Hello and welcome. This is BPs third-quarter 2015 results webcast and conference call. Im Jess Mitchell, BPs Head of Investor Relations and Im here with our Group Chief Executive Bob Dudley, and our Chief Financial Officer, Brian…
During todays 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…
Thank you Jess 4
Today we are reporting our third-quarter results in what has been another consistent quarter of operational delivery for BP. It is also a quarter where we have all seen continued volatility in the environment and our industry remains…
Thanks Bob. 6
Starting with the environment. Brent oil has averaged around 50 per barrel this quarter, down from 62 per barrel in the second quarter. Although global demand has been stronger and US production has begun to decline, OPEC production is…
Turning now to the results. BPs underlying replacement cost profit in the third quarter was 1.8 billion, down 40% on the same period a year ago, and 39% higher than the second quarter of 2015. Compared to a year ago, the result reflects:…
In the Upstream, the underlying third-quarter replacement cost profit before interest and tax of 820 million compares with 3.9 billion a year ago and 490 million in the second quarter of 2015. Compared to the third quarter last year the…
In the Downstream, the third quarter underlying replacement cost profit before interest and tax was 2.3 billion compared with 1.5 billion in the third quarter last year and 1.9 billion in the second quarter. The fuels business reported…
Turning to Rosneft. Based on preliminary information, we have recognised 380 million as our estimate of BPs share of Rosnefts underlying net income, compared to 110 million a year ago and 510 million in the second quarter. Our estimate…
In Other Businesses and Corporate, we reported a pre-tax underlying replacement cost charge of 230 million for the third quarter compared to 290 million a year ago and 400 million in the second quarter. The average quarterly charge for…
Turning to the Gulf of Mexico oil spill costs and provisions. As previously announced, BP Exploration & Production reached agreements in principle with the United States government and five Gulf Coast states to settle all federal and…
The ongoing costs of the Gulf Coast Restoration Organisation. It is still not possible to reliably estimate the remaining liability for business economic loss claims and we continue to review this each quarter. Of the 20 billion paid…
Moving to cash flow, this slide compares our sources and uses of cash in the first nine months of 2014 and 2015. Operating cash flow in the first nine months was 13.3 billion, of which 5.2 billion was generated in the third quarter. This…
Thanks Brian. 15
And I think that is a good set of results. Obviously the landscape has changed for everyone but I think the numbers show that BP is competing well in the current environment. I will come to the reasons for that and to our future plans…
world during both good and trying times. Our history has given us a strong desire to be pioneering and to be good at business, always looking to see and capture the opportunity in any situation. But we are very clear that, before we do…
Which brings me to our proposition for value growth. If we are going to succeed we need to hold on firmly to the things that matter for our business long-term, regardless of the environment. In July we began to talk with shareholders…
plan also needs to see us through the medium term. Brian will take you through that shortly, including the steps we are taking on resetting the capital and cost base of the company. He will also show you our financial framework out to…
For now, let me take you through these principles in a little more detail, starting with running safe and reliable operations. Over the last five years we have taken many steps to build a safer and more reliable business since the…
Now, moving on to our portfolio, here the key is balance balance between different geographies, different resource types, different parts of the value chain and different parts of an assets life cycle. Getting the right balance provides…
manufacturing and marketing with a strong orientation towards marketing growth. We have reshaped our refining portfolio in recent years and are now well positioned to drive top quartile competitive performance. We continue to carefully…
Four years ago we said that we would actively manage our portfolio for value over volume. While we are confident in the balance and make up of our portfolio as we see it today, we still keep it constantly under review. At its simplest we…
Turning now to each of our businesses, starting with the Upstream. We continue to build on the strategy we outlined to you in December last year. The efficient execution of our activities is delivered through a well established…
Looking more closely at our base business. This comprises around 350 oil & gas fields with thousands of reservoirs and over 50 rigs operating; and also employs the largest proportion of our Upstream staff and agency contractors. Here we…
Plutonio in Angola. We expect all these efforts will allow us to keep the average managed base decline through 2016 at around 2%. And this 2% is an important number for you to take note of. The long range view of managed base decline…
Looking ahead we continue to have more opportunities than our capital frame enables us to progress, and more than are required to sustain our underlying production growth in the longer term. In order to make choices, we apply our…
deflation, rescoping and rephasing the spending appropriately. We also have enough uncommitted spend and flexibility to manage the pace of investment as needed. 23
When it comes to progressing projects, our approach is focused on creating value and improving project performance from concept appraisal to execution. This includes having a single concept development team that appraises projects through…
Also on both current major projects and future project and drilling opportunities we prioritise the development of higher returning resources. 24
We have applied this approach on the West Nile Delta project and Ill use this and the Thunder Horse South Expansion project which were both sanctioned this year to illustrate this process in action. Firstly, West Nile Delta. This project…
So where does all this leave our expected production from new projects We have a robust pipeline of projects delivering growth through 2020. With 2014 start-ups now reflected in our base, we expect new project start-ups between 2015 and…
As shareholders you have given us feedback to be clearer about our pipeline of projects. While this slide is not so easy to read quickly, it will be available on our website. In addition to the projects under construction that I just…
Looking further out, we have the options, discovered resources and acreage in our portfolio to extend production growth well beyond 2020. Putting aside Russia for a moment, we have a hopper of 44 billion barrels of oil equivalent…
Thirdly, through success stemming from our ongoing level of investment into exploration, access and appraisal. We will also seek opportunities that arise in the current environment to deepen existing positions as we did earlier this…
We continue our agenda on cost, simplification and efficiency in the Upstream. Since we started the programme to reset Upstream costs in 2013 we have reduced unit production costs by around 20%, as the chart shows. We are focused on…
32m of gross rig cost savings in the Gulf of Mexico through the end of this year via materials tracking and management of services as well as a focus on equipment rental and rates; And, a 23% reduction in land lease cost during the…
Moving on to the US Lower 48, where we have a material resource base, with 7.5 billion barrels across 5.7 million net acres. The transformation programme of the last 18 months has empowered the Lower 48 team to focus on safety,…
Here we can see how this is all starting to deliver an improvement in capital efficiency. Development costs are benchmarked across the regions against competitors, and also versus previous performance in the same plays. As you can see…
Lets look now at the Downstream where the focus remains on delivering resilient and improving performance and growth. The disciplined execution of our strategy is illustrated by our record year to date pre-tax profit and returns. In…
Looking at the portfolio here you see what we mean by advantaged manufacturing and marketing growth. We continue to build a top quartile and focused refining business through operating reliability, feedstock advantage and efficiency…
European rollout. These fuels deploy proprietary technology to remove dirt from the engine and in turn increase fuel economy. In Lubricants, our sustained focus on growth markets and premium products has resulted in year-on-year pre-tax…
We continue to see significant year-on-year benefits from our focus on cost efficiencies in the Downstream. Year-to-date cash costs are some 15% lower than the same period in 2014 reflecting our simplification and efficiency programmes…
Now let me briefly remind you of our track record and, I think, unique position in Russia. BP has successfully been doing business there for over 25 years and over recent years we have taken some significant steps. We have acquired a…
look for other opportunities to work with our partners as we aim to build upon our successful involvement in Russia. We see Russia - one of the worlds largest hydrocarbon provinces - as an important part of BPs long term strategy…
So that explains the principles that drive our business long-term and how these principles reflect in the make-up of the portfolio for the Group and the strategies of our businesses. In the Upstream we have a very material resource base…
Thanks Bob. 37
Now that you have the overall perspective Bob presented, Ill start by outlining the key elements of our financial outlook for the next few years as we continue to re-calibrate to the current price environment. Our principal objective…
Turning to these points in more detail and starting with capital expenditure. As mentioned we now expect organic capital expenditure to be in the range of 17-19 billion through to 2017, although closer to 19 billion this year. For 2015…
Turning to cash costs. We continue to make strong progress on right-sizing the Groups cash cost base while seeing the benefit of the investment we made in improving asset integrity. Our intensified efforts across the whole of the Group…
Footnote to be added on price assumptions Looking at free cash flow beyond 2017. By 2017 we expect to be working off a reset and structurally more efficient platform, both Upstream and Downstream, with sources and uses of cash for…
Turning to divestments. Total divestments since 2010, as Bob described, are now approaching 50 billion, or nearer 75 billion including the sale of our interest in TNK-BP. To-date we have agreed 7.8 billion of our 10 billion programme…
Lastly, just a few words on gearing. At the end of the third quarter gearing stands at 20% including the impact of the consent decree and agreements with the Gulf States. This compares to the 10-20% target band we established in 2010 to…
Thanks Brian 44
To sum up, we believe we are navigating through the current challenges in a way that is characteristic for BP. I am confident we will adapt to this new world and do so with competitive advantages. We have worked hard to build a track…
the years and decades ahead. On that note, thank you very much for listening, a little longer this time, and now lets take your questions. 45
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