BP announces third quarter 2023 results

bp has announced its third quarter 2023 results.

• Underlying RC profit $3.3bn; Operating cash flow $8.7bn; Net debt reduced to $22.3bn
• Further $1.5bn share buyback announced
• Delivering resilient hydrocarbons - start up of major project* - Tangguh Expansion; North Sea Murlach project gets regulatory approval; bpx energy brings online 'Bingo' facility
• Continued progress to an IEC - first Archaea modular biogas plant; Woodfibre and OMV LNG agreements

Highlights

Underlying replacement cost profit* $3.3 billion

• Underlying replacement cost profit for the quarter was $3.3 billion, compared with $2.6 billion for the previous quarter. Compared to the second quarter 2023, the result reflects: higher realized refining margins, lower level of refining turnaround activity, a very strong oil trading result, higher oil and gas production, partly offset by a weak gas marketing and trading result.
• Reported profit for the quarter was $4.9 billion, compared with $1.8 billion for the second quarter 2023. The reported result for the third quarter is adjusted for inventory holding gains* of $1.2 billion (net of tax) and a net favourable impact of adjusting items* of $0.4 billion (net of tax) to derive the underlying replacement cost profit. Adjusting items include impairments of $1.2 billion and favourable fair value accounting effects* of $1.5 billion.

Operating cash flow* $8.7 billion and net debt* reduced to $22.3 billion

• Operating cash flow in the quarter of $8.7 billion includes a working capital* release (after adjusting for inventory holding gains, fair value accounting effects and other adjusting items) of $2.0 billion (see page 27). 
• Capital expenditure* in the third quarter was $3.6 billion. bp now expects capital expenditure, including inorganic capital expenditure* to be around $16 billion in 2023.
• During the third quarter, bp completed $2.0 billion of share buybacks. This included $225 million as part of the $675 million programme announced on 7 February 2023 to offset the expected full-year dilution from the vesting of awards under employee share schemes in 2023. bp completed the $675 million buyback programme on 1 September 2023.
• The $1.5 billion share buyback programme announced with the second quarter results was completed on 27 October 2023.
• Net debt was reduced by $1.3 billion to $22.3 billion at the end of the third quarter.

Further $ 1.5 billion share buyback within a disciplined 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 third quarter, bp has announced a dividend per ordinary share of 7.270 cents.
• bp remains committed to using 60% of 2023 surplus cash flow* for share buybacks, subject to maintaining a strong investment grade credit rating.
• bp intends to execute a further $1.5 billion share buyback prior to reporting fourth quarter results.
• 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.
• bp’s guidance for distributions remains unchanged. Based on bp’s current forecasts, at around $60 per barrel Brent and subject to the board’s discretion each quarter, bp expects 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%.

Continued progress in transformation to an integrated energy company

• In resilient hydrocarbons, bp has announced the start-up of Tangguh Expansion – the third major project* in 2023 - adding around 3.8mtpa of producing capacity to the existing 7.6mtpa facility. It has safely produced the first commercial cargo. In August, bpx energy successfully brought online 'Bingo', its second central processing facility in the Permian Basin. In September, a regulatory approval was received for the Murlach oil and gas development in the North Sea, a two well redevelopment of the Marnock-Skua field back to the ETAP (Eastern Trough Area Project) hub. bp has accelerated its biogas strategy – part of its bioenergy transition growth* engine - bp’s Archaea Energy announced the start-up of its original Archaea Modular Design (AMD) renewable natural gas plant in Medora, Indiana.
• In convenience and mobility, bp continued to advance its growth strategy in EV charging and convenience: announcing an agreement in October with Tesla for the future purchase of $100 million of ultra-fast chargers in the US – this is part of the approved $500 million of investment in the US; and expanding its successful strategic convenience partnership with Auchan in Poland, with plans to add more than 100 EasyAuchan stores to its retail network by the end of 2025.
• In low carbon energy, bp has strengthened its renewables pipeline to 43.9GW net to bp from the rights awarded to develop two offshore wind projects, with total potential generating capacity of 4GW, in the German tender round.

'This has been a solid quarter supported by strong underlying operational performance demonstrating our continued focus on delivery. Momentum continues to build across our businesses, with recent start-ups including Tangguh Expansion, bpx energy’s 'Bingo' central processing facility and Archaea Energy's first modular biogas plant in Indiana. As we laid out at our investor update in Denver, we remain committed to executing our strategy, expect to grow earnings through this decade, and on track to deliver strong returns for our shareholders,' said Murray Auchincloss, chief executive officer (interim).