BP Announce Second quarter 2024 results
London, July 30, 2024, (Oilandgaspress) –– Strong operating cash flow and lower net debt: underlying RC profit $2.8 billion; strong operating cash flow of $8.1 billion; net debt reduced to $22.6 billion.
Robust operations: 2Q24 bp-operated upstream plant reliability* 96.1%; 2Q24 bp-operated refining availability* 96.4%.
Growing shareholder distributions: Dividend per ordinary share of 8 cents; $1.75 billion share buyback announced for 2Q24, delivering on our commitment to announce $3.5 billion for the first half of 2024; committed to announcing $3.5 billion share buyback for the second half of 2024.
Six priorities in action: Advancing growth projects, taking FID on Kaskida in Gulf of Mexico; re-focusing bioenergy business with agreement to take full ownership of bp Bunge Bioenergia and high grading biofuels portfolio.
| $ million | Second quarter 2024 | First quarter 2024 | Second quarter 2023 | First half 2024 | First half 2023 |
| Profit (loss) for the period attributable to bp shareholders | (129) | 2,263 | 1,792 | 2,134 | 10,010 |
| Inventory holding (gains) losses*, net of tax | 113 | (657) | 549 | (544) | 1,001 |
| Replacement cost (RC) profit (loss)* | (16) | 1,606 | 2,341 | 1,590 | 11,011 |
| Net (favourable) adverse impact of adjusting items*, net of tax | 2,772 | 1,117 | 248 | 3,889 | (3,459) |
| Underlying RC profit* | 2,756 | 2,723 | 2,589 | 5,479 | 7,552 |
| Operating cash flow* | 8,100 | 5,009 | 6,293 | 13,109 | 13,915 |
| Capital expenditure* | (3,691) | (4,278) | (4,314) | (7,969) | (7,939) |
| Divestment and other proceeds(b) | 760 | 413 | 88 | 1,173 | 888 |
| Net issue (repurchase) of shares | (1,751) | (1,750) | (2,073) | (3,501) | (4,521) |
| Net debt*(c) | 22,614 | 24,015 | 23,660 | 22,614 | 23,660 |
| Adjusted EBITDA* | 9,639 | 10,306 | 9,770 | 19,945 | 22,836 |
| Announced dividend per ordinary share (cents per share) | 8.000 | 7.270 | 7.270 | 15.270 | 13.880 |
| Underlying RC profit per ordinary share* (cents) | 16.61 | 16.24 | 14.77 | 32.86 | 42.65 |
| Underlying RC profit per ADS* (dollars) | 1.00 | 0.97 | 0.89 | 1.97 | 2.56 |
Highlights
2Q24 underlying replacement cost (RC) profit* $2.8 billion
Underlying RC profit for the quarter was $2.8 billion, compared with $2.7 billion for the previous quarter. Compared with the first quarter 2024, the result reflects an average gas marketing and trading result, significantly lower realized refining margins, stronger fuels margins and lower taxation. The underlying effective tax rate (ETR)* in the quarter was 33% which reflects the impact of the reassessment of the recognition of deferred tax assets.
- Reported loss for the quarter was $0.1 billion, compared with a profit of $2.3 billion for the first quarter 2024. The reported result for the second quarter is adjusted for inventory holding losses* of $0.1 billion (net of tax) and a net adverse impact of adjusting items* of $2.8 billion (net of tax) to derive the underlying RC profit. Adjusting items post-tax include a net charge of $1.5 billion relating to asset impairments and associated onerous contract provisions, including those relating to the ongoing review of the Gelsenkirchen refinery and adverse post-tax fair value accounting effects* of $0.9 billion.
Segment results
- Gas & low carbon energy: The RC loss before interest and tax for the second quarter 2024 was $0.3 billion, compared with a profit of $1.0 billion for the previous quarter. After adjusting RC loss before interest and tax for a net adverse impact of adjusting items of $1.7 billion, the underlying RC profit before interest and tax* for the second quarter was $1.4 billion, compared with $1.7 billion in the first quarter 2024. The second quarter underlying result reflects an average gas marketing and trading result compared with a strong result in the first quarter, partially offset by the absence of foreign exchange losses from the devaluation of the Egyptian pound and lower exploration write-offs.
- Oil production & operations: The RC profit before interest and tax for the second quarter 2024 was $3.3 billion, compared with $3.1 billion for the previous quarter. After adjusting RC profit before interest and tax for a net favourable impact of adjusting items of $0.2 billion, the underlying RC profit before interest and tax for the second quarter was $3.1 billion, compared with $3.1 billion in the first quarter 2024. The second quarter underlying result reflects higher realizations partially offset by higher exploration write-offs.
- Customers & products: The RC loss before interest and tax for the second quarter 2024 was $0.1 billion, compared with a profit of $1.0 billion for the previous quarter. After adjusting RC loss before interest and tax for a net adverse impact of adjusting items of $1.3 billion, the underlying RC profit before interest and tax for the second quarter was $1.1 billion, compared with $1.3 billion in the first quarter 2024. The customers second quarter underlying result was higher by $0.4 billion, reflecting stronger fuels margins, convenience performance and seasonal volumes, and continued quarter on quarter momentum in Castrol. The products second quarter underlying result was lower by $0.6 billion, reflecting significantly lower realized refining margins mainly relating to weaker middle distillate margins and narrower North American heavy crude oil differentials, and a higher level of turnaround activity, partially offset by the absence of the first quarter impacts of the Whiting refinery outage. The oil trading contribution was weak following a strong result in the first quarter.
Operating cash flow* $8.1 billion and net debt* reduced to $22.6 billion
Operating cash flow in the quarter of $8.1 billion was strong. This includes a working capital* release of $0.5 billion (after adjusting for inventory holding losses, fair value accounting effects and other adjusting items). This largely reflects a partial unwind of previous quarters’ working capital build, partially offset by the settlement payment for the Gulf of Mexico (see page 29). Net debt reduced to $22.6 billion, largely driven by strong operating cash flow.
Growing distributions within an unchanged financial frame
A resilient dividend is bp’s first priority within its disciplined financial frame, underpinned by a cash balance point* of around $40 per barrel Brent, $11 per barrel RMM and $3 per mmBtu Henry Hub (all 2021 real). For the second quarter, bp has announced a dividend per ordinary share of 8 cents.
- bp is committed to maintaining a strong investment grade credit rating. Through the cycle, we are targeting to further improve our credit metrics within an ‘A’ grade credit range.
- bp continues to invest with discipline and a returns focused approach in our transition growth* engines and in our oil, gas and refining businesses. For 2024 and 2025 we expect capital expenditure of around $16 billion per annum.
- The $1.75 billion share buyback programme announced with the first quarter results was completed on 26 July 2024. Related to the second quarter results, bp intends to execute a $1.75 billion share buyback prior to reporting the third quarter results. Furthermore, bp is committed to announcing $3.5 billion for the second half of 2024. At current market conditions and subject to maintaining a strong investment grade credit rating, bp plans share buybacks of at least $14 billion through 2025 as part of our commitment, on a point forward basis, to returning at least 80% of surplus cash flow* to shareholders.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 maintaining a strong investment grade credit rating.
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