BP announces third quarter 2024 results

bp has announced its third quarter 2024 results.

Highlights

• Resilient operations: 3Q24 upstream production 2.4mmboe/d; 3Q24 refining availability 95.6%.
• Focus and efficiencies: in action to deliver at least $2 billion of sustainable cash cost* savings.
• Growth and access: Signed two memorandums of understanding to join SOCAR in two exploration and development blocks offshore Azerbaijan and to negotiate a material integrated redevelopment programme for the Kirkuk region; Completed the bp Bunge Bioenergia and Lightsource bp transactions in 4Q.
• Shareholder distributions: Dividend per ordinary share of 8 cents; $1.75 billion share buyback announced for 3Q24, as part of our commitment to announce $3.5 billion for the second half of 2024.

(a) Divestment proceeds are disposal proceeds as per the condensed group cash flow statement. See page 3 for more information on other proceeds.
(b) Third quarter and nine months 2024 include $0.3 billion to offset the expected dilution from the vesting of awards under employee share schemes (third quarter 2023 $0.2 billion, nine months 2023 $0.7 billion).
(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 31.

3Q24 underlying replacement cost (RC) profit $2.3 billion

• Underlying RC profit for the quarter was $2.3 billion, compared with $2.8 billion for the previous quarter. Compared with the second quarter 2024, the underlying result reflects weaker realized refining margins, a weak oil trading result and lower liquids realizations, partly offset by higher gas realizations. The gas marketing and trading result was average. The underlying effective tax rate (ETR)* in the quarter was 42%.
• Reported profit for the quarter was $0.2 billion, compared with a loss of $0.1 billion for the second quarter 2024. The reported result for the third quarter is adjusted for inventory holding losses* of $1.2 billion (pre-tax) and a net adverse impact of adjusting items* of $1.6 billion (pre-tax) to derive the underlying RC profit. Adjusting items pre-tax include impairments of $1.7 billion (see Note 3) and favourable fair value accounting effects* of $0.4 billion. See page 27 for more information on adjusting items.

Segment results

• Gas & low carbon energy: The RC profit before interest and tax for the third quarter 2024 was $1.0 billion, compared with a loss of $0.3 billion for the previous quarter. After adjusting RC profit before interest and tax for a net adverse impact of adjusting items of $0.7 billion, the underlying RC profit before interest and tax* for the third quarter was $1.8 billion, compared with $1.4 billion in the second quarter 2024. The third quarter underlying result before interest and tax is largely driven by higher gas realizations. The gas marketing and trading result was average.
• Oil production & operations: The RC profit before interest and tax for the third quarter 2024 was $1.9 billion, compared with $3.3 billion for the previous quarter. After adjusting RC profit before interest and tax for a net adverse impact of adjusting items of $0.9 billion, the underlying RC profit before interest and tax for the third quarter was $2.8 billion, compared with $3.1 billion in the second quarter 2024. The third quarter underlying result before interest and tax reflects lower liquids realizations and higher exploration write-offs.
• Customers & products: The RC profit before interest and tax for the third quarter 2024 was $23 million, compared with a loss of $0.1 billion for the previous quarter. After adjusting RC profit before interest and tax for a net adverse impact of adjusting items of $0.4 billion, the underlying RC profit before interest and tax (underlying result) for the third quarter was $0.4 billion, compared with $1.1 billion in the second quarter 2024. The customers third quarter underlying result was higher by $0.1 billion, reflecting broadly flat fuels margins, seasonally higher volumes partly offset by costs. The products third quarter underlying result was lower by $0.9 billion, mainly reflecting weaker realized refining margins and a weak oil trading contribution which was lower than the second quarter.

Operating cash flow* $6.8 billion and net debt* $24.3 billion

• Operating cash flow in the quarter was $6.8 billion. This includes a working capital* release of $1.4 billion (after adjusting for inventory holding losses, fair value accounting effects and other adjusting items), reflecting the unwind of a working capital build in the first quarter, impact of the price environment and timing of various payments (see page 28). Net debt increased to $24.3 billion compared to the second quarter, primarily driven by lower operating cash flow, higher capital expenditures and lower divestment and other proceeds.

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 third quarter, bp has announced a dividend per ordinary share of 8 cents.
• bp is committed to maintaining a strong balance sheet and 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.
•  The $1.75 billion share buyback programme announced with the second quarter results was completed on 25 October 2024. Related to the third quarter results, bp intends to execute a $1.75 billion share buyback prior to reporting the fourth quarter results. Furthermore, bp is committed to announcing $1.75 billion for the fourth quarter of 2024. In addition, our previous guidance for at least $14 billion of share buybacks through 2025 at market conditions around bp's fourth quarter 2023 results(a) and subject to maintaining a strong investment grade credit rating, is currently unchanged, although as part of the update to our medium term plans in February 2025, we intend to review elements of our financial guidance, including our expectations for 2025 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 maintaining a strong investment grade credit rating.

Murray Auchincloss, chief executive officer, said:

'We have made significant progress since we laid out our six priorities earlier this year to make bp simpler, more focused and higher value. In oil and gas, we see the potential to grow through the decade with a focus on value over volume. We also have a deep belief in the opportunity afforded by the energy transition – we have established a number of leading positions and will continue high-grading our investments to ensure they compete with the rest of our business. I am absolutely clear that the actions we are taking will grow the value of bp.'

Kate Thomson, Chief financial officer, said:

'In the third quarter, we delivered an underlying replacement cost profit* of $2.3 billion while continuing to transform our business. We are in action to deliver efficiencies and are confident in achieving at least $2 billion of cash cost* savings by the end of 2026 relative to 2023. Our financial frame is unchanged. Today, we are announcing a dividend of 8 cents per share and a $1.75 billion share buyback as part of our $3.5 billion commitment for the second half of 2024.'

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Source: bp