Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BP PLC (BP, Financial) achieved significant strategic progress in 2024, including 10 new Final Investment Decisions (FIDs) and new access to markets in Iraq and India.
- Upstream production increased by 2% to approximately 2.36 million barrels per day, with plant reliability above 95%.
- BP PLC (BP) announced a 10% increase in dividend per share and $7 billion in share buybacks, demonstrating a commitment to returning value to shareholders.
- The company successfully reduced cash costs by $750 million through portfolio focus and structural reductions.
- BP PLC (BP) has a strong track record in technical service contracts, particularly in the Middle East and Far East, which is expected to drive attractive returns.
Negative Points
- BP PLC (BP) faced a challenging year in refining due to a widening outage in Q1 and a difficult margin environment.
- The company was impacted by weaker biofuels margins and a trucking recession affecting TravelCenters of America.
- Refining margins started the year poorly, although there is some improvement as the year progresses.
- Biofuels in Europe faced challenges due to reduced voluntary mandates and oversupply from Asia.
- BP PLC (BP) is still working on divesting its stake in Rosneft, with ongoing sanctions complicating the process.
Q & A Highlights
Q: How confident are you that the issues experienced in 2024 in refining and trading are resolved, and what can be done to improve profitability?
A: Murray Auchincloss, CEO, explained that 2024 was challenging for refining due to industry-wide margin issues and specific outages. The focus is on improving plant reliability to 96%, optimizing operations, and reducing costs. Trading had an average year, but margins are improving as volatility returns.
Q: Can you elaborate on the recent upstream deals with ONGC and Kirkuk, and the expected returns?
A: Auchincloss highlighted BP's strong track record in late-life developments, which facilitated these deals. The ONGC deal is a service contract with attractive returns, while Kirkuk negotiations are ongoing, with expectations of competitive returns.
Q: How does BP plan to achieve cost reductions with a more capital-light approach and joint ventures?
A: Kate Thomson, CFO, noted that BP has already reduced cash costs by $750 million through portfolio focus. Future updates will provide more granularity on cost reductions, including third-party supply chain efficiencies.
Q: What is the current breakeven point, and how do recent one-off costs affect it?
A: Thomson clarified that the $40 balance point includes financing costs. Recent one-offs, like the $917 million remeasurement, are non-cash accounting adjustments related to acquisitions and do not affect the breakeven point.
Q: What are the expectations for LNG volumes from Tortue and Beach, and any updates on Venture?
A: Auchincloss stated that Tortue and Beach are expected to add about 3 million tonnes per annum, assuming full-year flow. Venture's volumes depend on ongoing arbitration, with potential updates later in the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
