Modelling guidance

Trading conditions update

The trading conditions update is produced in order to provide equal disclosure to all investors and potential investors of current trading conditions.

Content includes the following:

• Current and historic market prices
• Current and historic marker margins
• Rules of thumb for Brent, Henry Hub and RMM

*combined indicator for oil production & operations and gas & low carbon energy

Find out more about our trading conditions update

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Macro outlook

Below is bp's macro outlook as at 3Q23 results publication on 31 October 2023

In the fourth quarter:

• bp expects oil prices to be supported by OPEC+ production restrictions and the continued demand rebound;
• European gas and Asian LNG prices will be driven by weather, demand recovery in Europe and China and ongoing geopolitical tension. In the US, weather is also a risk factor, but higher than normal storage levels and higher production should help to dampen volatility; and 
• bp expects industry refining margins to be significantly lower than the third quarter.

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Upcoming quarters guidance

Below is bp's 4Q23 guidance as at 3Q23 results publication on 31 October 2023

• Looking ahead, we expect fourth-quarter 2023 reported upstream production to be broadly flat compared to third-quarter 2023.
• In its customers business, bp expects seasonally lower volumes with marketing margins to remain sensitive to movements in the cost of supply. In refining, we expect significantly lower realized refining margins and a higher level of turnaround activity in the fourth quarter.
  

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Full year guidance

Below is bp's 2023 guidance as at 3Q23 results publication on 31 October 2023

• bp expects both reported and underlying upstream production to be higher compared with 2022. Within this, bp expects underlying production from oil production & operations to be higher and production from gas & low carbon energy to be slightly lower. bp continues to expect four major project start-ups during 2023. 
• bp expects the other businesses & corporate underlying annual charge to be at the lower end of the range $1.1-1.3 billion for 2023. The charge may vary from quarter to quarter.
• bp continues to expect the depreciation, depletion and amortization to be slightly above 2022.
• bp continues to expect the underlying ETR for 2023 to be around 40% but it 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.
• Having realized $17.5 billion of divestment and other proceeds since the second quarter of 2020, bp continues to expect 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 continues to expect Gulf of Mexico oil spill payments for the year to be around $1.3 billion pre-tax including the $1.2 billion pre-tax payment made during the second quarter.
• bp now expects capital expenditure of around $16 billion in 2023 including inorganic capital expenditure.
• bp is committed to maintaining a strong investment grade credit rating, targeting further progress within an 'A' grade credit rating. For 2023 bp continues to intend to allocate 40% of surplus cash flow to further strengthen the balance sheet.
• 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.
• 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.
• Based on bp’s current forecasts, at around $60 per barrel Brent and subject to the board’s discretion each quarter, bp continues to expect to be able to deliver share buybacks of around $4.0 billion per annum, at the lower end of its $14-18 billion capital expenditure range, and have capacity for an annual increase in the dividend per ordinary share of around 4%.

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2025 targets and 2030 aims

We now have three years under our belt. We have made good progress on our 2025 targets. And we are increasingly confident - not just in those targets - but in the opportunities presented by the energy transition. Below is a summary of the 2025 targets and 2030 aims for the Group and our three strategic focus areas.

All references to $70/bbl in the below tables refer to Brent 2021 real.

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Financial framework

We have a disciplined financial framework with five clear priorities