BP(BP) - 2024 Q3 - Quarterly Report

Highlights Executive Summary BP's Q3 underlying profit decreased to $2.3 billion due to weaker refining margins and oil trading results - The company is focused on its six priorities to become simpler, more focused, and higher value, with a belief in growth opportunities in both oil and gas and the energy transition[4] - BP is implementing measures to achieve at least $2 billion in sustainable cash cost savings by the end of 2026, relative to 2023 levels[11][33] Q3 2024 Key Financial Metrics | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Underlying RC Profit* | $2,267 million | $2,756 million | $3,293 million | | Reported Profit for the period | $206 million | ($129) million | $4,858 million | | Operating Cash Flow* | $6,761 million | $8,100 million | $8,747 million | | Net Debt* | $24,268 million | $22,614 million | $22,324 million | Operational and Strategic Developments BP maintained resilient Q3 operations with 2.4 mmboe/d upstream production and advanced strategic growth through key acquisitions and MOUs - Upstream production was 2.4 million barrels of oil equivalent per day (mmboe/d) and refining availability was 95.6% for the third quarter[11] - Strategic growth initiatives include signing MOUs with SOCAR for exploration offshore Azerbaijan and completing the bp Bunge Bioenergia and Lightsource bp transactions in Q4[11] Shareholder Distributions BP announced an 8-cent Q3 dividend and a $1.75 billion share buyback, maintaining its $14 billion buyback guidance through 2025 - A dividend of 8 cents per ordinary share was announced for Q3 2024[11][17] - A $1.75 billion share buyback was announced for Q3 2024, part of a $3.5 billion commitment for the second half of the year[11][33] - The guidance for at least $14 billion in share buybacks through 2025 is currently unchanged, but will be reviewed with the full-year results in February 2025[37] Financial Results Group Financial Performance BP's Q3 2024 underlying profit declined to $2.3 billion due to lower refining margins and weak oil trading, with net debt increasing to $24.3 billion Underlying RC Profit Comparison | Period | 2024 | 2023 | | :--- | :--- | :--- | | Q3 Underlying RC Profit | $2.3 billion | $3.3 billion | | Nine Months Underlying RC Profit | $7.7 billion | $10.8 billion | - The decline in Q3 underlying profit compared to the prior year was driven by lower refining margins and a weak oil trading contribution, while the gas marketing and trading result was average[20] - Operating cash flow was $6.8 billion for Q3 2024, down from $8.7 billion in Q3 2023. Net debt rose to $24.3 billion at the end of the quarter[40] - Capital expenditure for Q3 2024 was $4.5 billion, up from $3.6 billion in Q3 2023. Total divestment and other proceeds were $0.3 billion for the quarter[40] Outlook & Guidance 4Q 2024 Guidance BP anticipates lower Q4 2024 upstream production and seasonally lower customer volumes, with refining margins expected to remain low - Reported upstream production is expected to be lower in Q4 2024 compared to Q3 2024[24] - The customers business expects seasonally lower volumes, with fuels margins remaining sensitive to supply costs[47] - The products business expects realized refining margins to remain low in the fourth quarter[47] Full Year 2024 Guidance BP maintains its 2024 guidance for slightly higher upstream production, $16 billion in capex, and over $3 billion in divestment proceeds - Full-year 2024 upstream production is expected to be slightly higher than in 2023[25] - Capital expenditure for 2024 is expected to be around $16 billion[25] - Divestment and other proceeds are now expected to be greater than $3 billion in 2024, with the company on track to reach its $25 billion target by 2025[25] - The underlying effective tax rate (ETR) for 2024 is expected to be around 40%[25] Segment Analysis Q3 2024 segment performance was mixed, with Gas & Low Carbon Energy profit up, Oil Production & Operations down, and Customers & Products significantly lower Gas & Low Carbon Energy Gas & Low Carbon Energy reported $1.8 billion underlying profit in Q3 2024, driven by higher gas realizations, alongside strategic acquisitions and project advancements Gas & Low Carbon Energy Financials ($ million) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Underlying RC profit before interest and tax | 1,756 | 1,402 | 1,256 | - The increase in underlying profit from the previous quarter was largely driven by higher gas realizations, with an average gas marketing and trading result[14] - Reported production for the quarter was 890 mboe/d, 6.0% lower than the same period in 2023[26] - Strategic progress includes completing the acquisition of GETEC ENERGIE GmbH to grow its European gas and power presence and acquiring the remaining 50.03% of Lightsource bp[26] Oil Production & Operations Oil Production & Operations reported $2.8 billion underlying profit in Q3 2024, down due to lower liquids realizations, despite increased production and strategic agreements Oil Production & Operations Financials ($ million) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Underlying RC profit before interest and tax | 2,794 | 3,094 | 3,136 | - The decrease in underlying profit from Q2 2024 was due to lower liquids realizations and increased exploration write-offs[35] - Reported production for the quarter was 1,488 mboe/d, a 7.7% increase compared to Q3 2023, reflecting strong performance from bpx energy and major projects[54] - Strategic progress includes signing an MOU with SOCAR for exploration in the Caspian Sea and another with the government of Iraq for redevelopment in the Kirkuk region[71] Customers & Products Customers & Products reported a significantly lower Q3 2024 underlying profit of $0.4 billion, primarily due to weaker refining margins and oil trading Customers & Products Financials ($ million) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Underlying RC profit before interest and tax | 381 | 1,149 | 2,055 | - The underlying result was significantly lower than the prior year, primarily due to lower refining margins and a weak oil trading contribution, which offset a higher result from the customers business[58] - The customers business result was higher than Q3 2023, benefiting from improved retail fuels margins and a stronger Castrol performance[58] - Strategic progress includes taking full ownership of bp Bunge Bioenergia, expanding the EV charging network, and launching a new loyalty program, 'earnify', in the US[74] Other Businesses & Corporate Other Businesses & Corporate reported a Q3 2024 underlying profit of $231 million, a significant improvement driven by favorable fair value effects Other Businesses & Corporate Financials ($ million) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Underlying RC profit (loss) before interest and tax | 231 | (158) | (303) | - The segment's result includes activities in technology, bp ventures, corporate functions, and residual costs from the Gulf of Mexico oil spill[92] Consolidated Financial Statements Group Income Statement BP reported Q3 2024 total revenues of $48.3 billion, with profit attributable to shareholders at $206 million, resulting in 1.26 cents EPS Q3 2024 Income Statement Highlights ($ million) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Sales and other operating revenues | 47,254 | 53,269 | | Profit before taxation | 1,398 | 7,309 | | Profit for the period | 370 | 5,069 | | Profit attributable to bp shareholders | 206 | 4,858 | Group Balance Sheet As of September 30, 2024, BP's total assets were $269.7 billion and total equity was $79.9 billion Balance Sheet Summary ($ million) | Metric | 30 Sep 2024 | 31 Dec 2023 | | :--- | :--- | :--- | | Total Assets | 269,708 | 280,294 | | Total Liabilities | 189,762 | 194,801 | | Total Equity | 79,946 | 85,493 | Group Cash Flow Statement Q3 2024 operating cash flow was $6.8 billion, with net cash used in investing and financing activities leading to a cash decrease Q3 2024 Cash Flow Summary ($ million) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | 6,761 | 8,747 | | Net cash used in investing activities | (4,233) | (3,453) | | Net cash used in financing activities | (3,003) | (4,178) | | Increase (decrease) in cash | (296) | 1,012 | Notes to the Financial Statements Note 3. Impairment BP recorded $1.73 billion in Q3 2024 net impairment charges, primarily in Gas & Low Carbon Energy, Oil Production & Operations, and Customers & Products - Total net impairment charges for Q3 2024 were $1,730 million[157] Q3 2024 Impairment Charges by Segment ($ million) | Segment | Impairment Charge | | :--- | :--- | | Gas & Low Carbon Energy | 734 | | Oil Production & Operations | 767 | | Customers & Products | 223 | Note 9. Net Debt BP's net debt increased to $24.3 billion as of September 30, 2024, with a gearing ratio of 23.3% Net Debt and Gearing | Metric | 30 Sep 2024 | 30 Jun 2024 | 30 Sep 2023 | | :--- | :--- | :--- | :--- | | Net Debt ($ million) | 24,268 | 22,614 | 22,324 | | Gearing | 23.3% | 21.6% | 20.3% | Note 10. Events after the reporting period After Q3, BP completed full acquisitions of bp Bunge Bioenergia on October 1, 2024, and Lightsource bp on October 24, 2024 - On October 1, 2024, BP acquired the remaining 50% of bp Bunge Bioenergia, taking 100% ownership[198] - On October 24, 2024, BP acquired the remaining 50.03% of Lightsource bp, taking 100% ownership[173]