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Second quarter 2020 results

4 August 2020
Resetting for the future in face of difficult conditions
“These headline results have been driven by another very challenging quarter, but also by the deliberate steps we have taken as we continue to reimagine energy and reinvent bp. In particular, our reset of long-term price assumptions and the related impairment and exploration write-off charges had a major impact. Beneath these, however, our performance remained resilient, with good cashflow and – most importantly – safe and reliable operations.”Bernard Looneychief executive officer
RC profit (loss), underlying RC profit, operating cash flow excluding Gulf of Mexico oil spill payments, working capital, organic capital expenditure, net debt and gearing are non-GAAP measures. These measures and inventory holding gains and losses, non-operating items, fair value accounting effects, underlying production, major project, Upstream plant reliability and refining availability are defined in the Glossary on page 35.
  • Underlying replacement cost loss for the quarter was $6.7 billion, compared with a profit of $2.8 billion for the same period a year earlier. The result was driven primarily by non-cash Upstream exploration write-offs – $6.5 billion after tax – principally resulting from a review of BP’s long-term strategic plans and revisions to long-term price assumptions, combined with the impact of lower oil and gas prices and very weak refining margins, reduced oil and gas production and much lower demand for fuels and lubricants. Oil trading delivered an exceptionally strong result.
  • Reported loss for the quarter was $16.8 billion, compared with a profit of $1.8 billion for the same period a year earlier, including a net post-tax charge of $10.9 billion for non-operating items. This included $9.2 billion in post-tax non-cash impairments across the group largely arising from the revisions to its long-term price assumptions and $1.7 billion of post-tax non-cash exploration write-offs treated as non-operating items.
  • Operating cash flow for the quarter, excluding Gulf of Mexico oil spill payments, was $4.8 billion, including a $1.5 billion working capital release (after adjusting for net inventory holding gains). Gulf of Mexico oil spill payments in the quarter of $1.1 billion on a post-tax basis included the scheduled annual payment.
  • Proceeds from divestments and other disposals received in the quarter were $1.1 billion. This included the first payment from the agreed sale of BP’s petrochemicals business to INEOS, which delivered BP’s plans for $15 billion of announced transactions a year earlier than expected. The sale of the upstream portion of BP’s Alaska business also completed at the end of the quarter.
  • Organic capital expenditure in the first half of 2020 was $6.6 billion, on track to meet BP’s revised full year expectation of around $12 billion, announced in April.
  • BP’s redesign of its organization to become leaner, faster moving and lower cost, including the announced reduction of around 10,000 jobs, is expected to make a significant contribution to the planned $2.5 billion reduction in annual cash costs by the end of 2021, relative to 2019. Restructuring costs of around $1.5 billion are expected to be recognized in 2020.
  • During the quarter BP issued $11.9 billion in hybrid bonds – a significant step in diversifying its capital structure, supporting its investment grade credit rating, and strengthening its finances.
  • Net debt at the end of the quarter was $40.9 billion, $10.5 billion lower than in the first quarter. Gearing at the end of the quarter was 33.1% compared with 36.2% at the end of the previous quarter. This reflected the increase in equity associated with the issuance of hybrid bonds and the lower net debt, partly offset by the reduction in equity associated with the second-quarter loss.
  • A dividend of 5.25 cents per share was announced for the quarter, compared to 10.5 cents per share for the previous quarter. This dividend decision is aligned with BP’s new distribution policy announced separately today.

Further information




BP press office, London: +44 (0)20 7496 4076, bppress@bp.com

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: the expectations regarding the COVID-19 pandemic including its risks, impacts, consequences and challenges and BP’s response, including the impact on the trading environment, commodity prices, global GDP; plans and expectations regarding the divestment programme including expectations with respect to completion of transactions and the timing and amount of proceeds of agreed disposals (including the expected completion of the sales of the midstream portion of BP’s Alaskan business to Hilcorp, BP’s petrochemicals business to INEOS and BP’s Andrew Area and Shearwater assets to Premier Oil); expectations for the total amount of organic capital expenditure in 2020; plans and expectations regarding new joint ventures and other agreements, including partnerships with Reliance Industries, China’s ENN, Enágas in Spain, JinkoPower, and Petrofac; plans to invest in India’s Green Growth Equity Fund and Satelytics; expectations regarding quarterly dividends; expectations regarding demand for BP’s products in the Upstream and Downstream; expectations regarding the Downstream refining margins; expectations regarding BP’s future financial performance and cash flows; plans and expectations with respect to the implementation and impact of BP’s redesign of its organization, including the announced reduction of around 10,000 jobs, and plans for BP to achieve $2.5 billion in cost savings by the end of 2021 relative to 2019, and the amount and timing of associated restructuring charges; expectations regarding the full-year charge for depreciation, depletion and amortization; expectations regarding the underlying effective tax rate in the second half of 2020; plans and expectations with respect the Lightsource BP project with SEPTA in the US and Lightsource BP’s ambition to reach 10GW of developed assets by the end of 2023; expectations regarding the Rosneft results; plans and expectations regarding Upstream projects, including the timing of the Mad Dog 2, Tanguuh Expansion, Trinidad Cassia Compression and Greater Tortue Ahmeyin Phase 1 major projects; expectations regarding Upstream full year and third-quarter 2020 reported production, including the expectation that interventions will reduce 2020 reported production; expectations regarding price assumptions used in accounting estimates; expectations regarding the Other businesses and corporate average quarterly charges; and expectations with respect to the timing and amount of future payments relating to the Gulf of Mexico oil spill.

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 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 significant drop in the oil price, the impact of COVID-19, overall global economic and business conditions impacting our business and demand for our products as well as the specific factors identified in the discussions accompanying such forward-looking statements; 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; OPEC quota restrictions; 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; 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; our access to future credit resources; business disruption and crisis management; the impact on our reputation of ethical misconduct and non-compliance with regulatory obligations; trading losses; major uninsured losses; decisions by Rosneft’s management and board of directors; 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, and under “Risk factors” in BP Annual Report and Form 20-F 2019 as filed with the US Securities and Exchange Commission.