bp has announced an Integrated Energy Company strategy update: Growing investment, growing value, growing distributions
- Performing while transforming:
- Performing: 2022 EBITDA $60.7 billion; full year operating cash flow $40.9 billion; net debt $21.4 billion, lowest for almost a decade; ROACE 30.5%; full year tax $15.1 billion; strongest upstream plant reliability on record; lowest production costs in 16 years
- Transforming: investment in transition growth engines c. 30% of 2022 total investment, up from c. 3% in 2019
- Leaning further into bp’s strategy:
- Investing more in the energy transition and bp’s transition, investing more in supporting energy security and energy affordability today
- Up to $8 billion more into transition growth engines by 2030 – growing in higher-return bioenergy, and convenience & EV charging; focusing hydrogen and renewables & power where bp can leverage integration
- Up to $8 billion more into oil and gas by 2030 – targeting short-cycle fast-payback opportunities with lower additional operational emissions
- Aim to materially increase earnings through 2030 – aiming for $51-56 billion group EBITDA in 2030
Delivering for shareholders:
- Growing dividends: 10% increase in dividend per ordinary share for fourth quarter, representing 21% growth from 4Q 2021.
- Growing buybacks: further $2.75 billion buybacks announced today; total of $11.25 billion buybacks announced from 2022 surplus cash flow
- Increasing targets: over 12% annual EBIDA per share growth to 2025; over 18% ROACE in 2025 and 2030
Since introducing its new purpose, net zero ambition, organisation and strategy in 2020, bp has built strong momentum across its strategy and delivered value for shareholders. The major global uncertainties experienced in the past three years – from the pandemic and its aftermath to the impact of Russia’s attack on Ukraine – have increased the world’s focus on energy security and affordability as well as accelerated the drive towards a lower carbon energy system.
bp chief executive Bernard Looney said: 'It’s clearer than ever after the past three years that the world wants and needs energy that is secure and affordable as well as lower carbon – all three together, what’s known as the energy trilemma. To tackle that, action is needed to accelerate the transition. And – at the same time – action is needed to make sure that the transition is orderly, so that affordable energy keeps flowing where it’s needed today.
'As an integrated energy company, bp is very deliberately set up to help on both counts. With three years of delivery and track record – we have increased confidence our strategy is working. And with today’s announcement we are leaning further in. We are growing our investment into our transition and, at the same time, growing investment into today’s energy system. In doing so - we see tremendous opportunity to create value. And it’s what governments and customers are asking of companies like us.'
bp now aims to accelerate the growth in earnings from its transition growth engines (TGEs) while also delivering higher earnings than previously expected from its oil and gas businesses through 2030 - both compared to bp’s previous aims(1).
bp plans to support this growth by disciplined increases in investment over the period to 2030 of up to $8 billion in the TGEs and up to $8 billion in oil and gas. bp is adjusting its target capital expenditure range to $14-18 billion a year out to 2030(2), from the previous range of $14-16 billion. All investments will remain subject to disciplined application of bp’s balanced investment and returns criteria.
bp expects this additional incremental investment to deliver around $3 billion additional group EBITDA in 2025 and is aiming for that to grow to $5-6 billion in 2030. This would comprise an additional $2 billion from the TGEs and $3-4 billon from oil and gas projects in 2030. bp has also raised its oil and gas price and refining margin assumptions(3).
As a result of both factors, bp is now targeting group EBITDA of $46-49 billion in 2025 and is aiming for $51-56 billion in 2030, in a $70/barrel (2021 real) oil price environment. These compare to its previous target and aim, from May 2022, of around $38 billion in 2025 and $39-46 billion in 2030 at $60/barrel (2020 real).
Click here for full announcement
Source: bp
