CEO Meg O'Neill lays out her priorities to accelerate delivery
This is my first full quarter at bp, and it has been marked by one of the most disrupted periods in the global energy market. Through that, bp’s team has stepped up, working tirelessly to keep energy flowing for our customers.
Financially, we delivered a strong quarter, with an underlying replacement cost profit of $5.7 billion ($2.5 billion higher than last quarter) and an operating cash flow of $10.9 billion, after a working capital build of $1.0 billion.
We made good progress strengthening bp’s balance sheet. We also took steps to simplify and strengthen bp. In recent weeks, we sold our Gelsenkirchen refinery, agreed to sell our retail business in Austria and announced our intention to sell our North Sea business in the UK. Today, we are announcing our intention to sell Archaea, our biogas business in the US.
But there are areas where our performance fell short. Operationally, our plants didn’t run as well as they did last quarter – upstream plant reliability was 92.4%, compared to 95.7%, and production was down and our refineries processed less crude. This was due, in part, to planned maintenance and the conflict in the Middle East, but this is a reminder that we have more to do to deliver consistent operational performance.
Where we must improve
Since I joined bp, I have spent time with bp’s teams on the frontline and met investors, business partners, governments and other key stakeholders. In four months, I’ve seen enough to know this company can be extraordinary – from our high-quality assets to our integrated model, deep capabilities, strong partnerships and exceptional people.
However, we are not making the most of our potential. Our performance over the past few years has not met our own expectations, let alone those of our shareholders. We have not delivered consistently; we have written off too much value; and our costs and liabilities are not resilient enough in a low price environment.
My job is to help make bp the best we can be. We need to take a clear look at ourselves: assessing what needs to change, stopping what holds us back and building strength where it matters. We have to get fit to grow. To do so, I am laying out five priorities to deliver a step change in performance and grow shareholder value.
Priorities to deliver a step change in performance
Strengthening the balance sheet. This quarter we reduced the total of net debt, hybrids, leases and Gulf of America settlement liabilities by more than 11% compared to last quarter. That is still not enough – we need to do more. Financial resilience gives us greater flexibility to invest to grow through the cycle and reward our shareholders.
Simplifying the portfolio based on value, not sentiment nor history. We have to focus on the assets with the strongest potential to deliver competitive returns and long-term value – just as we have done with our decisions on the North Sea and Archaea.
Investing with greater discipline to ensure every dollar of capital competes. Our decision to sell Bay du Nord and free up the capital shows that discipline in action. We must keep challenging ourselves, using our balanced investment criteria to make decisions rooted in profitability, cash generation and market realities. I am very clear on this, we need to compete in the weight class we are in.
Driving operational excellence. We need to run our assets safely, reliably and with greater cost efficiency. We have made progress on reducing structural costs, but we have not improved enough where it matters most: the bottom line. We need to move faster, and we have both the opportunity and the technology to do this. Operational excellence is also about working safely with people, communities and the environment; it helps us work to deliver energy that is secure, affordable and lower-carbon, where it makes business sense – and it is how we will make bp more competitive.
Hardwiring high-performance and accountability into bp. We must make better, faster decisions, reduce complexity and sharpen accountability. Last month, we moved to an Upstream and Downstream organization, supported by our world-class trading business. This integrated model is a competitive advantage and an important first step.
Looking ahead
We will be transparent about how we progress – and judge ourselves by our results. I want the organization focused on execution: deliver what we said, faster and with greater intensity. In three words: focus, perform, grow. We know what we need to do, we are taking urgent action and I am confident that this is how we will grow long-term value for shareholders.
- Meg O’Neill, bp CEO
Numbers at a glance
"We know what we need to do, we are taking urgent action and I am confident that this is how we will grow long-term value for shareholders."
Delivery highlights
Keeping energy flowing
Around 10,000 barrels of oil equivalent a day (5,000 net to bp) added to expected peak production from our Atlantis platform in the Gulf of America with the start-up of an expansion project.
Start of commercial gas production operations at Azeri-Chirag-Gunashli (ACG) in the Azerbaijan, one of the world’s largest oil-producing fields.
Jet fuel output increased by 30% at our Castellón refinery in Spain ahead of Europe's summer travel season, and an extra 50 million litres of diesel shipped from our Cherry Point refinery to Sydney in Australia.
10-year deal signed to supply Korea Gas Corporation, KOGAS, with 0.7 million tonnes a year of LNG.
Plans to add around 15,000 barrels of peak production per day by 2028 at Thunder Horse in the Gulf of America given the go-ahead with a final investment decision.
Simplifying and strengthening bp
Restructuring bp into two businesses, Upstream and Downstream, supported by our world-class trading organization.
New opportunities to develop oil and gas resource opened up through our relationships in Azerbaijan, Abu Dhabi, India, Indonesia and Iraq.
Sale of Gelsenkirchen refinery completed and agreement in place to sell our retail business in Austria, subject to regulatory and other approvals.
Agreed to sell our interest in the Bay du Nord project in Canada, subject to regulatory and other approvals.
Announced intention to market our North Sea and Archaea Energy businesses.
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