primarily due to middle distillate margins, weaker middle distillate margins, and narrower North American crude heavy differentials. A significantly higher level of turnaround and maintenance activity, including a planned full site turnaround at Lingen, and a weak oil trading result. The customer's result reflects stronger retail margins and seasonally higher volumes, and a stronger convenience performance partially offset by foreign exchange. Turning to cash flow, operating cash flow was $6.3 billion in the second quarter. This includes a working capital release of $100 million. Capital expenditure was $4.3 billion, including inorganic expenditure net of adjustments of $1.1 billion related to the acquisition of Travel Centers of America. During the quarter, we repurchased $2.1 billion of shares, and the $1.75 billion program announced with first quarter 2023 results was completed on July 28. In the second quarter, BP surplus cash flow was an outflow of $300 million, and at the end of the second quarter, net debt was $23.7 billion. Moving to our discipline financial frame, our five priorities and guidance remain unchanged. We have today announced a dividend increase of 10% for the second quarter to 7.27 dividend cents per ordinary share. The dividend remains our first priority and is underpinned by a cash balance point of $40 Brent, 11 RMM, and $3.00 Henry Hub. We remain committed to maintaining a strong investment grade credit rating, and we are targeting further progress within the A grade credit rating. However, we have no intention to target a AA rating. As a result of our strong surplus cash flow generation over the last four quarters, we have executed over $10 billion of buybacks and have reduced our issued share account capital by over 9%. BP remains committed to using 60% of 2023 surplus cash flow for share buybacks, subject to maintaining a strong investment grade credit rating. Consistent with this, we have announced a further $1.5 billion share buyback to be completed prior to reporting third quarter results. Today's dividend increase in our ongoing buyback program reflect the confidence we have in our performance and the outlook for cash flow, and also reflect the progress we have made in reducing our share account. Looking forward, based on BP's current forecasts at around $60 per barrel Brent and subject to the board's discretion each quarter, BP continues 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 capital expenditure range and have capacity for an annual increase in dividend per ordinary share of around 4%. In setting the dividend per ordinary share and buyback each quarter, the board continues to take into account factors including the cumulative level and outlook for surplus cash flow, the cash balance point, and the maintenance of a strong investment grade credit rating. Finally, we're enhancing disclosure for our transition growth engines. Starting this quarter, we will report CAPEX and EBITDA on a biannual basis for each of the five engines. We expect to grow EBITDA from these businesses from around $700 million in the first half of 2023 to $3 to $4 billion in 2025, driven by bioenergy, convenience, and EV charging. In bioenergy, we expect to deliver around $2 billion of EBITDA in 2025 compared to the first half of 2023. In biofuels, we expect a double production to 2025 to around 50,000 barrels per day, including growth and co-processing at our existing refineries. And in biogas, we expect a double production to 2025 to around 40,000 barrels of oil equivalent per day, underpinned by the delivery of the Arkea energy pipeline and growth and third-party off-takes. In convenience, we are targeting $1.5 billion of EBITDA in 2025. We expect TA to contribute around $800 million of EBITDA by 2025, the majority from convenience. We also expect to further expand our strategic convenience sites, reaching around 3,000 by 2025 from around 2,750 today. And in EV charging, we expect to be EBITDA positive by 2025 as we accelerate the rollout of rapid and ultra-fast EV charge points and drive a material increase in energy sold. This disclosure is an important part of our commitment to reinventing BP, providing greater transparency around the progress we are making as we invest and grow these businesses. With that, let me hand back to Bernard.