TIDMBP.
RNS Number : 3527Z
BP PLC
10 December 2014
press release
10 December 2014
BP presents Upstream strategy to investors
Also expects $1 billion in Group-wide
restructuring charges over coming year
BP will today present to investors its strategy and plans to the
end of the decade and beyond for its Upstream oil and gas
business.
The day-long presentation, led by BP's Upstream chief executive
Lamar McKay, will provide an in-depth and detailed account of how
BP is managing its Upstream business and its distinctive strategy
for the long term. The presentation will also review the
macro-environment and the context of recent developments in oil
prices.
McKay and senior members of his upstream management team will
share further insights into the depth and quality of the Group's
resource base and investment portfolio, which underpin BP's
long-term value proposition through the changes in the price
environment.
"Although the current environment is challenging, BP is
well-positioned to respond and manage our Upstream business for the
long term," said Lamar McKay. "We expect to see growth from our
conventional and deepwater assets and an increasing contribution
from gas. And we also have a quality pipeline of opportunities that
we believe are capable of extending underlying growth well beyond
2020. Our focus throughout will remain firmly on safe operations,
execution efficiency and greater plant reliability."
BP also said today that, as part of its wider ongoing Group-wide
programme to simplify across its Upstream and Downstream activities
and corporate functions, it expects to incur non-operating
restructuring charges of circa $1 billion in total over the next
five quarters, including the current quarter. Details of these
charges and further guidance on the programme are expected to be
given with each quarter's results.
Group Chief Executive Bob Dudley said: "We have already been
working very hard over these past 18 months or so to right-size our
organisation as a result of completing more than $43 billion of
divestments. We are clearly a more focused business now and,
without diverting our attention from safety and reliability, our
goal is to make BP even stronger and more competitive.
"The simplification work we have already done is serving us well
as we face the tougher external environment. We continue to seek
opportunities to eliminate duplication and stop unnecessary
activity that is not fully aligned with the group's strategy."
As an integrated group, not all BP's businesses are equally
exposed to the oil price. About one third of its Upstream projects
around the world are operated under production sharing contracts
and it is also investing in high quality gas projects which are
typically less sensitive to oil price movements. Importantly, while
BP approves projects at $80 a barrel, it also already tests each at
$60 a barrel to understand the resilience of the portfolio at a
range of prices. It will also continue to consider lower price sets
as appropriate.
BP also has a strong balance sheet, with historically low
gearing of 15% at the end of the third quarter of 2014, which
provides time and flexibility to adjust to changes in the
environment.
Across the Group, BP has said it will be looking to pare or
re-phase capital expenditure without compromising safety or future
growth. In October, BP told investors this could result in
reductions of $1 billion to $2 billion in capital expenditure
across the Group in 2015 against guidance of $24 billion to $26
billion laid out in March. This will be reviewed further as part of
the 2015 plan, recognising the current outlook for oil prices.
When oil prices fall, there is typically deflation in the
industry as a whole. Together with its already greater focus on
streamlining activity, this would be expected to further help BP
align its cost base with its smaller footprint and reduced activity
levels.
The Upstream team will today detail the business's track record
of delivery as part of the Group's 10-point plan. Amongst the
milestones, over the last three years, the Upstream has improved
safety and reliability of operations; doubled exploration drilling
activity; and rebuilt Gulf of Mexico production. It has also
increased the rate of reinvestment; made $32 billion of divestments
in the Upstream business alone; and, by year end, also expects to
have delivered 15 new upstream projects with average operating cash
margins double 2011 average.
Between now and 2020, the Upstream team's focus will be on
delivery, through safe and reliable operations, strong execution in
the existing base business, and the start-up of a suite of new
projects which are expected to be capable of adding over 900,000
barrels of oil equivalent a day of net incremental production to
BP's portfolio by 2020. BP will also be progressing opportunities
expected to continue to drive underlying growth into the next
decade as it builds out its well-established conventional and
deepwater oil positions and a distinctive and material portfolio of
gas options.
Further enquiries:
BP press office, London +44 (0)207 496 4076, bppress@bp.com
Cautionary Statement:
This press release contains certain forecasts, projections and
forward-looking statements - that is, statements related to future,
not past events - with respect to the financial conditions, results
of operations and businesses of BP and certain of the plans and
objectives of BP with respect to these items. These statements
generally, but not always, are identified by the use of words such
as "will", "expected to", "is intended to", "projected" or similar
expressions. In particular, among other statements, BP's plans and
expectations regarding the impact of and its management of the
current and potential future low oil price environment, including
statements regarding BP's management of its Upstream business in
the long-term; statements regarding underlying growth from
conventional and deepwater oil assets and gas assets including the
future contributions of these sources to BP's portfolio; statements
regarding the capability of BP's pipeline of opportunities to
extend underlying growth beyond 2020; statements regarding current
and future focus on safe operations, execution efficiency and
greater plant reliability; BP's expectations regarding a total of
approximately $1 billion in non-operating restructuring charges and
the timing of such charges; statements regarding the effect of the
completion of the divestment programme on BP's future competitive
position; statements regarding plans to continue to eliminate
activities which do not align with the group's strategy and the
effect of deflation thereon; BP's plans to reduce 2015 capital
expenditure by between $1 billion to $2 billion compared to March
2014 guidance; and statements regarding future growth from BP's
base business and major project activities, including expectations
regarding the additional volume contributions to BP's portfolio by
2020; are all forward looking in nature. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will or may
occur in the future. Actual results may differ from those expressed
in such statements, depending on a variety of factors including the
timing of bringing new fields onstream; the timing and level of
maintenance and/or turnaround activity; the nature, timing and
volume of refinery additions and outages; the timing, quantum and
nature of divestments; the receipt of relevant third-party and/or
regulatory approvals; future levels of industry product supply;
demand and pricing; OPEC quota restrictions; PSA effects;
operational problems; economic and financial market conditions
generally or in various countries and regions; political stability
and economic growth in relevant areas of the world; changes in laws
and governmental regulations; regulatory or legal actions including
court decisions, the types of enforcement action pursued and the
nature of remedies sought or imposed; the impact on our reputation
following the Gulf of Mexico oil spill; exchange rate fluctuations;
development and use of new technology; the success or otherwise of
partnering; the actions of competitors, trading partners,
creditors, rating agencies and others; natural disasters and
adverse weather conditions; changes in public expectations and
other changes to business conditions; wars and acts of terrorism,
cyber-attacks or sabotage; and other factors discussed under
"Principal risks and uncertainties" in BP's Form 6-K for the period
ended 30 June 2014.
This press release references financial information that is not
presented in accordance with generally accepted accounting
principles (GAAP). A quantitative reconciliation of this
information to the most directly comparable financial measure
calculated and presented in accordance with GAAP can be found on
our website at www.bp.com.
This press release uses contains references to non-proved
resources and production outlooks based on non-proved resources
that the SEC's rules prohibit us from including in our filings with
the SEC. U.S. investors are urged to consider closely the
disclosures in our Form 20-F, SEC File No. 1-06262. This form is
available on our website at www.bp.com. You can also obtain this
form from the SEC by calling 1-800-SEC-0330 or by logging on to
their website at www.sec.gov.
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
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