TIDMBP.
RNS Number : 0874P
BP PLC
07 February 2023
Top of page 1
FOR IMMEDIATE RELEASE
London 7 February 2023
BP p.l.c. Group results
Fourth quarter and full year 2022
---------------------------------
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Performing while transforming
Financial summary Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------------- ------- ------- ------- -------- --------
Profit (loss) for the period attributable
to bp shareholders 10,803 (2,163) 2,326 (2,487) 7,565
Inventory holding (gains) losses*, net
of tax 1,066 2,186 (358) (1,019) (2,826)
------------------------------------------------- ------- ------- ------- -------- --------
Replacement cost (RC) profit (loss)* 11,869 23 1,968 (3,506) 4,739
Net (favourable) adverse impact of adjusting
items*, net of tax (7,062) 8,127 2,097 31,159 8,076
------------------------------------------------- ------- ------- ------- -------- --------
Underlying RC profit* 4,807 8,150 4,065 27,653 12,815
------------------------------------------------- ------- ------- ------- -------- --------
Operating cash flow* 13,571 8,288 6,116 40,932 23,612
Capital expenditure* (7,369) (3,194) (3,633) (16,330) (12,848)
------------------------------------------------- ------- ------- ------- -------- --------
Divestment and other proceeds(a) 614 606 2,265 3,123 7,632
------------------------------------------------- ------- ------- ------- -------- --------
Surplus cash flow* 5,080 3,530 2,993 19,289 6,308
------------------------------------------------- ------- ------- ------- -------- --------
Net issue (repurchase) of shares(b) (3,240) (2,876) (1,725) (9,996) (3,151)
------------------------------------------------- ------- ------- ------- -------- --------
Net debt*(c) 21,422 22,002 30,613 21,422 30,613
------------------------------------------------- ------- ------- ------- -------- --------
Return on average capital employed (ROACE)*
(%) 30.5% 13.3%
------------------------------------------------- ------- ------- ------- -------- --------
Adjusted earnings before interest, taxation,
depreciation and amortization (adjusted
EBITDA)* 60,747 37,315
------------------------------------------------- ------- ------- ------- -------- --------
Adjusted earnings before interest, depreciation
and amortization (adjusted EBIDA)* 45,695 30,783
Announced dividend per ordinary share
(cents per share) 6.610 6.006 5.460 24.082 21.630
Underlying RC profit per ordinary share*
(cents) 26.44 43.15 20.53 145.63 63.65
------------------------------------------------- ------- ------- ------- -------- --------
Underlying RC profit per ADS* (dollars) 1.59 2.59 1.23 8.74 3.82
------------------------------------------------- ------- ------- ------- -------- --------
-- Net debt reduced -- 10% increase -- Delivering resilient -- Continued progress
to $21.4bn; 2022 in resilient dividend hydrocarbons - Cassia in transformation
ROACE 30.5% to 6.61 cents per C start-up; first to an IEC - accelerating
ordinary share; LNG cargo loaded biogas strategy
further $2.75bn at Coral Sul FLNG; with completion
share buyback announced 20-year extension of Archaea Energy
to Tangguh PSC* acquisition; >65%
increase in EV
charge points in
2022
Throughout 2022, bp continued to focus on delivery of our Integrated
Energy Company strategy. We are helping provide the energy the world
needs today and - at the same time - investing with discipline into our
transition and the energy transition - as demonstrated by the Archaea
Energy acquisition. We are strengthening bp, with our strongest upstream
plant reliability on record and our lowest production costs in 16 years,
helping to generate strong returns and reducing debt for the 11th quarter
in a row. Importantly, we are delivering for our shareholders - with
buybacks and a growing dividend. This is exactly what we said we would
do and will continue to do - performing while transforming.
Bernard Looney
Chief executive officer
(a) Divestment proceeds are disposal proceeds as per the
condensed group cash flow statement. See page 3 for more
information on divestment and other proceeds.
(b) Full year 2022 excludes the ordinary shares issued as
non-cash consideration for the acquisition of the public units of
BP Midstream Partners LP. See Note 8 for more information.
(c) See Note 10 for more information.
RC profit (loss), underlying RC profit (loss), surplus cash
flow, net debt, ROACE, adjusted EBITDA, adjusted EBIDA, underlying
RC profit per ordinary share and underlying RC profit per ADS are
non-GAAP measures. Inventory holding (gains) losses and adjusting
items are non-GAAP adjustments.
* For items marked with an asterisk throughout this document,
definitions are provided in the Glossary on page 36 .
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Highlights
Underlying replacement cost profit* $4.8 billion
* Underlying replacement cost profit for the quarter
was $4.8 billion, compared with $8.2 billion for the
previous quarter. Compared to the third quarter, the
result was impacted by a below average gas marketing
and trading result after the exceptional result in
the third quarter, lower oil and gas realizations, a
higher level of refinery turnaround and maintenance
activity, and lower marketing margins and seasonally
lower volumes. An underlying ETR* of 40% in the
fourth quarter brings the full year underlying ETR*
to 34%.
* Reported profit for the quarter was $10.8 billion,
compared with a loss of $2.2 billion for the third
quarter 2022. The reported result for the fourth
quarter is adjusted by inventory holding losses net
of tax of $1.1 billion and a gain for adjusting
items* net of tax of $7.1 billion to derive the
underlying replacement cost profit. Adjusting items
include favourable fair value accounting effects* of
$13.2 billion before tax, primarily due to a decrease
in forward gas prices compared to the end of the
third quarter.
Net debt* reduced to $21.4 billion; further $2.75 billion share
buyback announced
* Operating cash flow* in the quarter was $13.6 billion
including a working capital release (after adjusting
for inventory holding losses*, fair value accounting
effects and other adjusting items) of $4.2 billion
(see page 31).
* Capital expenditure* in the fourth quarter and full
year was $7.4 billion and $16.3 billion respectively.
Within this, inorganic spend was $3.5 billion in the
fourth quarter and full year, including $3.0 billion
for Archaea Energy, net of adjustments, and $0.5
billion for the earlier than expected completion of
the acquisition of EDF Energy Services.
* During the fourth quarter, bp completed share
buybacks of $3.2 billion. The $2.5 billion share
buyback programme announced with the third quarter
results was completed on 3 February 2023.
* In the fourth quarter, bp generated surplus cash
flow* of $5.1 billion and intends to execute a $2.75
billion share buyback from surplus cash flow prior to
announcing its first-quarter-2023 results. bp has now
announced share buybacks from surplus cash flow
equivalent to 60% of cumulative surplus cash flow
since the start of 2021.
* Net debt fell for the eleventh successive quarter to
reach $21.4 billion at the end of the fourth quarter.
Growing distributions; updating disciplined financial frame
* A resilient dividend remains bp's first priority
within its disciplined financial frame. It is
underpinned by a cash balance point* of $40 per
barrel Brent, $11 per barrel RMM and $3 per mmBtu
Henry Hub (all 2021 real).
* For the fourth quarter, bp has announced a dividend
per ordinary share of 6.610 cents an increase of
around 10%. This increase is underpinned by strong
underlying performance and supported by the
confidence we have in delivering higher adjusted
EBITDA* as a result of our updated investment plans.
* bp is committed to maintaining a strong investment
grade credit rating, targeting further progress
within an 'A' grade credit rating. For 2023 bp
intends to allocate 40% of surplus cash flow to
further strengthening the balance sheet.
* bp continues to focus on disciplined investment
allocation. For 2023 bp expects capital expenditure
of $16-18 billion and for 2024-30 now expects capital
expenditure in a range of $14-18 billion including
inorganic capital expenditure*.
* For 2023 and subject to maintaining a strong
investment grade credit rating, bp remains committed
to using 60% of surplus cash flow for share buybacks.
* Based on bp's current forecasts, at around $60 per
barrel Brent and subject to the board's discretion
each quarter, bp expects to be able to deliver share
buybacks of around $4.0 billion per annum, at the
lower end of its capital expenditure range, and have
capacity for an annual increase in the dividend per
ordinary share of around 4%.
Continued progress in transformation to an Integrated Energy Company
* In a separate announcement , bp has today provided an
update on the significant progress made in executing
its transformation to an Integrated Energy Company
(IEC) since outlining its new strategy.
* In resilient hydrocarbons bp has accelerated its
biogas strategy - part of its bioenergy Transition
Growth Engine - completing the acquisition of Archaea
Energy a leading US biogas company. Delivering on its
focus on cost and efficiency, in 2022 bp delivered
its lowest upstream unit production cost* since 2006
and highest upstream plant reliability* on record.
* In convenience and mobility bp continues to make
strategic progress, announcing an exclusive agreement
in the UK with Marks and Spencer (M&S) to install
fast(a) charge points to around 70 of their stores,
adding up to 900 charge points within the next two
years; and increasing the number of EV charge points
by over 65% versus 2021.
* In low carbon energy bp has continued to make rapid
progress building its portfolio of green hydrogen*
projects, signing memoranda of understanding (MoUs)
with both Mauritania and Egypt to explore the
potential for large scale green hydrogen
developments.
During 2022 bp delivered four quarters of robust underlying financial
performance. We have raised our dividend by 21% since 4Q 2021, reduced
net debt by $9.2 billion, invested with discipline and announced $11.25
billion of share buybacks. As we look to 2023, we remain focused on the
disciplined delivery of our financial frame, with its five priorities,
underpinned by a $40/bbl balance point, unchanged.
Murray Auchincloss
Chief financial officer
(a) "fast charging" includes rapid charging >=50kW and ultra-fast charging >=150kW.
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 42.
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Financial results
At 31 December 2021, the group's reportable segments were gas
& low carbon energy, oil production & operations, customers
& products and Rosneft. The group has ceased to report Rosneft
as a separate segment in the group's financial reporting for 2022.
From the first quarter of 2022, the group's reportable segments are
gas & low carbon energy, oil production & operations and
customers & products. For more information see Note 1 Basis of
preparation - Investment in Rosneft. For the period from 1 January
2022 to 27 February 2022, net income from Rosneft is classified as
an adjusting item.
In addition to the highlights on page 2:
-- Profit attributable to bp shareholders in the fourth quarter
was $10.8 billion compared with $2.3 billion in the same period of
2021. Loss attributable to bp shareholders in the full year was
$2.5 billion compared with a profit of $7.6 billion in the same
period of 2021.
- The increase in the underlying replacement cost profit for
both periods reflects higher gas and liquids realizations and
higher refining margins, partially offset by higher tax and the
absence of bp share of earnings from Rosneft. The fourth quarter
result also reflects an adverse impact of turnaround and
maintenance activity, and the year a favourable impact of strong
trading performance.
- Adjusting items* in the fourth quarter and full year were a
favourable pre-tax impact of $9.7 billion and an adverse pre-tax
impact of $29.8 billion respectively, compared with an adverse
pre-tax impact of $3.0 billion and $8.7 billion in the same periods
of 2021.
As a result of bp's two nominated directors stepping-down from
the Rosneft board on 27 February 2022, bp determined that it no
longer meets the criteria set out under IFRS for having
"significant influence" over Rosneft. bp therefore no longer equity
accounts for its interest in Rosneft from that date, treating it
prospectively as a financial asset measured at fair value. Within
the full year result, the loss of significant influence and an
impairment assessment led to a net pre-tax charge of $24.0 billion
classified as an adjusting item, reducing equity by $14.4 billion.
A further $1.5 billion pre-tax charge relating to bp's decision to
exit its other businesses with Rosneft in Russia is also included
in the full year result, reducing equity by $1.2 billion. See Note
1 for further information.
Adjusting items for the fourth quarter and full year 2022 also
include increases in pre-tax fair value accounting effects* of
$13.2 billion and decreases of $3.5 billion respectively, compared
with a decreasing pre-tax impact of $0.9 billion and $8.1 billion
in the same periods of 2021. Under IFRS, reported earnings include
the mark-to-market value of the hedges used to risk-manage LNG
contracts, but not of the LNG contracts themselves. The underlying
result includes the mark-to-market value of the hedges but also
recognizes changes in value of the LNG contracts being risk
managed.
Adjusting items for the fourth quarter also includes net
impairment charges of $3.6 billion principally as a result of
expected portfolio changes in our oil production & operations
segment, the annual review of price assumptions used for investment
appraisal and value-in-use impairment testing and the annual review
of discount rates used for impairment tests. The full year 2022
also includes a non-taxable gain of $2.0 billion arising from the
contribution of bp's Angolan business to Azule Energy.
-- The effective tax rate (ETR) on RC profit or loss* for the
fourth quarter and full year was 33% and 117% respectively,
compared with 38% and 51% for the same periods in 2021. Excluding
adjusting items, the underlying ETR* for the fourth quarter and
full year was 40% and 34% respectively, compared with 34% and 32%
for the same periods a year ago. The higher underlying ETR for the
fourth quarter and full year reflects the UK Energy Profits Levy on
North Sea profits and the absence of equity-accounted earnings from
Rosneft, for the full year this is partly offset by changes in the
geographical mix of profits. ETR on RC profit or loss and
underlying ETR are non-GAAP measures.
-- Operating cash flow* for the fourth quarter and full year
2022 was $13.6 billion and $40.9 billion respectively, compared
with $6.1 billion and $23.6 billion for the same periods in 2021
primarily as an outcome of higher underlying profits and working
capital movements.
-- Capital expenditure* in the fourth quarter and full year 2022
was $7.4 billion and $16.3 billion respectively, compared with $3.6
billion and $12.8 billion in the same periods of 2021, higher as a
result of acquisitions completed during the fourth quarter
2022.
-- Total divestment and other proceeds for the fourth quarter
and full year were $0.6 billion and $3.1 billion respectively,
compared with $2.3 billion and $7.6 billion for the same periods in
2021. Other proceeds for the full year 2022 consist of $0.6 billion
of proceeds from the disposal of a loan note related to the Alaska
divestment. See page 32 for further information.
-- At the end of the fourth quarter, net debt* was $21.4
billion, compared with $22.0 billion at the end of the third
quarter 2022 and $30.6 billion at the end of the fourth quarter
2021.
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Analysis of RC profit (loss) before interest and tax and
reconciliation to profit (loss) for the period
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
--------------------------------------------------- ------- ------- ------- -------- -------
RC profit (loss) before interest and
tax
gas & low carbon energy 16,439 (2,956) 1,911 14,696 2,133
oil production & operations 1,688 6,965 3,212 19,721 10,501
customers & products 771 2,586 (426) 8,869 2,208
other businesses & corporate(a) 103 (1,093) (369) (26,737) (348)
Of which:
other businesses & corporate excluding
Rosneft 103 (1,093) (924) (2,704) (2,777)
Rosneft - - 555 (24,033) 2,429
Consolidation adjustment - UPII* 147 (21) (7) 139 (67)
--------------------------------------------------- ------- ------- ------- -------- -------
RC profit loss before interest and tax 19,148 5,481 4,321 16,688 14,427
Finance costs and net finance expense
relating to pensions and other post-retirement
benefits (818) (633) (751) (2,634) (2,855)
Taxation on a RC basis (6,103) (4,646) (1,350) (16,430) (5,911)
Non-controlling interests (358) (179) (252) (1,130) (922)
--------------------------------------------------- ------- ------- ------- -------- -------
RC profit (loss) attributable to bp shareholders* 11,869 23 1,968 (3,506) 4,739
Inventory holding gains (losses)* (1,428) (2,868) 472 1,351 3,655
Taxation (charge) credit on inventory
holding gains and losses 362 682 (114) (332) (829)
--------------------------------------------------- ------- ------- ------- -------- -------
Profit (loss) for the period attributable
to bp shareholders 10,803 (2,163) 2,326 (2,487) 7,565
--------------------------------------------------- ------- ------- ------- -------- -------
Analysis of underlying RC profit (loss) before interest and
tax
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------------- ------- ------- ------- -------- -------
Underlying RC profit (loss) before interest
and tax
gas & low carbon energy 3,148 6,240 2,211 16,063 7,528
oil production & operations 4,428 5,211 4,024 20,224 10,292
customers & products 1,902 2,725 611 10,789 3,252
other businesses & corporate(a) (306) (405) 210 (1,171) 1,337
Of which:
other businesses & corporate excluding
Rosneft (306) (405) (535) (1,171) (1,383)
Rosneft - - 745 - 2,720
Consolidation adjustment - UPII 147 (21) (7) 139 (67)
------------------------------------------------- ------- ------- ------- -------- -------
Underlying RC profit before interest
and tax 9,319 13,750 7,049 46,044 22,342
Finance costs and net finance expense
relating to pensions and other post-retirement
benefits (649) (565) (494) (2,209) (2,073)
Taxation on an underlying RC basis (3,505) (4,856) (2,238) (15,052) (6,532)
Non-controlling interests (358) (179) (252) (1,130) (922)
------------------------------------------------- ------- ------- ------- -------- -------
Underlying RC profit attributable to
bp shareholders* 4,807 8,150 4,065 27,653 12,815
------------------------------------------------- ------- ------- ------- -------- -------
Reconciliations of underlying RC profit attributable to bp
shareholders to the nearest equivalent IFRS measure are provided on
page 1 for the group and on pages 6-15 for the segments.
(a) From first quarter 2022 the results of Rosneft, previously
reported as a separate segment, are also included in other
businesses & corporate. Comparative information for 2021 has
been restated to reflect the changes in reportable segments. For
more information see Note 1 Basis of preparation - Investment in
Rosneft.
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Operating Metrics
Operating metrics Year 2022 vs Year
2021
------------------------------------------- ---------- -------
Tier 1 and tier 2 process safety events* 50 -12
Reported recordable injury frequency* 0.187 +14.1%
upstream* production(a) (mboe/d) 2,253 +1.6%
upstream unit production costs*(b) ($/boe) 6.07 -11.0%
bp-operated hydrocarbon plant reliability* 96.0% +2.0
bp-operated refining availability*(a) 94.5% -0.3
-------------------------------------------- ---------- -------
(a) See Operational updates on pages 6, 9 and 11.
(b) Reflecting higher volumes and lower costs including impact
of conversion to equity-accounted entities.
Reserves replacement ratio*
The organic reserves replacement ratio (RRR) on a combined basis
of subsidiaries and equity-accounted entities was 20% for the year
(2021 50%). The decrease is largely due to price related reserves
reductions in our production-sharing agreements*. The announced
exit from Russia is treated as a divestment and therefore impacts
only total RRR, not organic.
Outlook & Guidance
Macro outlook
-- In the first quarter, bp expects oil prices to remain
supported by recovering Chinese demand, ongoing uncertainty around
the level of Russian exports and low inventory levels.
-- bp expects the outlook for global gas prices during the first
quarter to remain dependent on weather in the Northern Hemisphere
and the pace of Chinese demand recovery.
-- bp expects industry refining margins to remain elevated in
the first quarter due to sanctioning of Russian crude and
product.
1Q23 guidance
-- Looking ahead, we expect first-quarter 2023 reported
upstream* production to be broadly flat compared to fourth quarter
2022.
-- In our customers business, we expect seasonally lower volumes
and in Castrol base oil prices to remain high, although lower than
the fourth quarter 2022. In refining, we expect margins to remain
elevated and a lower level of turnaround activity.
2023 guidance
In addition to the guidance on page 2:
-- bp expects both reported and underlying upstream production
to be broadly flat compared with 2022. Within this, bp expects
underlying production* from oil production & operations to be
slightly higher and production from gas & low carbon energy to
be lower. bp expects the start-up of Mad Dog Phase 2 in the second
quarter of 2023 and first gas from the Tangguh expansion and GTA
Phase 1 Tortue projects in the fourth quarter of 2023.
-- bp expects the other businesses & corporate underlying
annual charge to be in a range of $1.1-1.3 billion for 2023. The
charge may vary from quarter to quarter.
-- bp expects the depreciation, depletion and amortization to be
slightly above 2022.
-- The underlying ETR* for 2023 is expected to be around 40% but
is sensitive to the impact that volatility in the current price
environment may have on the geographical mix of the group's profits
and losses.
-- bp expects capital expenditure* of $16-18 billion in 2023
including inorganic capital expenditure*.
-- Having realized $15.9 billion of divestment and other
proceeds since the second quarter of 2020, bp now expects
divestment and other proceeds of $2-3 billion in 2023 and continues
to expect to reach $25 billion of divestment and other proceeds
between the second half of 2020 and 2025.
-- bp expects Gulf of Mexico oil spill payments for the year to
be around $1.3 billion pre-tax including $1.2 billion pre-tax to be
paid during the second quarter.
-- Against the authority granted at bp's 2022 annual general
meeting to repurchase up to 1.95 billion shares, bp has repurchased
1.11 billion shares.
-- In setting the dividend per ordinary share and buyback each
quarter, the board will continue to take into account factors
including the cumulative level of and outlook for surplus cash
flow*, the cash balance point* and the maintenance of a strong
investment grade credit rating.
The commentary above contains forward-looking statements and should be
read in conjunction with the cautionary statement on page 42.
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gas & low carbon energy*
Financial results
-- The replacement cost profit before interest and tax for the
fourth quarter and full year was $16,439 million and $14,696
million respectively, compared with $1,911 million and $2,133
million for the same periods in 2021. The fourth quarter and full
year is adjusted by a favourable impact of net adjusting items* of
$13,291 million and adverse impact of $1,367 million respectively
to derive the underlying replacement cost profit, compared with
adverse impacts of net adjusting items of $300 million and $5,395
million for the same periods in 2021.
-- After adjusting items, the underlying replacement cost profit
before interest and tax* for the fourth quarter and full year was
$3,148 million and $16,063 million respectively, compared with
$2,211 million and $7,528 million for the same periods in 2021.
Adjusting items include favourable fair value accounting effects*
of $12,502 million for the quarter and an adverse effect of $1,811
million for the full year. The adjusting items for the fourth
quarter primarily arose from a significant decrease in forward gas
prices during the quarter. Under IFRS, reported earnings include
the mark-to-market value of the hedges used to risk-manage LNG
contracts, but not of the LNG contracts themselves. The underlying
result includes the mark-to-market value of the hedges but also
recognizes changes in value of the LNG contracts being risk
managed, which decreased as forward prices fell.
-- The underlying replacement cost profit for the fourth
quarter, compared with the same period in 2021, reflects higher
realizations, partially offset by lower production and a lower gas
marketing and trading result. For the full year the result reflects
higher realizations, higher production and an exceptional gas
marketing and trading result.
Operational update
-- Reported production for the quarter was 956mboe/d, 1.8% lower
than the same period in 2021. Underlying production* was 2.4%
lower, mainly due to base decline in Trinidad.
-- Reported production for the full year was 957mboe/d, 4.9%
higher than the same period in 2021. Underlying production for the
full year was 4.9% higher due to the ramp-up of major
projects*.
-- Renewables pipeline* at the end of the quarter was 37.2GW (bp
net). The renewables pipeline increased by 10.3GW during the
quarter due to additions to the renewables pipeline in support of
hydrogen in Australia. The renewables pipeline increased by 14.1GW
for the full year, primarily as a result of bp and its partner EnBW
being awarded a lease option off the east coast of Scotland to
develop an offshore wind project (1.45GW bp net) in the first
quarter of 2022, net additions to Lightsource bp's pipeline, and
the additions to the renewables pipeline in the fourth quarter in
support of hydrogen in Australia.
Strategic progress
gas
-- On 23 December the government of Indonesia granted a 20-year
extension, to 2055, of the Tangguh production-sharing contract*
(Tangguh PSC) to bp (40.22% and operator), and its Tangguh PSC
partners.
-- On 29 November bp announced its Cassia C development offshore
Trinidad had safely delivered first gas. Cassia C is bp Trinidad
and Tobago's (bp 70%) first offshore compression platform and its
biggest offshore facility.
-- On 28 November bp was awarded two exploration blocks in the
Mediterranean sea, offshore Egypt by the Egyptian Natural Gas
Holding Company. The Northwest Abu Qir Offshore Area (bp 82.75%
operator, Wintershall-Dea 17.25%) is located west of the recently
awarded North King Mariout block (bp 100%) and north of the Raven
field. The Bellatrix-Seti East block (bp 50%, Eni 50% operator) is
located west of the Atoll field and North Tabya blocks.
-- On 8 December Trinidad's Ministry of Energy and Energy
Industries announced that it had reached agreement with the
Atlantic LNG shareholders, including bp, on substantial commercial
terms for the consolidation of its operations into a single entity
which is a key milestone towards unlocking the energy future for
Trinidad and Tobago. The new structure is expected to be effective
in October 2024 and will enable increased focus on operational
efficiency and reliability and underpin future upstream
investments.
-- On 14 November bp began lifting cargoes of LNG from
Mozambique's first LNG project. bp has a long-term agreement to
purchase 100% of the LNG output from the facility that has the
capacity to produce up to 3.4 million tonnes of LNG per year.
low carbon energy
-- On 8 November and 8 December bp signed memoranda of
understanding with the governments of Mauritania and Egypt,
respectively to explore the potential for establishing green
hydrogen* production facilities in the countries.
-- Lightsource bp brought 2.7GW to FID (1.34GW bp net) in full
year 2022, an increase of 32% compared with 2.0GW (1.0GW bp net) in
2021, and divested 0.9GW of projects (0.45GW bp net) during the
year, resulting in $0.1 billion of gains on disposal recognized in
bp's share of equity-accounted earnings.
-- On 9 December bp announced it will partner with Shell and
Lightsource bp to develop a 148 megawatt-peak solar project in
Trinidad and Tobago following approval by the country's government.
It is the country's first commercial-scale renewable energy
project.
-- On 14 December bp agreed with its Flat Ridge 2 joint venture
partner to purchase their 50% ownership in that wind farm. bp now
owns 100%, adding an additional 235MW of capacity to bp's renewable
portfolio.
Top of page 7
gas & low carbon energy (continued)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
---------------------------------------------- -------- ------- ------- ------- -------
Profit (loss) before interest and tax 16,429 (2,970) 1,903 14,688 2,166
Inventory holding (gains) losses* 10 14 8 8 (33)
---------------------------------------------- -------- ------- ------- ------- -------
RC profit (loss) before interest and
tax 16,439 (2,956) 1,911 14,696 2,133
Net (favourable) adverse impact of adjusting
items (13,291) 9,196 300 1,367 5,395
---------------------------------------------- -------- ------- ------- ------- -------
Underlying RC profit before interest
and tax 3,148 6,240 2,211 16,063 7,528
Taxation on an underlying RC basis (1,163) (1,478) (509) (4,367) (1,677)
---------------------------------------------- -------- ------- ------- ------- -------
Underlying RC profit before interest 1,985 4,762 1,702 11,696 5,851
---------------------------------------------- -------- ------- ------- ------- -------
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------------ ------- ------- ------- ------ ------
Depreciation, depletion and amortization
Total depreciation, depletion and amortization 1,373 1,177 1,265 5,008 4,464
------------------------------------------------ ------- ------- ------- ------ ------
Exploration write-offs
----------------------------------------------- ------- ------- ------- ------ ------
Exploration write-offs (6) 10 2 2 43
------------------------------------------------ ------- ------- ------- ------ ------
Adjusted EBITDA*
----------------------------------------------- ------- ------- ------- ------ ------
Total adjusted EBITDA 4,515 7,427 3,478 21,073 12,035
------------------------------------------------ ------- ------- ------- ------ ------
Capital expenditure*
gas 1,032 872 928 3,227 3,180
low carbon energy(a)(b) 577 86 109 1,024 1,561
------------------------------------------------ ------- ------- ------- ------ ------
Total capital expenditure 1,609 958 1,037 4,251 4,741
------------------------------------------------ ------- ------- ------- ------ ------
(a) Full year 2021 includes $712 million in respect of the
remaining payment to Equinor for our investment in our strategic US
offshore wind partnership and $326 million as a lease option fee
deposit paid to The Crown Estate in connection with our
participation in the UK Round 4 Offshore Wind Leasing together with
our partner EnBW.
(b) Fourth quarter and full year 2022 include $504 million in
respect of the acquisition of EDF Energy Services. Power trading is
reported under low carbon energy.
Fourth Third Fourth
quarter quarter quarter Year Year
2022 2022 2021 2022 2021
------- ------- ------- ----- -----
Production (net of royalties)(b)
Liquids* (mb/d) 121 117 122 118 113
Natural gas (mmcf/d) 4,844 5,011 4,941 4,866 4,632
Total hydrocarbons* (mboe/d) 956 981 974 957 912
---------------------------------- ------- ------- ------- ----- -----
Average realizations* (c)
Liquids ($/bbl) 80.50 88.03 71.63 89.86 63.60
Natural gas ($/mcf) 9.40 9.85 6.94 8.91 5.11
Total hydrocarbons* ($/boe) 57.60 60.80 43.68 56.34 33.75
---------------------------------- ------- ------- ------- ----- -----
(c) Includes bp's share of production of equity-accounted
entities in the gas & low carbon energy segment.
(d) Realizations are based on sales by consolidated subsidiaries
only - this excludes equity-accounted entities.
Top of page 8
gas & low carbon energy (continued)
31 December 30 September 31 December
low carbon energy(a) 2022 2022 2021
Renewables (bp net, GW)
Installed renewables capacity* 2.2 2.0 1.9
-------------------------------------------------- ----------- ------------ -----------
Developed renewables to FID* 5.8 4.6 4.4
Renewables pipeline 37.2 26.9 23.1
of which by geographical area:
================================================= ----------- ------------ -----------
Renewables pipeline - Americas 17.0 17.5 16.2
Renewables pipeline - Asia Pacific(b) 11.8 1.7 1.4
Renewables pipeline - Europe 8.3 7.6 5.3
Renewables pipeline - Other 0.1 0.1 0.2
================================================== ----------- ------------ -----------
of which by technology:
================================================= ----------- ------------ -----------
Renewables pipeline - offshore wind 5.2 5.2 3.7
Renewables pipeline - onshore wind 6.3 - -
Renewables pipeline - solar 25.7 21.7 19.4
================================================== ----------- ------------ -----------
Total Developed renewables to FID and Renewables
pipeline 43.0 31.5 27.5
-------------------------------------------------- ----------- ------------ -----------
(a) Because of rounding, some totals may not agree exactly with
the sum of their component parts.
(b) 31 December 2022 includes 10.3GW of onshore wind and solar pipeline in support of hydrogen.
Top of page 9
oil production & operations
Financial results
-- The replacement cost profit before interest and tax for the
fourth quarter and full year was $1,688 million and $19,721 million
respectively, compared with $3,212 million and $10,501 million for
the same periods in 2021. The fourth quarter and full year is
adjusted by an adverse impact of net adjusting items* of $2,740
million and $503 million respectively to derive the underlying
replacement cost profit, compared with an adverse impact of net
adjusting items of $812 million and a favourable impact of $209
million for the same periods in 2021. Adjusting items in the fourth
quarter principally relate to impairments as a result of expected
portfolio changes. See Note 4 and page 30 for more information.
-- After adjusting items, the underlying replacement cost profit
before interest and tax* for the fourth quarter and full year was
$4,428 million and $20,224 million respectively, compared with
$4,024 million and $10,292 million for the same periods in
2021.
-- The underlying replacement cost profit for the fourth quarter
compared to the same quarter in 2021, reflects higher oil and gas
realizations, partly offset by the impact of portfolio changes. For
the full year the result reflects primarily higher
realizations.
Operational update
-- Reported production for the quarter was 1,309mboe/d, 3.6%
lower than the fourth quarter of 2021. Underlying production* for
the quarter was flat compared with the fourth quarter of 2021.
-- Reported production for the full year was 1,297mboe/d, 0.8%
lower than the same period of 2021. Underlying production for the
full year was 2.1% higher compared with the same period of 2021
reflecting bpx energy performance, major projects* and reduced
weather impacts in the US Gulf of Mexico partly offset by base
performance.
-- Progressed operational performance in upstream* in 2022,
delivering the highest bp-operated hydrocarbon plant reliability*
on record at 96%.
Strategic Progress
-- On 16 December bp was awarded operatorship of the Bumerangue
block, in the Santos Pre Salt Basin, in Brazil.
-- On 7 November the National Agency for Petroleum, Gas and
Biofuels (ANPG), ExxonMobil Angola and the Angola Block 15 partners
announced a new discovery at the Bavuca South-1 exploration well.
Azule Energy, the bp and ENI 50:50 joint venture, owns 42% of block
15.
-- In the Permian, methane flaring intensity averaged <0.5%
in 2022, the lowest recorded in BPX Energy.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
---------------------------------------------- ------- ------- ------- ------- -------
Profit before interest and tax 1,686 6,966 3,212 19,714 10,509
Inventory holding (gains) losses* 2 (1) - 7 (8)
---------------------------------------------- ------- ------- ------- ------- -------
RC profit before interest and tax 1,688 6,965 3,212 19,721 10,501
Net (favourable) adverse impact of adjusting
items 2,740 (1,754) 812 503 (209)
---------------------------------------------- ------- ------- ------- ------- -------
Underlying RC profit before interest
and tax 4,428 5,211 4,024 20,224 10,292
Taxation on an underlying RC basis (2,015) (2,921) (1,235) (9,143) (4,123)
---------------------------------------------- ------- ------- ------- ------- -------
Underlying RC profit before interest 2,413 2,290 2,789 11,081 6,169
---------------------------------------------- ------- ------- ------- ------- -------
Top of page 10
oil production & operations (continued)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------------ ------- ------- ------- ------ ------
Depreciation, depletion and amortization
----------------------------------------------- ------- ------- ------- ------ ------
Total depreciation, depletion and amortization 1,383 1,381 1,628 5,564 6,528
------------------------------------------------ ------- ------- ------- ------ ------
Exploration write-offs
----------------------------------------------- ------- ------- ------- ------ ------
Exploration write-offs 73 180 45 383 125
------------------------------------------------ ------- ------- ------- ------ ------
Adjusted EBITDA*
----------------------------------------------- ------- ------- ------- ------ ------
Total adjusted EBITDA 5,884 6,772 5,697 26,171 16,945
------------------------------------------------ ------- ------- ------- ------ ------
Capital expenditure*
----------------------------------------------- ------- ------- ------- ------ ------
Total capital expenditure 1,430 1,386 1,272 5,278 4,838
------------------------------------------------ ------- ------- ------- ------ ------
Fourth Third Fourth
quarter quarter quarter Year Year
2022 2022 2021 2022 2021
------- ------- ------- ----- -----
Production (net of royalties)(a)
Liquids* (mb/d) 966 959 1,004 952 978
Natural gas (mmcf/d) 1,989 2,075 2,053 1,998 1,903
Total hydrocarbons* (mboe/d) 1,309 1,317 1,358 1,297 1,307
---------------------------------- ------- ------- ------- ----- -----
Average realizations* (b)
Liquids ($/bbl) 80.43 93.14 71.07 89.62 62.57
Natural gas(c) ($/mcf) 10.20 12.12 8.73 10.46 5.49
Total hydrocarbons*(c) ($/boe) 74.60 86.83 66.19 82.23 55.65
---------------------------------- ------- ------- ------- ----- -----
(a) Includes bp's share of production of equity-accounted
entities in the oil production & operations segment.
(b) Realizations are based on sales by consolidated subsidiaries
only - this excludes equity-accounted entities.
(c) Realizations calculation methodology has been changed to
reflect gas price fluctuations within the North Sea region. All
comparatives are restated. There is no impact on financial
results.
Top of page 11
customers & products
Financial results
-- The replacement cost profit before interest and tax for the
fourth quarter and full year was $771 million and $8,869 million
respectively, compared with a loss of $426 million and a profit of
$2,208 million for the same periods in 2021. The fourth quarter and
full year is adjusted by an adverse impact of net adjusting items*
of $1,131 million and $1,920 million respectively to derive the
underlying replacement cost profit, mainly relating to impairment
charges (see Note 4), compared with an adverse impact of net
adjusting items of $1,037 million and $1,044 million for the same
periods in 2021.
-- After adjusting items, the underlying replacement cost profit
before interest and tax* for the fourth quarter and full year was
$1,902 million and $10,789 million respectively, compared with a
profit of $611 million and $3,252 million for the same periods in
2021.
-- The customers & products result for the fourth quarter
and full year were higher than the same periods in 2021. This
reflects a stronger performance in refining and oil trading.
-- customers - the convenience and mobility results, excluding
Castrol, for the fourth quarter and full year were higher compared
with the same periods in 2021. The benefits of a stronger
convenience, retail fuels and aviation performance were partially
offset by inflationary cost pressures. The full year result also
included higher midstream performance, including biofuels, and
adverse foreign exchange impacts.
Castrol results for the fourth quarter and full year were lower
than the same periods in 2021, due to higher input costs, ongoing
COVID restrictions, notably in China, and adverse foreign exchange
impacts.
-- products - the products results for the fourth quarter and
full year were higher compared with the same periods in 2021. In
refining, the fourth quarter and full year results benefited from
higher realized margins, partially offset by higher energy costs,
and turnaround and maintenance activity. In oil trading the fourth
quarter and full year results were higher compared to the same
period in 2021. The full year result benefited from an
exceptionally strong oil trading performance in the first half of
2022.
Operational update
-- Utilization for the full year was similar to 2021, however
the fourth quarter was lower compared to the same period in 2021,
primarily due to the bp-Husky Toledo refinery shutdown and a higher
level of maintenance activity. bp-operated refining availability*
for the fourth quarter and full year was 95.0% and 94.5%
respectively, compared with 95.4% and 94.8% for the same periods in
2021.
Strategic progress
-- Strategic convenience sites* grew to 2,400, an increase of more than 250 compared to 2021.
-- In December, bp announced an exclusive agreement in the UK
with its convenience partner M&S for bp pulse to install
fast(a) charge points in around 70 of their stores, with initial
ambition to add up to 900 charge points within the next two years.
This follows bp's announcement in October that its strategic
partnership with REWE in Germany has been expanded to include the
installation of fast(a) charge points at up to 180 of their
sites.
-- EV charge points* installed and energy sold grew by more than
65% and around 150% respectively, compared to 2021, with charge
points now at around 22,000. In addition, we continued to build
momentum in fleets. In October, bp announced plans to establish a
bp pulse Gigahub network, a series of large, EV fast(a) charging
hubs designed to serve ride-hail and taxi fleets, near US airports
and high-demand locations, with an initial location near Los
Angeles Airport in collaboration with Hertz.
-- In November, Castrol announced an investment in Ki Mobility
solutions (KMS) to create a co-branded service and maintenance
network in India, supported by KMS's digitally integrated
multi-brand service platform. The investment supports Castrol's aim
to grow its presence in service and maintenance for both EV and
non-EV vehicles.
-- In December, bp completed its purchase of Archaea Energy
Inc., a leading provider of renewable natural gas, marking a
milestone in the growth of bp's strategic bioenergy business.
Bioenergy is one of five strategic transition growth engines that
bp intends to grow rapidly through this decade.
-- In November, bp announced its Cherry Point refinery in the US
had doubled its renewable diesel production capacity compared to
the fourth quarter in 2021. The refinery now has the capability to
co-process more than 7,000 barrels a day of renewable diesel.
-- Following a fire at the bp-Husky Toledo refinery in Ohio, US,
the refinery remains shut down. bp continues to work with Cenovus
Energy, its partner in the facility, on the announced sale of bp's
50% interest in the refinery to Cenovus Energy.
(a) "fast charging" includes rapid charging >=50kW and ultra-fast charging >=150kW.
Top of page 12
customers & products (continued)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
---------------------------------------------- ------- ------- ------- ------- -------
Profit (loss) before interest and tax (645) (269) (14) 10,235 5,563
Inventory holding (gains) losses* 1,416 2,855 (412) (1,366) (3,355)
---------------------------------------------- ------- ------- ------- ------- -------
RC profit (loss) before interest and
tax 771 2,586 (426) 8,869 2,208
Net (favourable) adverse impact of adjusting
items 1,131 139 1,037 1,920 1,044
---------------------------------------------- ------- ------- ------- ------- -------
Underlying RC profit before interest
and tax 1,902 2,725 611 10,789 3,252
Of which:(a)
customers - convenience & mobility 628 1,137 637 2,966 3,052
Castrol - included in customers 70 151 207 700 1,037
products - refining & trading 1,274 1,588 (26) 7,823 200
Taxation on an underlying RC basis (400) (725) (640) (2,308) (1,210)
---------------------------------------------- ------- ------- ------- ------- -------
Underlying RC profit before interest 1,502 2,000 (29) 8,481 2,042
---------------------------------------------- ------- ------- ------- ------- -------
(a) A reconciliation to RC profit before interest and tax by business is provided on page 34.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------------ ------- ------- ------- ------ -----
Adjusted EBITDA*(b)
customers - convenience & mobility 962 1,448 966 4,252 4,358
Castrol - included in customers 110 187 243 853 1,187
products - refining & trading 1,681 1,974 399 9,407 1,894
2,643 3,422 1,365 13,659 6,252
------- ------- ------- ------ -----
Depreciation, depletion and amortization
----------------------------------------------- ------- ------- ------- ------ -----
Total depreciation, depletion and amortization 741 697 754 2,870 3,000
------------------------------------------------ ------- ------- ------- ------ -----
Capital expenditure*
customers - convenience & mobility 694 404 692 1,779 1,564
Castrol - included in customers 98 42 53 235 173
products - refining & trading(c) 3,455 309 532 4,473 1,308
Total capital expenditure 4,149 713 1,224 6,252 2,872
------------------------------------------------ ------- ------- ------- ------ -----
(b) A reconciliation to RC profit before interest and tax by business is provided on page 34.
(c) Fourth quarter and full year 2022 include $3,030 million in
respect of the Archaea Energy acquisition.
Retail(d) Fourth Third Fourth
quarter quarter quarter Year Year
2022 2022 2021 2022 2021
------- ------- ------- ------ ------
bp retail sites* - total (#) 20,650 20,550 20,500 20,650 20,500
bp retail sites in growth markets* 2,650 2,600 2,700 2,650 2,700
Strategic convenience sites* 2,400 2,250 2,150 2,400 2,150
-------------------------------------- ------- ------- ------- ------ ------
(d) Reported to the nearest 50.
Marketing sales of refined products Fourth Third Fourth
(mb/d)
quarter quarter quarter Year Year
2022 2022 2021 2022 2021
------- ------- ------- ----- -----
US 1,126 1,143 1,151 1,136 1,115
Europe 1,069 1,098 936 1,021 863
Rest of World 461 451 496 456 461
------------------------------------------ ------- ------- ------- ----- -----
2,656 2,692 2,583 2,613 2,439
Trading/supply sales of refined products 325 355 395 350 393
------------------------------------------ ------- ------- ------- ----- -----
Total sales volume of refined products 2,981 3,047 2,978 2,963 2,832
------------------------------------------ ------- ------- ------- ----- -----
Top of page 13
customers & products (continued)
Refining marker margin*(e) Fourth Third Fourth
quarter quarter quarter Year Year
2022 2022 2021 2022 2021
------- ------- ------- ---- ----
bp average refining marker margin (RMM)
($/bbl) 32.2 35.5 15.1 33.1 13.2
----------------------------------------- ------- ------- ------- ---- ----
(e) The RMM in the quarter is calculated based on bp's current
refinery portfolio. On a comparative basis, the fourth quarter and
full year 2021 RMM would be $15.3/bbl and $13.6/bbl
respectively.
Refinery throughputs (mb/d) Fourth Third Fourth
quarter quarter quarter Year Year
2022 2022 2021 2022 2021
------- ------- ------- ----- -----
US 615 703 720 678 719
Europe 763 809 833 804 787
Rest of World - - 91 22 88
---------------------------------------- ------- ------- ------- ----- -----
Total refinery throughputs 1,378 1,512 1,644 1,504 1,594
---------------------------------------- ------- ------- ------- ----- -----
bp-operated refining availability* (%) 95.0 94.3 95.4 94.5 94.8
---------------------------------------- ------- ------- ------- ----- -----
Top of page 14
other businesses & corporate
Other businesses & corporate comprises innovation &
engineering, bp ventures, Launchpad, regions, corporates &
solutions, our corporate activities & functions and any
residual costs of the Gulf of Mexico oil spill. From first quarter
2022 the results of Rosneft, previously reported as a separate
segment, are also included in other businesses & corporate.
Comparative information for 2021 has been restated to reflect the
changes in reportable segments. For more information see Note 1
Basis of Preparation - Investment in Rosneft.
Financial results
-- The replacement cost result before interest and tax for the
fourth quarter and full year was a profit of $103 million and a
loss of $26,737 million respectively, compared with a loss of $369
million and $348 million for the same periods in 2021. The fourth
quarter and full year is adjusted by a favourable impact of net
adjusting items* of $409 million and an adverse impact of $25,566
million respectively to derive the underlying replacement cost
profit, compared with an adverse impact of net adjusting items of
$579 million and $1,685 million for the same periods in 2021. The
adjusting items for the full year of 2022 mainly relate to Rosneft.
Fair value accounting effects* for the fourth quarter and full year
had a favourable impact of $515 million and an adverse impact of
$1,381 million respectively, compared with an adverse impact of
$212 million and $849 million for the same periods in 2021.
-- After adjusting items, the underlying replacement cost loss
before interest and tax* for the fourth quarter and full year was
$306 million and $1,171 million respectively, compared with a
profit of $210 million and $1,337 million for the same periods in
2021.
-- For other businesses & corporate excluding Rosneft, after
excluding adjusting items, the underlying replacement cost loss
before interest and tax for the fourth quarter and full year was
$306 million and $1,171 million respectively, compared with $535
million and $1,383 million for the same periods in 2021.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
---------------------------------------------- ------- ------- ------- -------- -----
Profit (loss) before interest and tax 103 (1,093) (301) (26,737) (89)
Inventory holding (gains) losses* - - (68) - (259)
---------------------------------------------- ------- ------- ------- -------- -----
RC profit (loss) before interest and
tax 103 (1,093) (369) (26,737) (348)
Net (favourable) adverse impact of adjusting
items(a) (409) 688 579 25,566 1,685
---------------------------------------------- ------- ------- ------- -------- -----
Underlying RC profit (loss) before interest
and tax (306) (405) 210 (1,171) 1,337
Taxation on an underlying RC basis 43 206 55 439 25
---------------------------------------------- ------- ------- ------- -------- -----
Underlying RC profit (loss) before interest (263) (199) 265 (732) 1,362
---------------------------------------------- ------- ------- ------- -------- -----
(a) Includes fair value accounting effects relating to the
hybrid bonds that were issued on 17 June 2020. See page 37 for more
information.
other businesses & corporate (excluding Rosneft)
Strategic progress
-- We have taken the decision to no longer seek new companies
for bp's Launchpad accelerator, with our focus now to scale and
build businesses within our 5 transition growth engines -
bioenergy, convenience, EV charging, renewables and hydrogen.
-- In December, bp ventures made a $20-million AUD investment in
5B Holdings Pty Ltd, an Australian renewable company with
technology that enables rapid deployment of solar power at
scale.
-- On 2 February 2023, bp and Chubu Electric signed a memorandum
of understanding to explore opportunities for decarbonisation in
Japan and the wider Asia region, including plans for a feasibility
study for a carbon capture, utilization, and storage (CCUS) hub in
the Nagoya port area.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
---------------------------------------------- ------- ------- ------- ------- -------
Profit (loss) before interest and tax 103 (1,093) (924) (2,704) (2,777)
Inventory holding (gains) losses* - - - - -
--------------------------------------------- ------- ------- ------- ------- -------
RC profit (loss) before interest and
tax 103 (1,093) (924) (2,704) (2,777)
Net (favourable) adverse impact of adjusting
items (409) 688 389 1,533 1,394
---------------------------------------------- ------- ------- ------- ------- -------
Underlying RC profit (loss) before interest
and tax (306) (405) (535) (1,171) (1,383)
Taxation on an underlying RC basis 43 206 128 439 294
---------------------------------------------- ------- ------- ------- ------- -------
Underlying RC profit (loss) before interest (263) (199) (407) (732) (1,089)
---------------------------------------------- ------- ------- ------- ------- -------
Top of page 15
other businesses & corporate (Rosneft)
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
---------------------------------------------- ------- ------- ------- -------- -----
Profit (loss) before interest and tax - - 623 (24,033) 2,688
Inventory holding (gains) losses* - - (68) - (259)
---------------------------------------------- ------- ------- ------- -------- -----
RC profit (loss) before interest and
tax - - 555 (24,033) 2,429
Net (favourable) adverse impact of adjusting
items - - 190 24,033 291
---------------------------------------------- ------- ------- ------- -------- -----
Underlying RC profit (loss) before interest
and tax - - 745 - 2,720
Taxation on an underlying RC basis - - (73) - (269)
---------------------------------------------- ------- ------- ------- -------- -----
Underlying RC profit (loss) before interest - - 672 - 2,451
---------------------------------------------- ------- ------- ------- -------- -----
Top of page 16
Financial statements
Group income statement
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
--------------------------------------------------- ------- ------- ------- ------- -------
Sales and other operating revenues (Note 6) 69,257 55,011 50,554 241,392 157,739
Earnings from joint ventures - after interest
and tax 189 498 243 1,128 543
Earnings from associates - after interest
and tax 129 275 896 1,402 3,456
Interest and other income 608 159 259 1,103 581
Gains on sale of businesses and fixed assets 173 1,866 286 3,866 1,876
--------------------------------------------------- ------- ------- ------- ------- -------
Total revenues and other income 70,356 57,809 52,238 248,891 164,195
Purchases 34,101 39,993 32,089 141,043 92,923
Production and manufacturing expenses 6,841 7,193 6,397 28,610 25,843
Production and similar taxes 557 639 406 2,325 1,308
Depreciation, depletion and amortization (Note
7) 3,714 3,467 3,863 14,318 14,805
Net impairment and losses on sale of businesses
and fixed assets (Note 4) 3,629 417 1,223 30,522 (1,121)
Exploration expense 140 225 102 585 424
Distribution and administration expenses 3,654 3,262 3,365 13,449 11,931
--------------------------------------------------- ------- ------- ------- ------- -------
Profit (loss) before interest and taxation 17,720 2,613 4,793 18,039 18,082
Finance costs 834 649 759 2,703 2,857
Net finance (income) expense relating to pensions
and other post-retirement benefits (16) (16) (8) (69) (2)
--------------------------------------------------- ------- ------- ------- ------- -------
Profit (loss) before taxation 16,902 1,980 4,042 15,405 15,227
Taxation 5,741 3,964 1,464 16,762 6,740
--------------------------------------------------- ------- ------- ------- ------- -------
Profit (loss) for the period 11,161 (1,984) 2,578 (1,357) 8,487
--------------------------------------------------- ------- ------- ------- ------- -------
Attributable to
bp shareholders 10,803 (2,163) 2,326 (2,487) 7,565
Non-controlling interests 358 179 252 1,130 922
--------------------------------------------------- ------- ------- ------- ------- -------
11,161 (1,984) 2,578 (1,357) 8,487
------- ------- ------- ------- -------
Earnings per share (Note 8)
Profit (loss) for the period attributable
to bp shareholders
Per ordinary share (cents)
Basic 59.43 (11.45) 11.75 (13.10) 37.57
Diluted 58.36 (11.45) 11.66 (13.10) 37.33
Per ADS (dollars)
Basic 3.57 (0.69) 0.70 (0.79) 2.25
Diluted 3.50 (0.69) 0.70 (0.79) 2.24
--------------------------------------------------- ------- ------- ------- ------- -------
Top of page 17
Condensed group statement of comprehensive income
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
----------------------------------------------- ------- ------- ------- ------- -------
Profit (loss) for the period 11,161 (1,984) 2,578 (1,357) 8,487
----------------------------------------------- ------- ------- ------- ------- -------
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
Currency translation differences(a) 2,142 (1,725) (619) (3,786) (921)
Exchange (gains) losses on translation
of foreign operations reclassified to
gain or loss on sale of businesses and
fixed assets(b) (32) - 36 10,759 36
Cash flow hedges and costs of hedging 584 (142) 408 763 (259)
Share of items relating to equity-accounted
entities, net of tax 392 (134) 104 402 44
Income tax relating to items that may
be reclassified (108) (54) (24) (334) 65
----------------------------------------------- ------- ------- ------- ------- -------
2,978 (2,055) (95) 7,804 (1,035)
------- ------- ------- ------- -------
Items that will not be reclassified to
profit or loss
Remeasurements of the net pension and
other post-retirement benefit liability
or asset(c) (1,508) 112 1,306 340 4,416
Cash flow hedges that will subsequently
be transferred to the balance sheet 1 (1) - (4) 1
Income tax relating to items that will
not be reclassified 538 19 (434) 68 (1,317)
----------------------------------------------- ------- ------- ------- ------- -------
(969) 130 872 404 3,100
------- ------- ------- ------- -------
Other comprehensive income 2,009 (1,925) 777 8,208 2,065
----------------------------------------------- ------- ------- ------- ------- -------
Total comprehensive income 13,170 (3,909) 3,355 6,851 10,552
----------------------------------------------- ------- ------- ------- ------- -------
Attributable to
bp shareholders 12,760 (4,042) 3,095 5,782 9,654
Non-controlling interests 410 133 260 1,069 898
----------------------------------------------- ------- ------- ------- ------- -------
13,170 (3,909) 3,355 6,851 10,552
------- ------- ------- ------- -------
(a) Fourth and third quarter 2022 are principally affected by
movements in the Pound Sterling against the US dollar. Full year
2022 is principally affected by movements in the Russian rouble and
Pound Sterling against the US dollar.
(b) See Note 1 Basis of preparation - Investment in Rosneft.
(c) See Note 1 Basis of preparation - Pensions and other
post-retirement benefits for further information.
Top of page 18
Condensed group statement of changes in equity
bp shareholders' Non-controlling interests Total
Hybrid
$ million equity(a) bonds Other interest equity
--------------------------------------- ---------------- -------- ----------------- --------
At 1 January 2022 75,463 13,041 1,935 90,439
Total comprehensive income 5,782 519 550 6,851
Dividends (4,365) - (294) (4,659)
Cash flow hedges transferred
to the balance sheet, net of
tax 1 - - 1
Issue of ordinary share capital(b) 820 - - 820
Repurchase of ordinary share
capital (10,493) - - (10,493)
Share-based payments, net of
tax 847 - - 847
Issue of perpetual hybrid bonds (4) 374 - 370
Payments on perpetual hybrid
bonds 15 (544) - (529)
Transactions involving non-controlling
interests, net of tax (513) - (144) (657)
---------------------------------------- ---------------- -------- ----------------- --------
At 31 December 2022 67,553 13,390 2,047 82,990
---------------------------------------- ---------------- -------- ----------------- --------
bp shareholders' Non-controlling interests Total
Hybrid
$ million equity bonds Other interest equity
--------------------------------------- ---------------- -------- ----------------- --------
At 1 January 2021 71,250 12,076 2,242 85,568
Total comprehensive income 9,654 507 391 10,552
Dividends (4,316) - (311) (4,627)
Cash flow hedges transferred
to the balance sheet, net of
tax (10) - - (10)
Repurchase of ordinary share
capital (3,151) - - (3,151)
Share-based payments, net of
tax 632 - - 632
Share of equity-accounted entities'
changes in equity, net of tax 556 - - 556
Issue of perpetual hybrid bonds (26) 950 - 924
Payments on perpetual hybrid
bonds (7) (492) - (499)
Transactions involving non-controlling
interests, net of tax 881 - (387) 494
---------------------------------------- ---------------- -------- ----------------- --------
At 31 December 2021 75,463 13,041 1,935 90,439
---------------------------------------- ---------------- -------- ----------------- --------
(a) In 2022 $9.2 billion of the opening foreign currency
translation reserve has been moved to the profit and loss account
reserve as a result of bp's decision to exit its shareholding in
Rosneft and its other businesses with Rosneft in Russia. For more
information see Note 1.
(b) Relates to ordinary shares issued as non-cash consideration
for the acquisition of the public units of BP Midstream Partners
LP.
Top of page 19
Group balance sheet
31 December 31 December
$ million 2022 2021
-------------------------------------------------------- ----------- -----------
Non-current assets
Property, plant and equipment 106,044 112,902
Goodwill 11,960 12,373
Intangible assets 10,200 6,451
Investments in joint ventures 12,400 9,982
Investments in associates(a) 8,201 21,001
Other investments 2,670 2,544
-------------------------------------------------------- ----------- -----------
Fixed assets 151,475 165,253
Loans 1,271 922
Trade and other receivables 1,092 2,693
Derivative financial instruments 12,841 7,006
Prepayments 576 479
Deferred tax assets 3,908 6,410
Defined benefit pension plan surpluses 9,269 11,919
-------------------------------------------------------- ----------- -----------
180,432 194,682
----------- -----------
Current assets
Loans 315 355
Inventories 28,081 23,711
Trade and other receivables 34,010 27,139
Derivative financial instruments 11,554 5,744
Prepayments 2,092 2,486
Current tax receivable 621 542
Other investments 578 280
Cash and cash equivalents 29,195 30,681
-------------------------------------------------------- ----------- -----------
106,446 90,938
Assets classified as held for sale (Note 3) 1,242 1,652
-------------------------------------------------------- ----------- -----------
107,688 92,590
----------- -----------
Total assets 288,120 287,272
-------------------------------------------------------- ----------- -----------
Current liabilities
Trade and other payables 63,984 52,611
Derivative financial instruments 12,618 7,565
Accruals 6,398 5,638
Lease liabilities 2,102 1,747
Finance debt 3,198 5,557
Current tax payable 4,065 1,554
Provisions 6,332 5,256
-------------------------------------------------------- ----------- -----------
98,697 79,928
Liabilities directly associated with assets classified
as held for sale (Note 3) 321 359
-------------------------------------------------------- ----------- -----------
99,018 80,287
----------- -----------
Non-current liabilities
Other payables 10,387 10,567
Derivative financial instruments 13,537 6,356
Accruals 1,233 968
Lease liabilities 6,447 6,864
Finance debt 43,746 55,619
Deferred tax liabilities 10,526 8,780
Provisions 14,992 19,572
Defined benefit pension plan and other post-retirement
benefit plan deficits 5,244 7,820
-------------------------------------------------------- ----------- -----------
106,112 116,546
----------- -----------
Total liabilities 205,130 196,833
-------------------------------------------------------- ----------- -----------
Net assets 82,990 90,439
-------------------------------------------------------- ----------- -----------
Equity
bp shareholders' equity 67,553 75,463
Non-controlling interests 15,437 14,976
-------------------------------------------------------- ----------- -----------
Total equity 82,990 90,439
-------------------------------------------------------- ----------- -----------
(a) See Note 1 Basis of preparation - Investment in Rosneft.
Top of page 20
Condensed group cash flow statement
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
-------------------------------------------------- ------- ------- ------- -------- --------
Operating activities
Profit (loss) before taxation 16,902 1,980 4,042 15,405 15,227
Adjustments to reconcile profit (loss) before
taxation to net cash provided by operating
activities
Depreciation, depletion and amortization
and exploration expenditure written off 3,781 3,657 3,909 14,703 14,972
Net impairment and (gain) loss on sale of
businesses and fixed assets 3,456 (1,449) 937 26,656 (2,997)
Earnings from equity-accounted entities,
less dividends received 582 (391) (201) (830) (2,157)
Net charge for interest and other finance
expense, less net interest paid 186 72 74 396 466
Share-based payments 166 251 226 795 627
Net operating charge for pensions and other
post-retirement benefits, less contributions
and benefit payments for unfunded plans (60) (15) (184) (257) (655)
Net charge for provisions, less payments (1,013) 173 194 440 2,934
Movements in inventories and other current
and non-current assets and liabilities (6,847) 6,764 (1,709) (6,270) (626)
Income taxes paid (3,582) (2,754) (1,172) (10,106) (4,179)
-------------------------------------------------- ------- ------- ------- -------- --------
Net cash provided by operating activities 13,571 8,288 6,116 40,932 23,612
-------------------------------------------------- ------- ------- ------- -------- --------
Investing activities
Expenditure on property, plant and equipment,
intangible and other assets (3,696) (3,105) (2,772) (12,069) (10,887)
Acquisitions, net of cash acquired (Note
2) (3,522) (3) (132) (3,530) (186)
Investment in joint ventures (107) (40) (581) (600) (1,440)
Investment in associates (44) (46) (148) (131) (335)
-------------------------------------------------- ------- ------- ------- -------- --------
Total cash capital expenditure (7,369) (3,194) (3,633) (16,330) (12,848)
Proceeds from disposal of fixed assets 27 12 520 709 1,145
Proceeds from disposal of businesses, net
of cash disposed 587 594 1,745 1,841 5,812
Proceeds from loan repayments 7 15 36 67 197
================================================== ======= ======= ======= ======== ========
Cash provided from investing activities 621 621 2,301 2,617 7,154
-------------------------------------------------- ------- ------- ------- -------- --------
Net cash used in investing activities (6,748) (2,573) (1,332) (13,713) (5,694)
-------------------------------------------------- ------- ------- ------- -------- --------
Financing activities
Net issue (repurchase) of shares (Note 8) (3,240) (2,876) (1,725) (9,996) (3,151)
Lease liability payments (513) (478) (502) (1,961) (2,082)
Proceeds from long-term financing 10 1 648 2,013 6,987
Repayments of long-term financing (2,197) (4,035) (2,963) (11,697) (16,804)
Net increase (decrease) in short-term debt 190 (618) 969 (1,392) 1,077
Issue of perpetual hybrid bonds 48 194 65 370 924
Payments relating to perpetual hybrid bonds (219) (180) (100) (708) (538)
Payments relating to transactions involving
non-controlling interests (Other interest) (1) (2) - (9) (560)
Receipts relating to transactions involving
non-controlling interests (Other interest) 1 3 12 11 683
Dividends paid - bp shareholders (1,088) (1,140) (1,077) (4,358) (4,304)
- non-controlling interests (100) (66) (66) (294) (311)
-------------------------------------------------- ------- ------- ------- -------- --------
Net cash provided by (used in) financing
activities (7,109) (9,197) (4,739) (28,021) (18,079)
-------------------------------------------------- ------- ------- ------- -------- --------
Currency translation differences relating
to cash and cash equivalents 177 (322) (58) (684) (269)
-------------------------------------------------- ------- ------- ------- -------- --------
Increase (decrease) in cash and cash equivalents (109) (3,804) (13) (1,486) (430)
-------------------------------------------------- ------- ------- ------- -------- --------
Cash and cash equivalents at beginning of
period 29,304 33,108 30,694 30,681 31,111
Cash and cash equivalents at end of period 29,195 29,304 30,681 29,195 30,681
-------------------------------------------------- ------- ------- ------- -------- --------
Top of page 21
Notes
Note 1. Basis of preparation
The results for the interim periods are unaudited and, in the
opinion of management, include all adjustments necessary for a fair
presentation of the results for each period. All such adjustments
are of a normal recurring nature. This report should be read in
conjunction with the consolidated financial statements and related
notes for the year ended 31 December 2021 included in BP Annual
Report and Form 20-F 2021.
bp prepares its consolidated financial statements included
within BP Annual Report and Form 20-F on the basis of International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB), IFRS as adopted by the UK, and
European Union (EU), and in accordance with the provisions of the
UK Companies Act 2006 as applicable to companies reporting under
international accounting standards. IFRS as adopted by the UK does
not differ from IFRS as adopted by the EU. IFRS as adopted by the
UK and EU differ in certain respects from IFRS as issued by the
IASB. The differences have no impact on the group's consolidated
financial statements for the periods presented.
The financial information presented herein has been prepared in
accordance with the accounting policies expected to be used in
preparing BP Annual Report and Form 20-F 2022 which are the same as
those used in preparing BP Annual Report and Form 20-F 2021. There
are no new or amended standards or interpretations adopted from 1
January 2022 onwards that have a significant impact on the
financial information.
Significant accounting judgements and estimates
bp's significant accounting judgements and estimates were
disclosed in BP Annual Report and Form 20-F 2021. These have been
subsequently considered at the end of each quarter to determine if
any changes were required to those judgements and estimates.
Impairment testing assumptions
The group's value-in-use impairment testing price assumptions
for Brent oil and Henry Hub gas were revised during the fourth
quarter from those disclosed in the BP Annual Report and Form 20-F
2021. Prices disclosed are in real 2021 terms. The Brent oil
assumption up to 2030 was increased to $70 per barrel to reflect
near term supply constraints before steadily declining to $45 per
barrel by 2050 continuing to reflect the assumption that as the
energy system decarbonises, falling oil demand will cause oil
prices to decline. The price assumptions for Henry Hub gas up to
2035 and up to 2050 were increased to $4 per mmBtu and $3.50 per
mmBtu respectively to reflect the increased demand for US gas
production to offset reducing Russian gas flows. A summary of the
group's price assumptions for value-in-use impairment testing, in
real 2021 terms, is provided below:
2023 2025 2030 2040 2050
------------------------ ---- ---- ---- ---- ----
Brent oil ($/bbl) 77 70 70 59 45
Henry Hub gas ($/mmBtu) 4.00 4.00 4.00 3.50 3.50
-------------------------- ---- ---- ---- ---- ----
The post-tax discount rates used for value-in-use impairment
testing of assets other than low carbon energy assets was increased
to 7% (31 December 2021: 6%) reflecting rising costs of
capital.
Provisions
The nominal risk-free discount rate applied to provisions is
reviewed on a quarterly basis. The discount rate applied to the
group's provisions was revised to 3.5% in the fourth quarter (31
December 2021 2.0%) to reflect increasing US Treasury yields. The
principal impact of this rate increase was a $2.1 billion decrease
in the decommissioning provision with a corresponding decrease in
the carrying amount of property, plant and equipment of $1.6
billion in the fourth quarter.
Pensions and other post-retirement benefits
The group's defined benefit plans are reviewed quarterly to
determine any changes to the fair value of the plan assets or
present value of the defined benefit obligations. As a result of
the review during the fourth quarter of 2022, the group's total net
defined benefit plan surplus as at 31 December 2022 is $4.0
billion, compared to a surplus of $5.0 billion at 30 September 2022
and $4.1 billion at 31 December 2021. The movement for the year
principally reflects net actuarial gains reported in other
comprehensive income arising from significant increases in the UK,
US and Eurozone discount rates largely offset by negative asset
performance. The current environment is likely to continue to
affect the values of the plan assets and obligations resulting in
potential volatility in the amount of the net defined benefit
pension plan surplus/deficit recognized.
Investment in Rosneft
On 27 February 2022, bp announced it will exit its shareholding
in Rosneft and bp's two nominated Rosneft directors both stepped
down from Rosneft's board. As a result, the significant judgement
on significant influence over Rosneft was reassessed and a new
significant estimate was identified for the fair value of bp's
equity investment in Rosneft. From that date, bp accounts for its
interest in Rosneft as a financial asset measured at fair value
within 'Other investments'. Russia has implemented a number of
counter-sanctions including restrictions on the divestment from
Russian assets by foreign investors. Further, bp is not able to
sell its Rosneft shares on the Moscow Stock Exchange and is unable
to ascribe probabilities to possible outcomes of any exit process.
As a result, it is considered that any measure of fair value, other
than nil, would be subject to such high measurement uncertainty
that no estimate would provide useful information even if it were
accompanied by a description of the estimate made in producing it
and an explanation of the uncertainties that affect the estimate.
Accordingly, it is not currently possible to estimate any carrying
value other than zero when determining the measurement of the
interest in Rosneft as at 31 December 2022.
Top of page 22
Note 1. Basis of preparation (continued)
During the year ended 31 December 2022, Rosneft held
shareholders meetings to approve resolutions to pay dividends. bp
did not participate in those meetings. In line with the
resolutions, bp would be entitled to dividend income. Russia has
imposed restrictions on the payments of dividends to certain
foreign shareholders, including those based in the UK, requiring
such dividends to be paid in roubles into restricted bank accounts
and a requirement for approval of the Russian government for
transfers from any such bank accounts out of Russia. Given the
restrictions applicable to such accounts, management considers that
the criteria for recognising any dividend income from Rosneft for
the year ended 31 December 2022 have not been met.
As a result of bp's decision to exit its shareholding in Rosneft
in the first quarter 2022, the group has ceased to report Rosneft
as a separate segment in its financial reporting for 2022. Rosneft
results up to 27 February 2022 are included within other businesses
& corporate (OB&C), and 2021 comparatives have been
restated to include the Rosneft segment as per the table below.
OB&C Rosneft OB&C OB&C Rosneft OB&C
(as previously (as previously restated (as previously (as previously restated
reported) reported) reported) reported)
Fourth Fourth Fourth
quarter quarter quarter Year Year Year
$ million 2021 2021 2021 2021 2021 2021
-------------------------- --------------- --------------- --------- --------------- --------------- ---------
Profit (loss) before
interest
and tax (924) 623 (301) (2,777) 2,688 (89)
Inventory holding (gains)
losses* - (68) (68) - (259) (259)
-------------------------- --------------- --------------- --------- --------------- --------------- ---------
RC profit (loss) before
interest
and tax (924) 555 (369) (2,777) 2,429 (348)
Net (favourable) adverse
impact of adjusting items 389 190 579 1,394 291 1,685
-------------------------- --------------- --------------- --------- --------------- --------------- ---------
Underlying RC profit
(loss)
before interest and tax (535) 745 210 (1,383) 2,720 1,337
Taxation on an underlying
RC basis 128 (73) 55 294 (269) 25
-------------------------- --------------- --------------- --------- --------------- --------------- ---------
Underlying RC profit
(loss)
before interest (407) 672 265 (1,089) 2,451 1,362
-------------------------- --------------- --------------- --------- --------------- --------------- ---------
Since the first quarter 2022, bp has also determined that its
other businesses with Rosneft within Russia, which are included in
the oil production & operations segment also have a fair value
of nil and are subject to similar sanctions and restrictions with
respect to the receipt of dividends as described above. Management
considers that the criteria for recognising dividend income from
other businesses with Rosneft within Russia that declared a
dividend in the fourth quarter 2022 have not been met.
The total pre-tax charge for the year to 31 December 2022
relating to bp's investment in Rosneft and other businesses with
Rosneft in Russia is $25,520 million.
Note 2. Business combinations
The group undertook a number of business combinations during
2022. For the fourth quarter and full year 2022, total
consideration paid in cash amounted to $3,663 million and $3,671
million respectively, offset by cash acquired of $141 million.
Archaea Energy
On 28 December 2022, bp acquired 100% of the issued common stock
of Archaea Energy Inc. a leading producer of renewable natural gas
(RNG) in the US, that was listed on the New York Stock
Exchange.
The acquisition expands bp's presence in the US biogas industry,
enhancing its ability to support customers' decarbonization goals
and progressing its aim to reduce the average lifecycle carbon
intensity of the energy products it sells.
The total cash consideration for the transaction, all paid at
completion, was $3,137 million.
The transaction has been accounted for as a business combination
using the acquisition method. The provisional fair values of the
identifiable assets and liabilities acquired, as at the date of
acquisition, are shown in the table below. The goodwill recognized
reflects the part of the project development pipeline that did not
qualify for separate recognition at the acquisition date and
goodwill arising from recognition of deferred tax liabilities on
fair value uplifts. The goodwill balance is not expected to be
deductible for tax purposes.
The transaction included a step acquisition of the Mavrix LLC
joint venture, which bp and Archaea Energy each held a 50% interest
in prior to this transaction. The fair value of bp's interest in
Mavrix LLC immediately before the acquisition date was $373 million
and the gain recognized in 'Interest and other income' as a result
of remeasuring this interest to fair value was $267 million.
Top of page 23
Note 2. Business combinations (continued)
Year
$ million 2022
-------------------------------------------------------- -------
Assets
Property plant and equipment 885
Goodwill 409
Intangible assets 3,475
Investments in equity-accounted entities 917
Inventory 42
Trade and other receivables 67
Cash and cash equivalents 107
Liabilities
Trade and other payables (1,032)
Finance debt (1,044)
Deferred tax liabilities (293)
Provisions (16)
Non-controlling interests (7)
-------------------------------------------------------- -------
Total consideration 3,510
-------------------------------------------------------- -------
Of which:
Cash 3,137
Fair value of previously held interest in Mavrix LLC 373
-------------------------------------------------------- -------
As the transaction completed shortly prior to the end of the
reporting period, the acquisition-date fair values of the assets
and liabilities acquired are provisional. As we gain further
understanding of the acquired assets and development pipeline,
these fair values may be subsequently adjusted, including
goodwill.
An analysis of the cash flows relating to the acquisition
included within the cash flow statement for the full year 2022 is
provided below.
Year
$ million 2022
---------------------------------------------------------------------- -----
Transaction costs of the acquisition (included in cash flows from
operating activities) 56
Cash consideration paid, net of cash acquired (included in cash
flows from investing activities) 3,030
---------------------------------------------------------------------- -----
Total net cash outflow for the acquisition 3,086
---------------------------------------------------------------------- -----
Settlement of acquired debt and warrants liabilities immediately
after completion (included in cash flows from financing activities) 1,044
---------------------------------------------------------------------- -----
Total net cash outflow related to the acquisition 4,130
---------------------------------------------------------------------- -----
The revenues and profit before tax generated by the acquired
activities from the date of acquisition to 31 December 2022 were
immaterial. If the business combination had taken place on 1
January 2022, it is estimated that the acquired activities would
have generated revenues of $370 million and losses before tax of
$169 million.
Other acquisitions
The fair value of the net assets (including goodwill) recognized
from other business combinations in the fourth quarter and full
year was $611 million. This principally related to the acquisitions
of the Flat Ridge 2 wind farm and EDF Energy Services in North
America.
Top of page 24
Note 3. Non-current assets held for sale
The carrying amount of assets classified as held for sale at 31
December 2022 is $1,242 million, with associated liabilities of
$321 million. These relate to the transactions described below.
On 7 September 2022, bp announced that it had agreed to sell its
upstream business in Algeria to Eni. Completion is subject to
customary governmental and other approvals. Assets of $511 million
and associated liabilities of $48 million have been classified as
held for sale in the group balance sheet at 31 December 2022.
On 8 August 2022, bp announced an agreement to sell its 50%
interest in the bp-Husky Toledo refinery in Ohio US, to Cenovus
Energy, its partner in the facility. Following a fire at the
refinery, it has been shut down since 20 September 2022. Assets of
$731 million and associated liabilities of $273 million have been
classified as held for sale in the group balance sheet at 31
December 2022.
Note 4. Impairment and losses on sale of businesses and fixed
assets(a)
Net impairment reversals and losses on sale of businesses and
fixed assets for the fourth quarter were a charge of $3,629 million
and net impairment charges and losses on sale of businesses and
fixed assets for the full year were $30,522 million, compared with
net charges of $1,223 million and reversals of $1,121 million for
the same periods in 2021 and include net impairment charges for the
quarter of $3,564 million and for the full year of $18,341 million,
compared with net charges of $1,137 million and reversals of $1,351
million for the same periods in 2021.
gas & low carbon energy segment
In the gas & low carbon energy segment there was a net
impairment reversal of $1,111 million and $588 million for the
fourth quarter and full year respectively, compared with net
reversals of $553 million and $1,504 million for the same periods
in 2021 respectively.
oil production & operations segment
In the oil production & operations segment there was a net
impairment charge of $3,251 million and $3,587 million for the
fourth quarter and full year respectively, compared with net
charges of $790 million and reversals of $862 million for the same
periods in 2021.
Impairment charges in the fourth quarter principally relate to
expected portfolio changes with recoverable amounts of those cash
generating units based on their fair value less costs to sell.
Impairment charges for the year ended 31 December 2022 included
charges related to the decision to exit other businesses with
Rosneft within Russia.
customers and products
In the customer and products segment there was a net impairment
charge of $1,380 million and $1,806 million for the fourth quarter
and full year 2022 respectively compared with net charges of $885
million and $949 million for the same periods in 2021. 2022
impairment charges principally relate to changes in long-term
economic assumptions in the Products business and announced
portfolio changes. The recoverable amounts of the cash generating
units were based on value-in-use calculations.
other businesses and corporate
In the other businesses and corporate segment there was an
impairment charge of $44 million and $13,536 million for the fourth
quarter and full year respectively, compared with net impairment
charges of $15 million and $66 million for the same periods in
2021.
The impairment charge and the loss on sale of businesses and
fixed assets for the year mainly relates to bp's investment in
Rosneft - see Note 1.
(a) All disclosures are pre-tax .
Top of page 25
Note 5. Analysis of replacement cost profit (loss) before
interest and tax and reconciliation to profit (loss) before
taxation
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
---------------------------------------- ------- ------- ------- -------- ------
gas & low carbon energy 16,439 (2,956) 1,911 14,696 2,133
oil production & operations 1,688 6,965 3,212 19,721 10,501
customers & products 771 2,586 (426) 8,869 2,208
other businesses & corporate(a) 103 (1,093) (369) (26,737) (348)
---------------------------------------- ------- ------- ------- -------- ------
19,001 5,502 4,328 16,549 14,494
Consolidation adjustment - UPII* 147 (21) (7) 139 (67)
---------------------------------------- ------- ------- ------- -------- ------
RC profit (loss) before interest and
tax 19,148 5,481 4,321 16,688 14,427
Inventory holding gains (losses)*
gas & low carbon energy (10) (14) (8) (8) 33
oil production & operations (2) 1 - (7) 8
customers & products (1,416) (2,855) 412 1,366 3,355
other businesses & corporate(a) - - 68 - 259
---------------------------------------- ------- ------- ------- -------- ------
Profit (loss) before interest and tax 17,720 2,613 4,793 18,039 18,082
Finance costs 834 649 759 2,703 2,857
Net finance expense/(income) relating
to pensions and other post-retirement
benefits (16) (16) (8) (69) (2)
---------------------------------------- ------- ------- ------- -------- ------
Profit (loss) before taxation 16,902 1,980 4,042 15,405 15,227
---------------------------------------- ------- ------- ------- -------- ------
RC profit (loss) before interest and
tax*
US 1,404 3,954 959 10,957 5,785
Non-US 17,744 1,527 3,362 5,731 8,642
---------------------------------------- ------- ------- ------- -------- ------
19,148 5,481 4,321 16,688 14,427
------- ------- ------- -------- ------
(a)From first quarter 2022 the results of Rosneft, previously
reported as a separate segment, are also included in other
businesses & corporate. Comparative information for 2021 has
been restated to reflect the changes in reportable segments. For
more information see Note 1 Basis of preparation - Investment in
Rosneft.
Top of page 26
Note 6. Sales and other operating revenues
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
---------------------------------------------------- ------- ------- ------- ------- -------
By segment
gas & low carbon energy 26,793 8,053 14,545 56,255 30,840
oil production & operations 6,932 8,599 7,482 33,193 24,519
customers & products 43,072 47,831 37,446 188,623 130,095
other businesses & corporate 779 552 484 2,299 1,724
---------------------------------------------------- ------- ------- ------- ------- -------
77,576 65,035 59,957 280,370 187,178
------- ------- ------- ------- -------
Less: sales and other operating revenues between
segments
gas & low carbon energy (441) 2,785 1,199 5,913 4,563
oil production & operations 6,916 7,589 7,202 30,294 22,408
customers & products 610 (276) 650 1,418 1,226
other businesses & corporate 1,234 (74) 352 1,353 1,242
---------------------------------------------------- ------- ------- ------- ------- -------
8,319 10,024 9,403 38,978 29,439
------- ------- ------- ------- -------
External sales and other operating revenues
gas & low carbon energy 27,234 5,268 13,346 50,342 26,277
oil production & operations 16 1,010 280 2,899 2,111
customers & products 42,462 48,107 36,796 187,205 128,869
other businesses & corporate (455) 626 132 946 482
---------------------------------------------------- ------- ------- ------- ------- -------
Total sales and other operating revenues 69,257 55,011 50,554 241,392 157,739
---------------------------------------------------- ------- ------- ------- ------- -------
By geographical area
US 18,563 22,451 17,927 87,497 63,095
Non-US 61,593 45,111 43,423 203,832 128,584
---------------------------------------------------- ------- ------- ------- ------- -------
80,156 67,562 61,350 291,329 191,679
Less: sales and other operating revenues between
areas 10,899 12,551 10,796 49,937 33,940
---------------------------------------------------- ------- ------- ------- ------- -------
69,257 55,011 50,554 241,392 157,739
------- ------- ------- ------- -------
Revenues from contracts with customers
Sales and other operating revenues include
the following in relation to revenues from
contracts with customers:
Crude oil 809 1,322 1,583 6,309 5,483
Oil products 34,800 40,036 29,790 149,854 101,418
Natural gas, LNG and NGLs 11,040 11,106 10,449 41,770 24,378
Non-oil products and other revenues from contracts
with customers 1,459 2,267 806 7,896 6,082
---------------------------------------------------- ------- ------- ------- ------- -------
Revenue from contracts with customers 48,108 54,731 42,628 205,829 137,361
---------------------------------------------------- ------- ------- ------- ------- -------
Other operating revenues(a) 21,149 280 7,926 35,563 20,378
---------------------------------------------------- ------- ------- ------- ------- -------
Total sales and other operating revenues 69,257 55,011 50,554 241,392 157,739
---------------------------------------------------- ------- ------- ------- ------- -------
(a) Principally relates to commodity derivative transactions
including sales of bp own production in trading books.
Top of page 27
Note 7. Depreciation, depletion and amortization
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------------ ------- ------- ------- ------ ------
Total depreciation, depletion and amortization
by segment
gas & low carbon energy 1,373 1,177 1,265 5,008 4,464
oil production & operations 1,383 1,381 1,628 5,564 6,528
customers & products 741 697 754 2,870 3,000
other businesses & corporate 217 212 216 876 813
------------------------------------------------ ------- ------- ------- ------ ------
3,714 3,467 3,863 14,318 14,805
------- ------- ------- ------ ------
Total depreciation, depletion and amortization
by geographical area
US 1,202 1,180 1,209 4,624 4,697
Non-US 2,512 2,287 2,654 9,694 10,108
------------------------------------------------ ------- ------- ------- ------ ------
3,714 3,467 3,863 14,318 14,805
------- ------- ------- ------ ------
Note 8. Earnings per share and shares in issue
Basic earnings per ordinary share (EpS) amounts are calculated
by dividing the profit (loss) for the period attributable to
ordinary shareholders by the weighted average number of ordinary
shares outstanding during the period. Against the authority granted
at bp's 2022 annual general meeting, 586 million ordinary shares
repurchased for cancellation were settled during the fourth quarter
2022 for a total cost of $3,240 million. This brings the total
number of shares repurchased and settled in the full year to 1,900
million for a total cost of $9,996 million. A further 84 million
ordinary shares were repurchased between the end of the reporting
period and the date when the financial statements are authorised
for issue for a total cost of $497 million which has been accrued
at 31 December 2022. The number of shares in issue is reduced when
shares are repurchased, but is not reduced in respect of the
period-end commitment to repurchase shares subsequent to the end of
the period.
165 million new ordinary shares were issued in April 2022 as
non-cash consideration for the acquisition of the public units of
BP Midstream Partners LP.
The calculation of EpS is performed separately for each discrete
quarterly period, and for the year-to-date period. As a result, the
sum of the discrete quarterly EpS amounts in any particular
year-to-date period may not be equal to the EpS amount for the
year-to-date period.
For the diluted EpS calculation the weighted average number of
shares outstanding during the period is adjusted for the number of
shares that are potentially issuable in connection with employee
share-based payment plans using the treasury stock method.
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------- ---------- ---------- ---------- ---------- ----------
Results for the period
Profit (loss) for the period attributable
to bp shareholders 10,803 (2,163) 2,326 (2,487) 7,565
Less: preference dividend - - - 1 2
------------------------------------------- ---------- ---------- ---------- ---------- ----------
Profit (loss) attributable to
bp ordinary shareholders 10,803 (2,163) 2,326 (2,488) 7,563
------------------------------------------- ---------- ---------- ---------- ---------- ----------
Number of shares (thousand) (a)(b)
Basic weighted average number
of shares outstanding 18,178,821 18,885,725 19,800,620 18,987,936 20,128,862
ADS equivalent(c) 3,029,803 3,147,620 3,300,103 3,164,656 3,354,810
------------------------------------------- ---------- ---------- ---------- ---------- ----------
Weighted average number of shares
outstanding used to calculate
diluted earnings per share 18,509,421 18,885,725 19,947,023 18,987,936 20,260,388
ADS equivalent(c) 3,084,903 3,147,620 3,324,503 3,164,656 3,376,731
------------------------------------------- ---------- ---------- ---------- ---------- ----------
Shares in issue at period-end 17,974,112 18,566,848 19,642,221 17,974,112 19,642,221
ADS equivalent(c) 2,995,685 3,094,474 3,273,703 2,995,685 3,273,703
------------------------------------------- ---------- ---------- ---------- ---------- ----------
(a) Excludes treasury shares and includes certain shares that
will be issued in the future under employee share-based payment
plans.
(b) If the inclusion of potentially issuable shares would
decrease loss per share, the potentially issuable shares are
excluded from the weighted average number of shares outstanding
used to calculate diluted earnings per share. The numbers of
potentially issuable shares that have been excluded from the
calculation for the third quarter 2022 and full year 2022 are
274,005 thousand (ADS equivalent 45,668 thousand) and 242,289
thousand (ADS equivalent 40,381 thousand).
(c) One ADS is equivalent to six ordinary shares.
Top of page 28
Note 9. Dividends
Dividends payable
BP today announced an interim dividend of 6.610 cents per
ordinary share which is expected to be paid on 31 March 2023 to
ordinary shareholders and American Depositary Share (ADS) holders
on the register on 17 February 2023. The ex-dividend date will be
16 February 2023. The corresponding amount in sterling is due to be
announced on 14 March 2023, calculated based on the average of the
market exchange rates over three dealing days between 8 March 2023
and 10 March 2023. Holders of ADSs are expected to receive $0.39660
per ADS (less applicable fees). The board has decided not to offer
a scrip dividend alternative in respect of the fourth quarter 2022
dividend. Ordinary shareholders and ADS holders (subject to certain
exceptions) will be able to participate in a dividend reinvestment
programme. Details of the fourth quarter dividend and timetable are
available at bp.com/dividends and further details of the dividend
reinvestment programmes are available at bp.com/drip.
Fourth Third Fourth
quarter quarter quarter Year Year
2022 2022 2021 2022 2021
------- ------- ------- ------ ------
Dividends paid per ordinary share
cents 6.006 6.006 5.460 22.932 21.420
pence 4.940 5.168 4.105 18.624 15.538
Dividends paid per ADS (cents) 36.04 36.04 32.76 137.59 128.52
----------------------------------- ------- ------- ------- ------ ------
Note 10. Net debt
Net debt* Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
---------------------------------------- -------- -------- -------- -------- --------
Finance debt(a) 46,944 46,560 61,176 46,944 61,176
Fair value (asset) liability of hedges
related to finance debt(b) 3,673 4,746 118 3,673 118
---------------------------------------- -------- -------- -------- -------- --------
50,617 51,306 61,294 50,617 61,294
Less: cash and cash equivalents 29,195 29,304 30,681 29,195 30,681
---------------------------------------- -------- -------- -------- -------- --------
Net debt(c) 21,422 22,002 30,613 21,422 30,613
---------------------------------------- -------- -------- -------- -------- --------
Total equity 82,990 73,333 90,439 82,990 90,439
Gearing* 20.5% 23.1% 25.3% 20.5% 25.3%
---------------------------------------- -------- -------- -------- -------- --------
(a) The fair value of finance debt at 31 December 2022 was
$42,590 million (30 September 2022 $41,414 million, 31 December
2021 $62,946 million).
(b) Derivative financial instruments entered into for the
purpose of managing interest rate and foreign currency exchange
risk associated with net debt with a fair value liability position
of $91 million at 31 December 2022 (third quarter 2022 liability of
$116 million and fourth quarter 2021 liability of $166 million) are
not included in the calculation of net debt shown above as hedge
accounting is not applied for these instruments.
(c) Net debt does not include accrued interest, which is
reported within other receivables and other payables on the balance
sheet and for which the associated cash flows are presented as
operating cash flows in the group cash flow statement.
As part of actively managing its debt portfolio, year to date
the group has bought back a total of $7.4 billion of finance debt
($11.0 billion equivalent for the comparative period in 2021,
fourth quarter 2022 $nil, fourth quarter 2021 $2.9 billion)
consisting entirely of US dollar bonds. Derivatives associated with
non-US dollar debt bought back in relevant comparative periods were
also terminated. These transactions have no significant impact on
net debt or gearing.
Note 11. Statutory accounts
The financial information shown in this publication, which was
approved by the Board of Directors on 6 February 2023, is unaudited
and does not constitute statutory financial statements. Audited
financial information will be published in BP Annual Report and
Form 20-F 2022. BP Annual Report and Form 20-F 2021 has been filed
with the Registrar of Companies in England and Wales. The report of
the auditor on those accounts was unqualified, did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and did not contain a
statement under section 498(2) or section 498(3) of the UK
Companies Act 2006.
Top of page 29
Additional information
Capital expenditure*
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
-------------------------------------- ------- ------- ------- ------ ------
Capital expenditure
Organic capital expenditure* 3,861 3,191 3,512 12,470 11,779
Inorganic capital expenditure*(a)(b) 3,508 3 121 3,860 1,069
-------------------------------------- ------- ------- ------- ------ ------
7,369 3,194 3,633 16,330 12,848
------- ------- ------- ------ ------
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------- ------- ------- ------- ------ ------
Capital expenditure by segment
gas & low carbon energy(a) 1,609 958 1,037 4,251 4,741
oil production & operations 1,430 1,386 1,272 5,278 4,838
customers & products(b) 4,149 713 1,224 6,252 2,872
other businesses & corporate 181 137 100 549 397
------- ------- ------- ------ ------
7,369 3,194 3,633 16,330 12,848
------- ------- ------- ------ ------
Capital expenditure by geographical
area
US 4,929 1,377 1,305 8,656 4,858
Non-US 2,440 1,817 2,328 7,674 7,990
------------------------------------- ------- ------- ------- ------ ------
7,369 3,194 3,633 16,330 12,848
------- ------- ------- ------ ------
(a) Full year 2021 includes the final payment of $712 million in
respect of the strategic partnership with Equinor.
(b) Fourth quarter and full year 2022 include $3,030 million in
respect of the Archaea Energy acquisition.
Top of page 30
Adjusting items*
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------------ ------- ------- ------- -------- -------
gas & low carbon energy
Gains on sale of businesses and fixed
assets(a) 33 3 - 45 1,034
Net impairment and losses on sale of
businesses and fixed assets(b) 1,111 (6) 553 588 1,503
Environmental and other provisions - - - - -
Restructuring, integration and rationalization
costs 3 - (4) 8 (33)
Fair value accounting effects(c)(d) 12,502 (9,224) (790) (1,811) (7,662)
Other (358) 31 (59) (197) (237)
------------------------------------------------ ------- ------- ------- -------- -------
13,291 (9,196) (300) (1,367) (5,395)
------- ------- ------- -------- -------
oil production & operations
Gains on sale of businesses and fixed
assets(e) 68 1,851 224 3,446 869
Net impairment and losses on sale of
businesses and fixed assets(b) (3,246) (326) (799) (4,508) 776
Environmental and other provisions(f) 420 244 (235) 518 (1,144)
Restructuring, integration and rationalization
costs 3 3 (2) (11) (92)
Fair value accounting effects - - - - -
Other 15 (18) - 52 (200)
------------------------------------------------ ------- ------- ------- -------- -------
(2,740) 1,754 (812) (503) 209
------- ------- ------- -------- -------
customers & products
Gains on sale of businesses and fixed
assets 72 10 62 374 (52)
Net impairment and losses on sale of
businesses and fixed assets(b) (1,451) (85) (961) (1,983) (1,097)
Environmental and other provisions (65) (1) (102) (101) (111)
Restructuring, integration and rationalization
costs 12 (4) 24 18 (11)
Fair value accounting effects(d) 189 (59) 146 (309) 436
Other(g) 112 - (206) 81 (209)
------------------------------------------------ ------- ------- ------- -------- -------
(1,131) (139) (1,037) (1,920) (1,044)
------- ------- ------- -------- -------
other businesses & corporate(h)
Gains on sale of businesses and fixed
assets 1 1 - 1 -
Net impairment and losses on sale of
businesses and fixed assets (1) - (9) (17) (59)
Environmental and other provisions (67) 67 (144) (92) (281)
Restructuring, integration and rationalization
costs 3 6 (2) 19 (113)
Fair value accounting effects(d) 515 (785) (212) (1,381) (849)
Rosneft(h) - - (190) (24,033) (291)
Gulf of Mexico oil spill (23) (21) (24) (84) (70)
Other (19) 44 2 21 (22)
------------------------------------------------ ------- ------- ------- -------- -------
409 (688) (579) (25,566) (1,685)
Total before interest and taxation 9,829 (8,269) (2,728) (29,356) (7,915)
Finance costs(i) (169) (68) (257) (425) (782)
------------------------------------------------ ------- ------- ------- -------- -------
Total before taxation 9,660 (8,337) (2,985) (29,781) (8,697)
Taxation on adjusting items(j) (1,542) 988 888 456 621
Taxation - tax rate change effect of
UK energy profits levy(k) (1,056) (778) - (1,834) -
------------------------------------------------ ------- ------- ------- -------- -------
Total after taxation for period(l) 7,062 (8,127) (2,097) (31,159) (8,076)
------------------------------------------------ ------- ------- ------- -------- -------
(a) Full year 2021 relates to a gain from the divestment of a 20% stake in Oman Block 61.
(b) See Note 4 for further information.
(c) Under IFRS bp marks-to-market the value of the hedges used
to risk-manage LNG contracts, but not the contracts themselves,
resulting in a mismatch in accounting treatment. The fair value
accounting effect includes the change in value of LNG contracts
that are being risk managed, and the underlying result reflects how
bp risk-manages its LNG contracts.
(d) For further information, including the nature of fair value
accounting effects reported in each segment, see pages 3, 6 and
37.
(e) Third quarter and full year 2022 include a non-taxable gain
of $1,951 million arising from the contribution of bp's Angolan
business to Azule Energy. Full year 2022 also includes gains of
$904 million related to the deemed disposal of 12% of the group's
interest in Aker BP, an associate of bp, following completion of
Aker BP's acquisition of Lundin Energy, and $361 million in
relation to the disposal of the group's interest in the Rumaila
field in Iraq to Basra Energy Company, an associate of bp.
(f) Full year 2021 includes adjustments relating to the change in discount rate on retained decommissioning provisions and the recognition of a decommissioning provision in relation to certain assets previously sold to a third party where the decommissioning obligation transferred may revert to bp due to the financial condition of the current owner. 2022 includes a provision reversal relating to the change in discount rate on retained decommissioning provisions.
(g) Fourth quarter and full year 2021 include amounts arising in
relation to the amendment of the timing of recognition of certain
customer incentives in our customers business.
(h) From first quarter 2022 the results of Rosneft, previously
reported as a separate segment, are also included in other
businesses & corporate. Comparative information for 2021 has
been restated to reflect the changes in reportable segments. For
more information see Note 1 Basis of preparation - Investment in
Rosneft.
Top of page 31
(i) Includes the unwinding of discounting effects relating to
Gulf of Mexico oil spill payables, the income statement impact
associated with the buyback of finance debt (see Note 10 for
further information) and temporary valuation differences associated
with the group's interest rate and foreign currency exchange risk
management of finance debt.
(j) Includes certain foreign exchange effects on tax as
adjusting items. These amounts represent the impact of: (i) foreign
exchange on deferred tax balances arising from the conversion of
local currency tax base amounts into functional currency, and (ii)
taxable gains and losses from the retranslation of US
dollar-denominated intra-group loans to local currency.
(k) Fourth quarter and full year 2022 include the deferred tax
impact of the UK Energy Profits Levy (EPL) on existing temporary
differences unwinding over the period 1 January 2023 to 31 March
2028. The revised EPL substantively enacted in the fourth quarter
2022 increases the headline rate of tax to 75% and applies to
taxable profits from bp's North Sea business made from 1 January
2023 until 31 March 2028. Third quarter 2022 includes the deferred
tax impact of the original UK EPL enacted in the third quarter
which increased the headline rate of tax to 65% on taxable profits
between 26 May 2022 and 31 December 2025. The revised EPL
supersedes the original EPL from 1 January 2023.
(l) Fourth quarter and full year 2022 include a $505-million
charge in respect of the EU Solidarity Contribution.
Net debt including leases
Net debt including leases* Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
----------------------------------------- -------- -------- -------- -------- --------
Net debt 21,422 22,002 30,613 21,422 30,613
Lease liabilities 8,549 7,895 8,611 8,549 8,611
Net partner (receivable) payable for
leases entered into on behalf of joint
operations 19 22 187 19 187
Net debt including leases 29,990 29,919 39,411 29,990 39,411
----------------------------------------- -------- -------- -------- -------- --------
Total equity 82,990 73,333 90,439 82,990 90,439
Gearing including leases* 26.5% 29.0% 30.4% 26.5% 30.4%
----------------------------------------- -------- -------- -------- -------- --------
Gulf of Mexico oil spill
31 December 31 December
$ million 2022 2021
Gulf of Mexico oil spill payables and provisions (9,566) (10,433)
-------------------------------------------------- ----------- -----------
Of which - current (1,216) (1,279)
Deferred tax asset 1,444 3,959
-------------------------------------------------- ----------- -----------
During the second quarter pre-tax payments of $1,204 million
were made relating to the 2016 consent decree and settlement
agreement with the United States and the five Gulf coast states.
Payables and provisions presented in the table above reflect the
latest estimate for the remaining costs associated with the Gulf of
Mexico oil spill. Where amounts have been provided on an estimated
basis, the amounts ultimately payable may differ from the amounts
provided and the timing of payments is uncertain. Further
information relating to the Gulf of Mexico oil spill, including
information on the nature and expected timing of payments relating
to provisions and other payables, is provided in BP Annual Report
and Form 20-F 2021 - Financial statements - Notes 6, 8, 19, 21, 22,
28, and 32.
Working capital* reconciliation
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------------ ------- -------- ------- ------- -------
Movements in inventories and other current
and non-current assets and liabilities
as per condensed group cash flow statement(a) (6,847) 6,764 (1,709) (6,270) (626)
Adjusted for inventory holding gains
(losses)* (Note 4 excluding Rosneft) (1,428) (2,868) 404 1,351 3,396
Adjusted for fair value accounting effects
relating to subsidiaries 13,288 (10,068) (856) (3,273) (8,075)
Other adjusting items(b) (815) 645 (85) 1,279 1,563
------------------------------------------------ ------- -------- ------- ------- -------
Working capital release (build) after
adjusting for net inventory gains (losses),
fair value accounting effects and other
adjusting items 4,198 (5,527) (2,246) (6,913) (3,742)
------------------------------------------------ ------- -------- ------- ------- -------
(a) The movement in working capital includes outflows relating
to the Gulf of Mexico oil spill on a pre-tax basis of $1 million
and $1,286 million in the fourth quarter and full year 2022
respectively. For the same periods in 2021 the amount was an
outflow of $7 million and $1,382 million respectively.
(b) Other adjusting items relate to the non-cash movement of US
emissions obligations carried as a provision that will be settled
by allowances held as inventory.
Top of page 32
Surplus cash flow* reconciliation
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------------- ------- ------- ------- -------- --------
Sources:
Net cash provided by operating activities 13,571 8,288 6,116 40,932 23,612
Cash provided from investing activities 621 621 2,301 2,617 7,154
Other proceeds(a) - - - 573 -
Receipts relating to transactions involving
non-controlling interests 1 3 12 11 683
------------------------------------------------- ------- ------- ------- -------- --------
Cash inflow 14,193 8,912 8,429 44,133 31,449
------------------------------------------------- ------- ------- ------- -------- --------
Uses:
Lease liability payments (513) (478) (502) (1,961) (2,082)
Payments on perpetual hybrid bonds (219) (180) (100) (708) (538)
Dividends paid - BP shareholders (1,088) (1,140) (1,077) (4,358) (4,304)
- non-controlling interests (100) (66) (66) (294) (311)
Total capital expenditure* (7,369) (3,194) (3,633) (16,330) (12,848)
Net repurchase of shares relating to
employee share schemes - - - (500) (500)
Payments relating to transactions involving
non-controlling interests (1) (2) - (9) (560)
Currency translation differences relating
to cash and cash equivalents 177 (322) (58) (684) (269)
------------------------------------------------- ------- ------- ------- -------- --------
Cash outflow (9,113) (5,382) (5,436) (24,844) (21,412)
------------------------------------------------- ------- ------- ------- -------- --------
Cash used to meet net debt target - - - - 3,729
Surplus cash flow 5,080 3,530 2,993 19,289 6,308
------------------------------------------------- ------- ------- ------- -------- --------
(a) Other proceeds for the year 2022 includes $573 million of
proceeds from the disposal of a loan note related to the Alaska
divestment. The cash was received in the fourth quarter 2021,
reported as a financing cash flow and was not included in other
proceeds at the time due to potential recourse from the
counterparty. The proceeds have been recognized as the potential
recourse reduces and by end second quarter 2022 all proceeds were
recognized.
Top of page 33
Adjusted earnings before interest, taxation, depreciation and
amortization (adjusted EBITDA)*
Year Year
$ million 2022 2021
Profit (loss) for the period (1,357) 8,487
Finance costs 2,703 2,857
Net finance (income) expense relating to pensions
and other post-retirement benefits (69) (2)
Taxation 16,762 6,740
--------------------------------------------------- ------- -------
Profit before interest and tax 18,039 18,082
Inventory holding (gains) losses*, before tax (1,351) (3,655)
--------------------------------------------------- ------- -------
RC profit before interest and tax 16,688 14,427
Net (favourable) adverse impact of adjusting
items*, before interest and tax 29,356 7,915
--------------------------------------------------- ------- -------
Underlying RC profit before interest and tax 46,044 22,342
Add back:
Depreciation, depletion and amortization 14,318 14,805
Exploration expenditure written off 385 168
--------------------------------------------------- ------- -------
Adjusted EBITDA 60,747 37,315
--------------------------------------------------- ------- -------
Adjusted earnings before interest, depreciation and amortization
(adjusted EBIDA)*
Year Year
$ million 2022 2021
Profit (loss) for the period (1,357) 8,487
Finance costs 2,703 2,857
Net finance (income) expense relating to pensions
and other post-retirement benefits (69) (2)
Taxation 16,762 6,740
--------------------------------------------------- -------- -------
Profit before interest and tax 18,039 18,082
Inventory holding (gains) losses*, before tax (1,351) (3,655)
--------------------------------------------------- -------- -------
RC profit before interest and tax 16,688 14,427
Net (favourable) adverse impact of adjusting
items*, before interest and tax 29,356 7,915
--------------------------------------------------- -------- -------
Underlying RC profit before interest and tax 46,044 22,342
Taxation on an underlying RC basis (15,052) (6,532)
--------------------------------------------------- -------- -------
30,992 15,810
Add back:
Depreciation, depletion and amortization 14,318 14,805
Exploration expenditure written off 385 168
--------------------------------------------------- -------- -------
Adjusted EBIDA 45,695 30,783
--------------------------------------------------- -------- -------
Top of page 34
Return on average capital employed (ROACE)*
Year Year
$ million 2022 2021
----------------------------------------------------- --------------------- ---------------------
Profit for the year attributable to bp shareholders (2,487) 7,565
Inventory holding (gains) losses*, net of tax (1,019) (2,826)
Net (favourable) adverse impact of adjusting
items*, after taxation 31,159 8,076
----------------------------------------------------- --------------------- ---------------------
Underlying replacement cost (RC) profit* 27,653 12,815
Interest expense, net of tax(a) 1,336 1,127
Non-controlling interests 1,130 922
----------------------------------------------------- --------------------- ---------------------
Adjusted underlying RC profit 30,119 14,864
----------------------------------------------------- --------------------- ---------------------
Total equity 82,990 90,439
Finance debt 46,944 61,176
----------------------------------------------------- --------------------- ---------------------
Capital employed 129,934 151,615
Less: Goodwill 11,960 12,373
Cash and cash equivalents 29,195 30,681
----------------------------------------------------- --------------------- ---------------------
88,779 108,561
--------------------- ---------------------
Average capital employed (excluding goodwill
and cash and cash equivalents) 98,670 111,601
----------------------------------------------------- --------------------- ---------------------
ROACE 30.5% 13.3%
----------------------------------------------------- --------------------- ---------------------
(a) Finance costs, as reported in the Group income statement,
were $2,703 million (2021 $2,857 million). Interest expense which
totals $1,632 million (2021 $1,322 million) on a pre-tax basis is
finance costs excluding lease interest of $257 million (2021 $306
million), unwinding of discount on provisions and other payables of
$808 million (2021 $890 million) and other adjusting items related
to finance costs of $6 million (2021 $339 million). Interest
expense included above is calculated on a post-tax basis.
Reconciliation of customers & products RC profit before
interest and tax to underlying RC profit before interest and tax*
to adjusted EBITDA* by business
Fourth Third Fourth
quarter quarter quarter Year Year
$ million 2022 2022 2021 2022 2021
------------------------------------------ ------- ------- ------- ------- -------
RC profit before interest and tax for
customers & products 771 2,586 (426) 8,869 2,208
Less: Adjusting items* gains (charges) (1,131) (139) (1,037) (1,920) (1,044)
Underlying RC profit before interest
and tax for customers & products 1,902 2,725 611 10,789 3,252
By business:
customers - convenience & mobility 628 1,137 637 2,966 3,052
Castrol - included in customers 70 151 207 700 1,037
products - refining & trading 1,274 1,588 (26) 7,823 200
Add back: Depreciation, depletion and
amortization 741 697 754 2,870 3,000
By business:
customers - convenience & mobility 334 311 329 1,286 1,306
Castrol - included in customers 40 36 36 153 150
products - refining & trading 407 386 425 1,584 1,694
Adjusted EBITDA for customers & products 2,643 3,422 1,365 13,659 6,252
By business:
customers - convenience & mobility 962 1,448 966 4,252 4,358
Castrol - included in customers 110 187 243 853 1,187
products - refining & trading 1,681 1,974 399 9,407 1,894
------------------------------------------ ------- ------- ------- ------- -------
Top of page 35
Realizations* and marker prices
Fourth Third Fourth
quarter quarter quarter Year Year
2022 2022 2021 2022 2021
------- ------- ------- ------ ------
Average realizations (a)
Liquids* ($/bbl)
US 71.21 82.23 65.25 78.40 56.15
Europe 86.62 94.21 80.49 99.90 70.82
Rest of World 89.38 101.82 74.19 97.03 66.23
BP Average 80.44 92.44 71.12 89.65 62.69
--------------------------------------------- ------- ------- ------- ------ ------
Natural gas ($/mcf)
US 4.84 7.25 4.59 5.61 3.68
Europe(b) 35.56 36.72 29.21 33.45 14.59
Rest of World 9.40 9.85 6.94 8.91 5.11
BP Average(b) 9.59 10.41 7.38 9.29 5.20
--------------------------------------------- ------- ------- ------- ------ ------
Total hydrocarbons* ($/boe)
US 55.67 66.82 51.09 61.21 43.88
Europe(b) 130.61 137.66 112.26 133.48 75.22
Rest of World 64.73 71.19 52.93 67.49 43.72
BP Average(b) 66.18 74.08 56.05 69.95 45.79
--------------------------------------------- ------- ------- ------- ------ ------
Average oil marker prices ($/bbl)
Brent 88.87 100.84 79.76 101.32 70.91
West Texas Intermediate 82.82 91.63 77.32 94.58 68.10
Western Canadian Select 53.52 69.02 59.71 73.28 53.90
Alaska North Slope 87.89 98.84 79.74 98.76 70.56
Mars 78.81 89.54 75.21 91.74 67.28
Urals (NWE - cif) 61.04 71.24 77.66 74.16 68.65
--------------------------------------------- ------- ------- ------- ------ ------
Average natural gas marker prices
Henry Hub gas price(c) ($/mmBtu) 6.26 8.20 5.84 6.65 3.85
UK Gas - National Balancing Point (p/therm) 166.54 281.01 226.24 203.81 115.78
--------------------------------------------- ------- ------- ------- ------ ------
(a) Based on sales of consolidated subsidiaries only - this
excludes equity-accounted entities.
(b) Realizations calculation methodology has been changed to
reflect gas price fluctuations within the North Sea region. All
comparatives are restated. There is no impact on financial
results.
(c) Henry Hub First of Month Index.
Exchange rates
Fourth Third Fourth
quarter quarter quarter Year Year
2022 2022 2021 2022 2021
------- ------- ------- ----- -----
$/GBP average rate for the period 1.17 1.18 1.35 1.23 1.38
$/GBP period-end rate 1.21 1.12 1.35 1.21 1.35
$/EUR average rate for the period 1.02 1.01 1.14 1.05 1.18
$/EUR period-end rate 1.07 0.98 1.13 1.07 1.13
$/AUD average rate for the period 0.66 0.68 0.73 0.69 0.75
$/AUD period-end rate 0.68 0.65 0.73 0.68 0.73
Rouble/$ average rate for the period 63.12 60.24 72.72 69.69 73.71
Rouble/$ period-end rate 73.52 58.40 74.66 73.52 74.66
-------------------------------------- ------- ------- ------- ----- -----
Top of page 36
Legal proceedings
For a full discussion of the group's material legal proceedings,
see pages 248-249 of bp Annual Report and Form 20-F 2021.
Glossary
Non-GAAP measures are provided for investors because they are
closely tracked by management to evaluate bp's operating
performance and to make financial, strategic and operating
decisions. Non-GAAP measures are sometimes referred to as
alternative performance measures.
Adjusted EBIDA is a non-GAAP measure and is defined as profit or
loss for the period, adjusting for finance costs and net finance
(income) or expense relating to pensions and other post-retirement
benefits and taxation, inventory holding gains or losses before
tax, net adjusting items* before interest and tax, and taxation on
an underlying RC basis, and adding back depreciation, depletion and
amortization (pre-tax) and exploration expenditure written-off (net
of adjusting items, pre-tax). bp believes that adjusted EBIDA is a
useful measure for investors because it is a measure closely
tracked by management to evaluate bp's operating performance and to
make financial, strategic and operating decisions and because it
may help investors to understand and evaluate, in the same manner
as management, the underlying trends in bp's operational
performance on a comparable basis, period on period. The nearest
equivalent measure on an IFRS basis is profit or loss for the
period. A reconciliation of profit or loss for the period to
adjusted EBIDA is provided on page 33.
Adjusted EBITDA is a non-GAAP measure presented for bp's
operating segments and is defined as replacement cost (RC) profit
before interest and tax, excluding net adjusting items* before
interest and tax, and adding back depreciation, depletion and
amortization and exploration write-offs (net of adjusting items).
Adjusted EBITDA by business is a further analysis of adjusted
EBITDA for the customers & products businesses. bp believes it
is helpful to disclose adjusted EBITDA by operating segment and by
business because it reflects how the segments measure underlying
business delivery. The nearest equivalent measure on an IFRS basis
for the segment is RC profit or loss before interest and tax, which
is bp's measure of profit or loss that is required to be disclosed
for each operating segment under IFRS.
Adjusted EBITDA for the group is defined as profit or loss for
the period, adjusting for finance costs and net finance (income) or
expense relating to pensions and other post-retirement benefits and
taxation, inventory holding gains or losses before tax, net
adjusting items before interest and tax, and adding back
depreciation, depletion and amortization (pre-tax) and exploration
expenditure written-off (net of adjusting items, pre-tax). The
nearest equivalent measure on an IFRS basis for the group is profit
or loss for the period. A reconciliation of profit or loss for the
period to adjusted EBITDA is provided on page 33.
Adjusting items are items that bp discloses separately because
it considers such disclosures to be meaningful and relevant to
investors. They are items that management considers to be important
to period-on-period analysis of the group's results and are
disclosed in order to enable investors to better understand and
evaluate the group's reported financial performance. Adjusting
items include gains and losses on the sale of businesses and fixed
assets, impairments, environmental and other provisions,
restructuring, integration and rationalization costs, fair value
accounting effects, financial impacts relating to Rosneft for the
2022 financial reporting period and costs relating to the Gulf of
Mexico oil spill and other items. Adjusting items within
equity-accounted earnings are reported net of incremental income
tax reported by the equity-accounted entity. Adjusting items are
used as a reconciling adjustment to derive underlying RC profit or
loss and related underlying measures which are non-GAAP measures.
An analysis of adjusting items by segment and type is shown on page
30.
Blue hydrogen - Hydrogen made from natural gas in combination
with carbon capture and storage (CCS).
Capital expenditure is total cash capital expenditure as stated
in the condensed group cash flow statement. Capital expenditure for
the operating segments and customers & products businesses is
presented on the same basis.
Cash balance point is defined as the implied Brent oil price
2021 real to balance bp's sources and uses of cash assuming an
average bp refining marker margin around $11/bbl and Henry Hub at
$3/mmBtu in 2021 real terms.
Consolidation adjustment - UPII is unrealized profit in
inventory arising on inter-segment transactions.
Developed renewables to final investment decision (FID) - Total
generating capacity for assets developed to FID by all entities
where bp has an equity share (proportionate to equity share). If
asset is subsequently sold bp will continue to record capacity as
developed to FID. If bp equity share increases developed capacity
to FID will increase proportionately to share increase for any
assets where bp held equity at the point of FID.
Divestment proceeds are disposal proceeds as per the condensed
group cash flow statement.
Effective tax rate (ETR) on replacement cost (RC) profit or loss
is a non-GAAP measure. The ETR on RC profit or loss is calculated
by dividing taxation on a RC basis by RC profit or loss before tax.
Taxation on a RC basis for the group is calculated as taxation as
stated on the group income statement adjusted for taxation on
inventory holding gains and losses. Information on RC profit or
loss is provided below. bp believes it is helpful to disclose the
ETR on RC profit or loss because this measure excludes the impact
of price changes on the replacement of inventories and allows for
more meaningful comparisons between reporting periods. Taxation on
a RC basis and ETR on RC profit or loss are non-GAAP measures. The
nearest equivalent measure on an IFRS basis is the ETR on profit or
loss for the period.
Electric vehicle charge points / EV charge points are defined as
the number of connectors on a charging device, operated by either
bp or a bp joint venture.
Top of page 37
Glossary (continued)
Fair value accounting effects are non-GAAP adjustments to our
IFRS profit (loss). They reflect the difference between the way bp
manages the economic exposure and internally measures performance
of certain activities and the way those activities are measured
under IFRS. Fair value accounting effects are included within
adjusting items. They relate to certain of the group's commodity,
interest rate and currency risk exposures as detailed below. Other
than as noted below, the fair value accounting effects described
are reported in both the gas & low carbon energy and customer
& products segments.
bp uses derivative instruments to manage the economic exposure
relating to inventories above normal operating requirements of
crude oil, natural gas and petroleum products. Under IFRS, these
inventories are recorded at historical cost. The related derivative
instruments, however, are required to be recorded at fair value
with gains and losses recognized in the income statement. This is
because hedge accounting is either not permitted or not followed,
principally due to the impracticality of effectiveness-testing
requirements. Therefore, measurement differences in relation to
recognition of gains and losses occur. Gains and losses on these
inventories, other than net realizable value provisions, are not
recognized until the commodity is sold in a subsequent accounting
period. Gains and losses on the related derivative commodity
contracts are recognized in the income statement, from the time the
derivative commodity contract is entered into, on a fair value
basis using forward prices consistent with the contract
maturity.
bp enters into physical commodity contracts to meet certain
business requirements, such as the purchase of crude for a refinery
or the sale of bp's gas production. Under IFRS these physical
contracts are treated as derivatives and are required to be fair
valued when they are managed as part of a larger portfolio of
similar transactions. Gains and losses arising are recognized in
the income statement from the time the derivative commodity
contract is entered into.
IFRS require that inventory held for trading is recorded at its
fair value using period-end spot prices, whereas any related
derivative commodity instruments are required to be recorded at
values based on forward prices consistent with the contract
maturity. Depending on market conditions, these forward prices can
be either higher or lower than spot prices, resulting in
measurement differences.
bp enters into contracts for pipelines and other transportation,
storage capacity, oil and gas processing, liquefied natural gas
(LNG) and certain gas and power contracts that, under IFRS, are
recorded on an accruals basis. These contracts are risk-managed
using a variety of derivative instruments that are fair valued
under IFRS. This results in measurement differences in relation to
recognition of gains and losses.
The way that bp manages the economic exposures described above,
and measures performance internally, differs from the way these
activities are measured under IFRS. bp calculates this difference
for consolidated entities by comparing the IFRS result with
management's internal measure of performance. We believe that
disclosing management's estimate of this difference provides useful
information for investors because it enables investors to see the
economic effect of these activities as a whole.
These include:
-- Under management's internal measure of performance the
inventory, transportation and capacity contracts in question are
valued based on fair value using relevant forward prices prevailing
at the end of the period.
-- Fair value accounting effects also include changes in the
fair value of the near-term portions of LNG contracts that fall
within bp's risk management framework. LNG contracts are not
considered derivatives, because there is insufficient market
liquidity, and they are therefore accrual accounted under IFRS.
However, oil and natural gas derivative financial instruments used
to risk manage the near-term portions of the LNG contracts are fair
valued under IFRS. The fair value accounting effect, which is
reported in the gas and low carbon energy segment, represents the
change in value of LNG contacts that are being risk managed and
which is reflected in the underlying result, but not in reported
earnings. Management believes that this gives a better
representation of performance in each period.
Furthermore, the fair values of derivative instruments used to
risk manage certain other oil, gas, power and other contracts, are
deferred to match with the underlying exposure. The commodity
contracts for business requirements are accounted for on an
accruals basis.
In addition, fair value accounting effects include changes in
the fair value of derivatives entered into by the group to manage
currency exposure and interest rate risks relating to hybrid bonds
to their respective first call periods. The hybrid bonds which were
issued on 17 June 2020 are classified as equity instruments and
were recorded in the balance sheet at that date at their USD
equivalent issued value. Under IFRS these equity instruments are
not remeasured from period to period, and do not qualify for
application of hedge accounting. The derivative instruments
relating to the hybrid bonds, however, are required to be recorded
at fair value with mark to market gains and losses recognized in
the income statement. Therefore, measurement differences in
relation to the recognition of gains and losses occur. The fair
value accounting effect, which is reported in the other businesses
& corporate segment, eliminates the fair value gains and losses
of these derivative financial instruments that are recognized in
the income statement. We believe that this gives a better
representation of performance, by more appropriately reflecting the
economic effect of these risk management activities, in each
period.
Top of page 38
Glossary (continued)
Gas & low carbon energy segment comprises our gas and low
carbon businesses. Our gas business includes regions with upstream
activities that predominantly produce natural gas, integrated gas
and power, and gas trading. Our low carbon business includes solar,
offshore and onshore wind, hydrogen and CCS, power trading and our
share in bp Bunge Bioenergia. Power trading includes trading of
both renewable and non-renewable power.
Gearing and net debt are non-GAAP measures. Net debt is
calculated as finance debt, as shown in the balance sheet, plus the
fair value of associated derivative financial instruments that are
used to hedge foreign currency exchange and interest rate risks
relating to finance debt, for which hedge accounting is applied,
less cash and cash equivalents. Net debt does not include accrued
interest, which is reported within other receivables and other
payables on the balance sheet and for which the associated cash
flows are presented as operating cash flows in the group cash flow
statement. Gearing is defined as the ratio of net debt to the total
of net debt plus total equity. bp believes these measures provide
useful information to investors. Net debt enables investors to see
the economic effect of finance debt, related hedges and cash and
cash equivalents in total. Gearing enables investors to see how
significant net debt is relative to total equity. The derivatives
are reported on the balance sheet within the headings 'Derivative
financial instruments'. The nearest equivalent GAAP measures on an
IFRS basis are finance debt and finance debt ratio. A
reconciliation of finance debt to net debt is provided on page
28.
We are unable to present reconciliations of forward-looking
information for net debt or gearing to finance debt and total
equity, because without unreasonable efforts, we are unable to
forecast accurately certain adjusting items required to present a
meaningful comparable GAAP forward-looking financial measure. These
items include fair value asset (liability) of hedges related to
finance debt and cash and cash equivalents, that are difficult to
predict in advance in order to include in a GAAP estimate.
Gearing including leases and net debt including leases are
non-GAAP measures. Net debt including leases is calculated as net
debt plus lease liabilities, less the net amount of partner
receivables and payables relating to leases entered into on behalf
of joint operations. Gearing including leases is defined as the
ratio of net debt including leases to the total of net debt
including leases plus total equity. bp believes these measures
provide useful information to investors as they enable investors to
understand the impact of the group's lease portfolio on net debt
and gearing. The nearest equivalent GAAP measures on an IFRS basis
are finance debt and finance debt ratio. A reconciliation of
finance debt to net debt including leases is provided on page
31.
Green hydrogen - Hydrogen made from solar, wind and
hydro-electricity.
Hydrocarbons - Liquids and natural gas. Natural gas is converted
to oil equivalent at 5.8 billion cubic feet = 1 million
barrels.
Inorganic capital expenditure is a subset of capital expenditure
on a cash basis and a non-GAAP measure. Inorganic capital
expenditure comprises consideration in business combinations and
certain other significant investments made by the group. It is
reported on a cash basis. bp believes that this measure provides
useful information as it allows investors to understand how bp's
management invests funds in projects which expand the group's
activities through acquisition. The nearest equivalent measure on
an IFRS basis is capital expenditure on a cash basis. Further
information and a reconciliation to GAAP information is provided on
page 29.
Installed renewables capacity is bp's share of capacity for
operating assets owned by entities where bp has an equity
share.
Inventory holding gains and losses are non-GAAP adjustments to
our IFRS profit (loss) and represent:
a. the difference between the cost of sales calculated using the
replacement cost of inventory and the cost of sales calculated on
the first-in first-out (FIFO) method after adjusting for any
changes in provisions where the net realizable value of the
inventory is lower than its cost. Under the FIFO method, which we
use for IFRS reporting of inventories other than for trading
inventories, the cost of inventory charged to the income statement
is based on its historical cost of purchase or manufacture, rather
than its replacement cost. In volatile energy markets, this can
have a significant distorting effect on reported income. The
amounts disclosed as inventory holding gains and losses represent
the difference between the charge to the income statement for
inventory on a FIFO basis (after adjusting for any related
movements in net realizable value provisions) and the charge that
would have arisen based on the replacement cost of inventory. For
this purpose, the replacement cost of inventory is calculated using
data from each operation's production and manufacturing system,
either on a monthly basis, or separately for each transaction where
the system allows this approach; and
b. an adjustment relating to certain trading inventories that
are not price risk managed which relate to a minimum inventory
volume that is required to be held to maintain underlying business
activities. This adjustment represents the movement in fair value
of the inventories due to prices, on a grade by grade basis, during
the period. This is calculated from each operation's inventory
management system on a monthly basis using the discrete monthly
movement in market prices for these inventories.
The amounts disclosed are not separately reflected in the
financial statements as a gain or loss. No adjustment is made in
respect of the cost of inventories held as part of a trading
position and certain other temporary inventory positions that are
price risk-managed. See Replacement cost (RC) profit or loss
definition below.
Liquids - Liquids comprises crude oil, condensate and natural
gas liquids. For the oil production & operations segment, it
also includes bitumen.
Major projects have a bp net investment of at least $250
million, or are considered to be of strategic importance to bp or
of a high degree of complexity.
Operating cash flow is net cash provided by (used in) operating
activities as stated in the condensed group cash flow
statement.
Top of page 39
Glossary (continued)
Organic capital expenditure is a non-GAAP measure. Organic
capital expenditure comprises capital expenditure on a cash basis
less inorganic capital expenditure. bp believes that this measure
provides useful information as it allows investors to understand
how bp's management invests funds in developing and maintaining the
group's assets. The nearest equivalent measure on an IFRS basis is
capital expenditure on a cash basis and a reconciliation to GAAP
information is provided on page 29 .
We are unable to present reconciliations of forward-looking
information for organic capital expenditure to total cash capital
expenditure, because without unreasonable efforts, we are unable to
forecast accurately the adjusting item, inorganic capital
expenditure, that is difficult to predict in advance in order to
derive the nearest GAAP estimate.
Production-sharing agreement/contract (PSA/PSC) is an
arrangement through which an oil and gas company bears the risks
and costs of exploration, development and production. In return, if
exploration is successful, the oil company receives entitlement to
variable physical volumes of hydrocarbons, representing recovery of
the costs incurred and a stipulated share of the production
remaining after such cost recovery.
Realizations are the result of dividing revenue generated from
hydrocarbon sales, excluding revenue generated from purchases made
for resale and royalty volumes, by revenue generating hydrocarbon
production volumes. Revenue generating hydrocarbon production
reflects the bp share of production as adjusted for any production
which does not generate revenue. Adjustments may include losses due
to shrinkage, amounts consumed during processing, and contractual
or regulatory host committed volumes such as royalties. For the gas
& low carbon energy and oil production & operations
segments, realizations include transfers between businesses.
Refining availability represents Solomon Associates' operational
availability for bp-operated refineries, which is defined as the
percentage of the year that a unit is available for processing
after subtracting the annualized time lost due to turnaround
activity and all planned mechanical, process and regulatory
downtime.
The Refining marker margin (RMM) is the average of regional
indicator margins weighted for bp's crude refining capacity in each
region. Each regional marker margin is based on product yields and
a marker crude oil deemed appropriate for the region. The regional
indicator margins may not be representative of the margins achieved
by bp in any period because of bp's particular refinery
configurations and crude and product slate.
Renewables pipeline - Renewable projects satisfying the
following criteria until the point they can be considered developed
to final investment decision (FID): Site based projects that have
obtained land exclusivity rights, or for PPA based projects an
offer has been made to the counterparty, or for auction projects
pre-qualification criteria has been met, or for acquisition
projects post a binding offer being accepted.
Replacement cost (RC) profit or loss / RC profit or loss
attributable to bp shareholders reflects the replacement cost of
inventories sold in the period and is calculated as profit or loss
attributable to bp shareholders, adjusting for inventory holding
gains and losses (net of tax). RC profit or loss for the group is
not a recognized GAAP measure. bp believes this measure is useful
to illustrate to investors the fact that crude oil and product
prices can vary significantly from period to period and that the
impact on our reported result under IFRS can be significant.
Inventory holding gains and losses vary from period to period due
to changes in prices as well as changes in underlying inventory
levels. In order for investors to understand the operating
performance of the group excluding the impact of price changes on
the replacement of inventories, and to make comparisons of
operating performance between reporting periods, bp's management
believes it is helpful to disclose this measure. The nearest
equivalent measure on an IFRS basis is profit or loss attributable
to bp shareholders. A reconciliation to GAAP information is
provided on page 1. RC profit or loss before interest and tax is
bp's measure of profit or loss that is required to be disclosed for
each operating segment under IFRS.
Reported recordable injury frequency measures the number of
reported work-related employee and contractor incidents that result
in a fatality or injury per 200,000 hours worked. This represents
reported incidents occurring within bp's operational HSSE reporting
boundary. That boundary includes bp's own operated facilities and
certain other locations or situations. Reported incidents are
investigated throughout the year and as a result there may be
changes in previously reported incidents. Therefore comparative
movements are calculated against internal data reflecting the final
outcomes of such investigations, rather than the previously
reported comparative period, as this this represents a more up to
date reflection of the safety environment.
Reserves replacement ratio - the extent to which the year's
production has been replaced by proved reserves added to our
reserve base. The ratio is expressed in oil-equivalent terms and
includes changes resulting from discoveries, improved recovery and
extensions and revisions to previous estimates, but excludes
changes resulting from acquisitions and disposals.
Retail sites include sites operated by dealers, jobbers,
franchisees or brand licensees or joint venture (JV) partners,
under the bp brand. These may move to and from the bp brand as
their fuel supply agreement or brand licence agreement expires and
are renegotiated in the normal course of business. Retail sites are
primarily branded bp, ARCO, Amoco, Aral and Thorntons, and also
includes sites in India through our Jio-bp JV.
Retail sites in growth markets are retail sites that are either
bp branded or co-branded with our partners in China, Mexico and
Indonesia and also include sites in India through our Jio-bp
JV.
Top of page 40
Glossary (continued)
Return on average capital employed (ROACE) is a non-GAAP measure
and is defined as underlying replacement cost profit, which is
defined as profit or loss attributable to bp shareholders adjusted
for inventory holding gains and losses, adjusting items and related
taxation on inventory holding gains and losses and adjusting items
total taxation, after adding back non-controlling interest and
interest expense net of tax, divided by the average of the
beginning and ending balances of total equity plus finance debt,
excluding cash and cash equivalents and goodwill as presented on
the group balance sheet over the periods presented. Interest
expense before tax is finance costs as presented on the group
income statement, excluding lease interest, the unwinding of the
discount on provisions and other payables and other adjusting items
reported in finance costs. bp believes it is helpful to disclose
the ROACE because this measure gives an indication of the company's
capital efficiency. The nearest GAAP measures of the numerator and
denominator are profit or loss for the period attributable to bp
shareholders and total equity respectively. The reconciliation of
the numerator and denominator is provided on page 34.
Solomon availability - See Refining availability definition.
Strategic convenience sites are retail sites, within the bp
portfolio, which sell bp-branded vehicle energy (e.g. bp, Aral,
Arco, Amoco, Thorntons and Pulse) and either carry one of the
strategic convenience brands (e.g. M&S, Rewe to Go) or a
differentiated convenience offer. To be considered a strategic
convenience site, the convenience offer should have a demonstrable
level of differentiation in the market in which it operates.
Strategic convenience site count includes sites under a pilot
phase.
Surplus cash flow does not represent the residual cash flow
available for discretionary expenditures. It is a non-GAAP
financial measure that should be considered in addition to, not as
a substitute for or superior to, net cash provided by operating
activities, reported in accordance with IFRS. bp believes it is
helpful to disclose the surplus cash flow because this measure
forms part of bp's financial frame.
Surplus cash flow refers to the net surplus of sources of cash
over uses of cash, after reaching the $35 billion net debt target.
Sources of cash include net cash provided by operating activities,
cash provided from investing activities and cash receipts relating
to transactions involving non-controlling interests. Uses of cash
include lease liability payments, payments on perpetual hybrid
bond, dividends paid, cash capital expenditure, the cash cost of
share buybacks to offset the dilution from vesting of awards under
employee share schemes, cash payments relating to transactions
involving non-controlling interests and currency translation
differences relating to cash and cash equivalents as presented on
the condensed group cash flow statement.
For the full year of 2022, the sources of cash includes other
proceeds related to the proceeds from the disposal of a loan note
related to the Alaska divestment. The cash was received in the
fourth quarter 2021, was reported as a financing cash flow and was
not included in other proceeds at the time due to potential
recourse from the counterparty. The proceeds are being recognized
as the potential recourse reduces. See page 32 for the components
of our sources of cash and uses of cash.
Technical service contract (TSC) - Technical service contract is
an arrangement through which an oil and gas company bears the risks
and costs of exploration, development and production. In return,
the oil and gas company receives entitlement to variable physical
volumes of hydrocarbons, representing recovery of the costs
incurred and a profit margin which reflects incremental production
added to the oilfield.
Tier 1 and tier 2 process safety events - Tier 1 events are
losses of primary containment from a process of greatest
consequence - causing harm to a member of the workforce, damage to
equipment from a fire or explosion, a community impact or exceeding
defined quantities. Tier 2 events are those of lesser consequence.
These represent reported incidents occurring within bp's
operational HSSE reporting boundary. That boundary includes bp's
own operated facilities and certain other locations or situations.
Reported process safety events are investigated throughout the year
and as a result there may be changes in previously reported events.
Therefore comparative movements are calculated against internal
data reflecting the final outcomes of such investigations, rather
than the previously reported comparative period, as this this
represents a more up to date reflection of the safety
environment.
Underlying effective tax rate (ETR) is a non-GAAP measure. The
underlying ETR is calculated by dividing taxation on an underlying
replacement cost (RC) basis by underlying RC profit or loss before
tax. Taxation on an underlying RC basis for the group is calculated
as taxation as stated on the group income statement adjusted for
taxation on inventory holding gains and losses and total taxation
on adjusting items. Information on underlying RC profit or loss is
provided below. Taxation on an underlying RC basis presented for
the operating segments is calculated through an allocation of
taxation on an underlying RC basis to each segment. bp believes it
is helpful to disclose the underlying ETR because this measure may
help investors to understand and evaluate, in the same manner as
management, the underlying trends in bp's operational performance
on a comparable basis, period on period. Taxation on an underlying
RC basis and underlying ETR are non-GAAP measures. The nearest
equivalent measure on an IFRS basis is the ETR on profit or loss
for the period.
We are unable to present reconciliations of forward-looking
information for underlying ETR to ETR on profit or loss for the
period, because without unreasonable efforts, we are unable to
forecast accurately certain adjusting items required to present a
meaningful comparable GAAP forward-looking financial measure. These
items include the taxation on inventory holding gains and losses
and adjusting items, that are difficult to predict in advance in
order to include in a GAAP estimate.
Underlying production - 2022 underlying production, when
compared with 2021, is production after adjusting for acquisitions
and divestments, curtailments, and entitlement impacts in our
production-sharing agreements/contracts and technical service
contract*.
Underlying RC profit or loss / underlying RC profit or loss
attributable to bp shareholders is a non-GAAP measure and is RC
profit or loss* (as defined on page 39) after excluding net
adjusting items and related taxation. See page 30 for additional
information on the adjusting items that are used to arrive at
underlying RC profit or loss in order to enable a full
understanding of the items and their financial impact.
Top of page 41
Glossary (continued)
Underlying RC profit or loss before interest and tax for the
operating segments or customers & products businesses is
calculated as RC profit or loss (as defined above) including profit
or loss attributable to non-controlling interests before interest
and tax for the operating segments and excluding net adjusting
items for the respective operating segment or business.
bp believes that underlying RC profit or loss is a useful
measure for investors because it is a measure closely tracked by
management to evaluate bp's operating performance and to make
financial, strategic and operating decisions and because it may
help investors to understand and evaluate, in the same manner as
management, the underlying trends in bp's operational performance
on a comparable basis, period on period, by adjusting for the
effects of these adjusting items. The nearest equivalent measure on
an IFRS basis for the group is profit or loss attributable to bp
shareholders. The nearest equivalent measure on an IFRS basis for
segments and businesses is RC profit or loss before interest and
taxation. A reconciliation to GAAP information is provided on page
1 for the group and pages 6-15 for the segments.
Underlying RC profit or loss per share / underlying RC profit or
loss per ADS is a non-GAAP measure. Earnings per share is defined
in Note 8. Underlying RC profit or loss per ordinary share is
calculated using the same denominator as earnings per share as
defined in the consolidated financial statements. The numerator
used is underlying RC profit or loss attributable to bp
shareholders rather than profit or loss attributable to bp
shareholders. Underlying RC profit or loss per ADS is calculated as
outlined above for underlying RC profit or loss per share except
the denominator is adjusted to reflect one ADS equivalent to six
ordinary shares. bp believes it is helpful to disclose the
underlying RC profit or loss per ordinary share and per ADS because
these measures may help investors to understand and evaluate, in
the same manner as management, the underlying trends in bp's
operational performance on a comparable basis, period on period.
The nearest equivalent measure on an IFRS basis is basic earnings
per share based on profit or loss for the period attributable to bp
shareholders.
upstream includes oil and natural gas field development and
production within the gas & low carbon energy and oil
production & operations segments.
upstream/hydrocarbon plant reliability (bp-operated) is
calculated taking 100% less the ratio of total unplanned plant
deferrals divided by installed production capacity, excluding
non-operated assets and bpx energy. Unplanned plant deferrals are
associated with the topside plant and where applicable the subsea
equipment (excluding wells and reservoir). Unplanned plant
deferrals include breakdowns, which does not include Gulf of Mexico
weather related downtime.
upstream unit production cost is calculated as production cost
divided by units of production. Production cost does not include ad
valorem and severance taxes. Units of production are barrels for
liquids and thousands of cubic feet for gas. Amounts disclosed are
for bp subsidiaries only and do not include bp's share of
equity-accounted entities.
Working capital is movements in inventories and other current
and non-current assets and liabilities as reported in the condensed
group cash flow statement.
Change in working capital adjusted for inventory holding
gains/losses, fair value accounting effects relating to
subsidiaries and other adjusting items is a non-GAAP measure. It is
calculated by adjusting for inventory holding gains/losses reported
in the period and from the second quarter 2021 onwards, it is also
adjusted for fair value accounting effects relating to subsidiaries
reported within adjusting items for the period. For 2022, it is
adjusted for other adjusting items relating to the non-cash
movement of US emissions obligations carried as a provision that
will be settled by allowances held as inventory. This represents
what would have been reported as movements in inventories and other
current and non-current assets and liabilities, if the starting
point in determining net cash provided by operating activities had
been underlying replacement cost profit rather than profit for the
period. The nearest equivalent measure on an IFRS basis for this is
movements in inventories and other current and non-current assets
and liabilities.
bp utilizes various arrangements in order to manage its working
capital including discounting of receivables and, in the supply and
trading business, the active management of supplier payment terms,
inventory and collateral.
Trade marks
Trade marks of the bp group appear throughout this announcement.
They include:
bp , Amoco, Aral, Castrol ON and Thorntons
Top of page 42
Cautionary statement
In order to utilize the 'safe harbor' provisions of the United
States Private Securities Litigation Reform Act of 1995 (the
'PSLRA') and the general doctrine of cautionary statements, bp is
providing the following cautionary statement:
The discussion in this results announcement contains certain
forecasts, projections and forward-looking statements - that is,
statements related to future, not past events and circumstances -
with respect to the financial condition, results of operations and
businesses of bp and certain of the plans and objectives of bp with
respect to these items. These statements may generally, but not
always, be identified by the use of words such as 'will',
'expects', 'is expected to', 'aims', 'should', 'may', 'objective',
'is likely to', 'intends', 'believes', 'anticipates', 'plans', 'we
see' or similar expressions.
In particular, the following, among other statements, are all
forward looking in nature: plans, expectations and assumptions
regarding oil and gas demand, supply, prices or volatility;
expectations regarding upstream production and bp's customers &
products business; expectations regarding refining margins;
expectations regarding production from oil production and
operations, gas and low carbon energy; expectations regarding bp's
business, financial performance, results of operations and cash
flows; expectations regarding future project start-ups;
expectations with regards to bp's transformation to an IEC;
expectations regarding price assumptions used in accounting
estimates; bp's plans and expectations regarding the amount and
timing of share buybacks and quarterly and interim dividends; plans
and expectations regarding bp's credit rating, including in respect
of maintaining a strong investment grade credit rating; plans and
expectations regarding the allocation of surplus cash flow to share
buybacks and strengthening the balance sheet; plans and
expectations regarding bp's exit of its shareholding in Rosneft and
other investments in Russia; plans and expectations with respect to
the total depreciation, depletion and amortization and business and
corporate underlying annual charge for 2023; plans and expectations
regarding the factors taken into account in setting the dividend
per ordinary share and buyback each quarter; plans and expectations
regarding investments, collaborations and partnerships in charging
infrastructure; plans related to bp's Launchpad accelerator; plans
and expectations related to bp's transition growth engines of
bioenergy, convenience, EV charging, renewables and hydrogen; plans
and expectations regarding divestments, including the amount and
timing of proceeds; plans and expectations regarding bp's renewable
energy business; expectations regarding the underlying effective
tax rate for 2023; expectations regarding the timing and amount of
future payments relating to the Gulf of Mexico oil spill;
expectations regarding bp's defined benefit pension plans; plans
and expectations regarding capital expenditure, including that
capital expenditure will be around $16-18 billion in 2023; plans
and expectations regarding bp's work in the biogas industry; plans
and expectations regarding projects, joint ventures and other
partnerships and agreements, including partnerships and other
collaborations with M&S, Mauritania, Egypt, REWE, Hertz, Chubu
Electric and KMS as well as plans and expectations regarding the
Mad Dog Phase 2 project in the Gulf of Mexico, the Tangguh
expansion in Indonesia, operations in Trinidad and Tobago and
Mozambique, the partnership with Shell and Lightsource bp to
develop a solar project in Trinidad and Tobago, GTA Phase 1 Tortue
projects, bp ventures' investments in 5B Holdings Pty Ltd, the sale
of its interest in the bp-Husky Toledo refinery to Cenovus Energy
and related operational impacts, the sale of bp's upstream business
in Algeria to Eni and the development of EV charge points.
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 and are outside
the control of bp.
Actual results or outcomes, may differ materially from those
expressed in such statements, depending on a variety of factors,
including: the extent and duration of the impact of current market
conditions including the volatility of oil prices, the effects of
bp's plan to exit its shareholding in Rosneft and other investments
in Russia, the impact of COVID-19, overall global economic and
business conditions impacting bp's business and demand for bp's
products as well as the specific factors identified in the
discussions accompanying such forward-looking statements; changes
in consumer preferences and societal expectations; the pace of
development and adoption of alternative energy solutions;
developments in policy, law, regulation, technology and markets,
including societal and investor sentiment related to the issue of
climate change; the receipt of relevant third party and/or
regulatory approvals; the timing and level of maintenance and/or
turnaround activity; the timing and volume of refinery additions
and outages; the timing of bringing new fields onstream; the
timing, quantum and nature of certain acquisitions and divestments;
future levels of industry product supply, demand and pricing,
including supply growth in North America and continued base oil and
additive supply shortages; OPEC+ quota restrictions; PSA and TSC
effects; operational and safety problems; potential lapses in
product quality; 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 and policies, including related to climate
change; changes in social attitudes and customer preferences;
regulatory or legal actions including the types of enforcement
action pursued and the nature of remedies sought or imposed; the
actions of prosecutors, regulatory authorities and courts; delays
in the processes for resolving claims; amounts ultimately payable
and timing of payments relating to the Gulf of Mexico oil spill;
exchange rate fluctuations; development and use of new technology;
recruitment and retention of a skilled workforce; the success or
otherwise of partnering; the actions of competitors, trading
partners, contractors, subcontractors, creditors, rating agencies
and others; bp's access to future credit resources; business
disruption and crisis management; the impact on bp's reputation of
ethical misconduct and non-compliance with regulatory obligations;
trading losses; major uninsured losses; the possibility that
international sanctions or other steps or actions taken by any
competent authorities or any other relevant persons may impact
Rosneft's business or outlook, bp's ability to sell its interests
in Rosneft, or the price for which bp could sell such interests;
the actions of contractors; 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 elsewhere in this report, as
well as those factors discussed under "Risk factors" in bp's Annual
Report and Form 20-F 2021 as filed with the US Securities and
Exchange Commission and those factors discussed under "Principal
risks and uncertainties" in bp's Report on Form 6-K regarding
results for the six-month period ended 30 June 2022 as filed with
the US Securities and Exchange Commission.
This announcement contains inside information. The person
responsible for arranging the release of this announcement on
behalf of BP p.l.c. is Ben Mathews, Company Secretary.
Top of page 43
Contacts
London Houston
Press Office David Nicholas Megan Baldino
+44 (0) 7831 095541 +1 907 529 9029
Investor Relations Craig Marshall Graham Collins
bp.com/investors +44 (0) 203 401 5592 +1 832 753 5116
BP p.l.c.'s LEI Code 213800LH1BZH3D16G760
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