Second quarter 2024 results

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.                

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 39.

(a) This results announcement also represents bp's half-yearly financial report (see page 15).

(b) Divestment proceeds are disposal proceeds as per the condensed group cash flow statement. See page 3 for more information on other proceeds.

(c) See Note 9 for more information.

RC profit (loss), underlying RC profit, net debt, adjusted EBITDA, underlying RC profit per ordinary share and underlying RC profit per ADS are non-IFRS measures. Inventory holding (gains) losses and adjusting items are non-IFRS adjustments.

* For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 33.

Further information

Contacts

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: plans, expectations and assumptions regarding oil and gas demand, supply, prices or volatility; expectations regarding reserves; expectations regarding production and volumes; expectations regarding bp’s customers & products business; expectations regarding margins, including sensitivity of fuels margin to costs of supply; expectations regarding underlying effective tax rate; expectations regarding turnaround and maintenance activity; expectations regarding financial performance, results of operations and cash flows; expectations regarding future project start-ups; expectations regarding the timing of bp’s updates of medium-term plans; expectations regarding shareholders returns; expectations regarding bp’s convenience businesses, including TravelCenters of America, Castrol and bp pulse; bp’s plans and expectations regarding the amount and timing of share buybacks and dividends; plans and expectations regarding bp’s credit rating, including in respect of maintaining a strong investment grade credit rating and targeting further improvements in credit metrics; plans and expectations regarding the allocation of surplus cash flow to share buybacks and strengthening the balance sheet; plans and expectations regarding LNG sales and purchases; plans and expectations regarding bp’s investments, including the formation of a joint venture with ADNOC in Egypt, the award of an interest in ADNOC’s planned Ruwais LNG project and the sale of bp’s Türkiye ground fuels business; plans and expectations regarding investments, collaborations and partnerships in electric vehicle (EV) charging infrastructure; plans and expectations for the development of the Kaskida project following bp’s final investment decision; plans and expectations related to bp’s transition growth engines, including expected capital expenditures; plans and expectations regarding the amount or timing of payments related to divestment and other proceeds, and the timing, quantum and nature of certain acquisitions and divestments; expectations regarding the timing and amount of future payments relating to the Gulf of Mexico oil spill; expectations regarding bp’s development of hydrogen, offshore wind and UK CCS projects; plans and expectations regarding; plans and expectations regarding bioenergy, including progress in biofuels and bp’s ownership of bp Bunge Bioenergia; plans and expectations regarding bp’s guidance for 2024 and the third quarter of 2024, including expected growth, margins, the other businesses & corporate underlying annual charge, timing and amount of divestment and other proceeds, depreciation, depletion and amortization; plans and expectations regarding capital expenditure for 2024 and 2025; plans and expectations regarding bp-operated projects and ventures and its projects, joint ventures, partnerships and agreements with commercial entities and other third party partners.

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, 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 forwardlooking 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 including ongoing approvals required for the continued developments of approved projects; 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 taken by governmental authorities or any other relevant persons may impact bp’s ability to sell its interests in Rosneft, or the price for which it 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, including under “Principal risks and uncertainties,” as well as factors discussed under “Risk factors” in bp’s Annual Report and Form 20-F for fiscal year 2023 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.