BP plc Group Results for the Fourth Quarter 2023

2023 : A year of delivery

Financial summary		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Profit (loss) for the period attributable to bp shareholders		371	4,858	10,803		15,239	(2,487)
Inventory holding (gains) losses*, net of tax		1,155	(1,212)	1,066		944	(1,019)
Replacement cost (RC) profit (loss)*		1,526	3,646	11,869		16,183	(3,506)
Net (favourable) adverse impact of adjusting items*, net of tax		1,465	(353)	(7,062)		(2,347)	31,159
Underlying RC profit*		2,991	3,293	4,807		13,836	27,653
Operating cash flow*		9,377	8,747	13,571		32,039	40,932
Capital expenditure*		(4,711)	(3,603)	(7,369)		(16,253)	(16,330)
Divestment and other proceeds(a)		300	655	614		1,843	3,123
Surplus cash flow*		2,755	3,107	4,985		7,876	19,065
Net issue (repurchase) of shares		(1,350)	(2,047)	(3,240)		(7,918)	(9,996)
Net debt*(b)		20,912	22,324	21,422		20,912	21,422
Return on average capital employed (ROACE)* (%)						18.1%	30.5%
Adjusted EBITDA*		10,568	10,306	13,100		43,710	60,747
Adjusted EBIDA*						34,345	45,695
Announced dividend per ordinary share (cents per share)		7.270	7.270	6.610		28.420	24.082
Underlying RC profit per ordinary share* (cents)		17.77	19.14	26.44		79.69	145.63
Underlying RC profit per ADS* (dollars)		1.07	1.15	1.59		4.78	8.74

Highlights

•     Resilient financial and operational performance: 2023 Operating cash flow $32.0bn; net debt reduced to $20.9bn

•     Executing with discipline: Started up four major projects* in 2023, including Seagull in 4Q; Acquisition of TravelCenters of America; Agreement to acquire Lightsource bp

•     Growing shareholder distributions: Dividend per ordinary share 7.270 cents per share +10% versus 4Q22; 4Q23 $1.75bn share buyback announced; committed to announcing $3.5bn share buyback for the first half of 2024

•     IOC to IEC – destination is unchanged: we will deliver as a simpler and more focused company

Looking back, 2023 was a year of strong operational performance with real momentum in delivery right across the business. And as we look ahead, our destination remains unchanged – from IOC to IEC – focused on growing the value of bp. We are confident in our strategy, on delivering as a simpler, more focused and higher-value company, and committed to growing long-term value for our shareholders.

Murray AuchinclossChief executive officer

(a)      Divestment proceeds are disposal proceeds as per the condensed group cash flow statement. See page 3 for more information on other proceeds.

(b)     See Note 9 for more information.

RC profit (loss), underlying RC profit (loss), surplus cash flow, net debt, ROACE, adjusted EBITDA, adjusted EBIDA, 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 34.

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	Highlights
	Underlying replacement cost profit* $3.0 billion
	•     Underlying replacement cost profit for the quarter was $3.0 billion, compared with $3.3 billion for the previous quarter. Compared to the third quarter 2023, the result reflects a strong gas marketing and trading result, higher oil realizations including the favourable impact of price-lags on Gulf of Mexico and UAE realizations, higher gas realizations, significantly lower industry refining margins albeit with a smaller decrease in realized refining margins, a weak oil trading result, higher exploration write-offs, and a higher level of refining turnaround activity. An underlying effective tax rate (ETR)* of 42% in the fourth quarter brings the full year underlying ETR to 39%.•     Reported profit for the quarter was $0.4 billion, compared with $4.9 billion for the third quarter 2023. The reported result for the fourth quarter is adjusted for inventory holding losses* of $1.2 billion (net of tax) and a net adverse impact of adjusting items* of $1.5 billion (net of tax) to derive the underlying replacement cost profit. Adjusting items pre-tax include impairments of $4.6 billion, largely as a result of changes in the group’s price and discount rate assumptions, activity phasing, economic forecasts (in particular related to the Gelsenkirchen refinery) and portfolio composition, and favourable fair value accounting effects* of $2.6 billion.
	Operating cash flow* $9.4 billion and net debt* reduced to $20.9 billion
	•     Operating cash flow in the quarter of $9.4 billion includes a working capital* release (after adjusting for inventory holding losses, fair value accounting effects and other adjusting items) of $2.1 billion (see page 28).•     Capital expenditure* in the fourth quarter was $4.7 billion and total 2023 capital expenditure, including inorganic capital expenditure* was $16.3 billion.•     The $1.5 billion share buyback programme announced with the third quarter results was completed on 2 February 2024.•     Net debt was reduced by $1.4 billion to $20.9 billion at the end of the fourth quarter.
	Further $1.75 billion share buyback announced for 4Q23; $3.5 billion for first half 2024
	•     A resilient dividend is bp’s first priority within its disciplined financial frame, underpinned by a cash balance point* ofaround $40 per barrel Brent, $11 per barrel RMM and $3 per mmBtu Henry Hub (all 2021 real). For the fourth quarter, bp has announced a dividend per ordinary share of 7.270 cents, up 10% from the fourth quarter of 2022.•     bp is committed to maintaining a 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. For 2024 and 2025 we expect capital expenditure of around $16 billion per annum, in line with our medium term target of $14-18 billion.•     Related to the fourth quarter results, bp intends to execute a $1.75 billion share buyback prior to reporting first quarter results. Furthermore, bp is committed to announcing $3.5 billion for the first half of 2024. At current market conditions and subject to maintaining a strong investment grade credit rating, bp plans share buybacks of at least $14 billion through 2025 as part of our commitment, on a point forward basis, to returning at least 80% of surplus cash flow* to shareholders.•     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.
	Continued progress in transformation to an integrated energy company
	•     In resilient hydrocarbons, bp announced the start-up of major project* Seagull, expected to add around 15 thousand barrels of oil equivalent per day of net production by 2025. In Gulf of Mexico bp sanctioned Argos Southwest Expansion project and expansion of the Great White development project. In Brazil, bp was awarded the Tupinambá block located in the Santos pre-salt basin.Under aim 4, we met our first goal of deploying our methane measurement approach to all our operated upstream oil and gas assets by the end of 2023.•     In convenience and mobility, bp continued to progress its convenience strategy, delivering a record convenience gross margin* for a fourth quarter, bringing full year to 9%(a) excluding TravelCenters of America, underpinned by customer offers driving stronger margin mix, continued roll-out of strategic conveniences sites*, and strategic convenience partnerships. bp and Iberdrola formed a joint venture to accelerate EV charging infrastructure roll-out in Spain and Portugal, with plans to invest up to €1 billion and install 5,000 fast EV charge points* by 2025 and around 11,700 by 2030.•     In low carbon energy, bp has agreed to acquire the 50.03% interest it does not already own in Lightsource bp, one of the world’s leading developers and operator of utility-scale solar and battery storage assets. This transaction is expected to complete in the second half of 2024, subject to regulatory approvals.•     In November, bp announced that it will be expanding the use of generative AI through the use of Copilot for Microsoft 365 – bp is one of the first companies globally to act as a launch partner for ‘intelligent AI assistant’.
	(a)       Nearest equivalent IFRS measure: Replacement cost profit (loss) before interest and tax for the customers & products segment is -52% for 2023 compared with 2022. Convenience gross margins are at constant foreign exchange – values are at end 2023 foreign exchange rates, excluding TravelCenters of America and adjusting for other portfolio changes.

bp delivered strong underlying financial performance in 2023 – we raised dividend per ordinary share by 10% and bought back $7.9 billion of shares. We remain focused on strengthening the balance sheet, with net debt falling to $20.9 billion, the lowest level over the past decade. As we look forward, we are staying disciplined, tightening our capital expenditure frame and simplifying and enhancing our share buyback guidance through 2025.

Kate Thomson Chief financial officer

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 41.

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Financial results

In addition to the highlights on page 2:

• Profit attributable to bp shareholders in the fourth quarter and full year was $0.4 billion and $15.2 billion respectively, compared with a profit of $10.8 billion and a loss of $2.5 billion in the same periods of 2022.

– After adjusting profit attributable to bp shareholders for inventory holding losses* and net impact of adjusting items*, underlying replacement cost profit* for the fourth quarter and full year was $3.0 billion and $13.8 billion respectively, compared with $4.8 billion and $27.7 billion for the same periods of 2022. This reduction in underlying replacement cost profit for the fourth quarter mainly reflects lower realizations and the impact of significantly lower refining margins, partially offset by a strong gas marketing and trading result. For the full year, the reduction reflects lower realizations, the impact of portfolio changes, the impact of lower refining margins and a lower oil trading performance.

– Adjusting items in the fourth quarter and full year had a net adverse pre-tax impact of $2.6 billion and a net favourable pre-tax impact of $1.1 billion respectively, compared with a favourable pre-tax impact of $9.7 billion and an adverse pre-tax impact of $29.8 billion in the same periods of 2022.

– Adjusting items for the fourth quarter and full year of 2023 include a favourable impact of pre-tax fair value accounting effects*, relative to management’s internal measure of performance, of $2.6 billion and $9.4 billion respectively, compared with a favourable pre-tax impact of $13.2 billion and an adverse pre-tax impact of $3.5 billion in the same periods of 2022. This is primarily due to a decline in the forward price of LNG during 2023. Under IFRS, reported earnings include the mark-to-market value of the hedges used to risk-manage LNG contracts, but not of the LNG contracts themselves. The underlying result includes the mark-to-market value of the hedges but also recognizes changes in value of the LNG contracts being risk managed.

– Adjusting items for the fourth quarter and full year of 2023 also include net impairment charges (including impairment charges reported through equity-accounted earnings) of $4.6 billion and $7.0 billion, compared with net impairment charges of $3.8 billion and $18.6 billion in the same periods of 2022. The fourth quarter 2023 impairments have arisen largely as a result of changes in the group’s price and discount rate assumptions, activity phasing, economic forecasts (in particular related to the Gelsenkirchen refinery) and portfolio composition. For further details on the impairment charges see Note 3.

– Adjusting items for the full year 2022 include a pre-tax charge of $24.0 billion relating to bp’s decision to exit its 19.75% shareholding in Rosneft. A further $1.5 billion pre-tax charge relating to bp’s decision to exit its other businesses with Rosneft in Russia is also included.

• The effective tax rate (ETR) on RC profit or loss* for the fourth quarter and full year was 39% and 33% respectively, compared with 33% and 117% for the same periods in 2022. Excluding adjusting items, the underlying ETR* for the fourth quarter and full year was 42% and 39% respectively, compared with 40% and 34% for the same periods a year ago. The higher underlying ETR for the full year reflects changes in the geographical mix of profits and the increased impact of the UK Energy Profits Levy. ETR on RC profit or loss and underlying ETR are non-IFRS measures.

• Operating cash flow* for the fourth quarter and full year was $9.4 billion and $32.0 billion respectively, compared with $13.6 billion and $40.9 billion for the same periods in 2022 driven by the movements in underlying replacement cost profit and working capital in the periods.

• Capital expenditure* in the fourth quarter and full year was $4.7 billion and $16.3 billion respectively, compared with $7.4 billion and $16.3 billion in the same periods of 2022. The full year 2023 reflected the inorganic capital expenditure* of $1.1 billion for the acquisition of TravelCenters of America in the second quarter 2023. Full year 2022 included $3.0 billion in respect of the Archaea Energy acquisition.

• Total divestment and other proceeds for the fourth quarter and full year were $0.3 billion and $1.8 billion respectively, compared with $0.6 billion and $3.1 billion for the same periods in 2022. Other proceeds for full year 2023 were $0.5 billion of proceeds from the sale of a 49% interest in a controlled affiliate holding certain midstream assets onshore US. Other proceeds for full year 2022 were $0.6 billion of proceeds from the disposal of a loan note related to the Alaska divestment.

• At the end of the fourth quarter, net debt* was $20.9 billion, compared with $22.3 billion at the end of the third quarter 2023 and $21.4 billion at the end of the fourth quarter 2022.

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Analysis of RC profit (loss) before interest and tax and reconciliation to profit (loss) for the period

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
RC profit (loss) before interest and tax
gas & low carbon energy		2,169	2,275	16,439		14,080	14,696
oil production & operations		1,879	3,427	1,688		11,191	19,721
customers & products		(554)	1,549	771		4,230	8,869
other businesses & corporate		(16)	(500)	103		(903)	(26,737)
Of which:
other businesses & corporate excluding Rosneft		(16)	(500)	103		(903)	(2,704)
Rosneft		–	–	–		–	(24,033)
Consolidation adjustment – UPII*		95	(57)	147		(14)	139
RC profit before interest and tax		3,573	6,694	19,148		28,584	16,688
Finance costs and net finance expense relating to pensions and other post-retirement benefits		(977)	(978)	(818)		(3,599)	(2,634)
Taxation on a RC basis		(1,005)	(1,859)	(6,103)		(8,161)	(16,430)
Non-controlling interests		(65)	(211)	(358)		(641)	(1,130)
RC profit (loss) attributable to bp shareholders*		1,526	3,646	11,869		16,183	(3,506)
Inventory holding gains (losses)*		(1,497)	1,593	(1,428)		(1,236)	1,351
Taxation (charge) credit on inventory holding gains and losses		342	(381)	362		292	(332)
Profit (loss) for the period attributable to bp shareholders		371	4,858	10,803		15,239	(2,487)

Analysis of underlying RC profit (loss) before interest and tax

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Underlying RC profit (loss) before interest and tax
gas & low carbon energy		1,777	1,256	3,148		8,722	16,063
oil production & operations		3,549	3,136	4,428		12,781	20,224
customers & products		803	2,055	1,902		6,413	10,789
other businesses & corporate		(97)	(303)	(306)		(866)	(1,171)
Of which:
other businesses & corporate excluding Rosneft		(97)	(303)	(306)		(866)	(1,171)
Rosneft		–	–	–		–	–
Consolidation adjustment – UPII		95	(57)	147		(14)	139
Underlying RC profit before interest and tax		6,127	6,087	9,319		27,036	46,044
Finance costs and net finance expense relating to pensions and other post-retirement benefits		(891)	(882)	(649)		(3,194)	(2,209)
Taxation on an underlying RC basis		(2,180)	(1,701)	(3,505)		(9,365)	(15,052)
Non-controlling interests		(65)	(211)	(358)		(641)	(1,130)
Underlying RC profit attributable to bp shareholders*		2,991	3,293	4,807		13,836	27,653

Reconciliations of underlying RC profit attributable to bp shareholders to the nearest equivalent IFRS measure are provided on page 1 for the group and on pages 6-14 for the segments.

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Operating Metrics

Operating metrics		Year 2023		vs Year 2022
Tier 1 and tier 2 process safety events*(a)		39		-11
Reported recordable injury frequency*(a)		0.274		+46.7%
upstream* production(b) (mboe/d)		2,313		+2.6%
upstream unit production costs*(c) ($/boe)		5.78		-4.8%
bp-operated upstream plant reliability*		95.0%		-1.0
bp-operated refining availability*(b)		96.1%		1.6

(a)      In 2023, bp acquired the US-based TravelCenters of America (TA) business. At the time of publication, TA reporting processes were still being integrated into bp’s reporting processes and as such, TA performance data is not included in reported data for 2023.

(b)     See Operational updates on pages 6, 9 and 11. Because of rounding, upstream production may not agree exactly with the sum of gas & low carbon energy and oil production & operations.

(c)      Mainly reflecting impact of portfolio changes.

Reserves replacement ratio*

The organic reserves replacement ratio on a combined basis of subsidiaries and equity-accounted entities was 47% for the year (2022 20%). The increase is largely due to additions in BPX Energy in the US and in the Middle East.

Outlook & Guidance

1Q24 guidance

• Looking ahead, bp expects first quarter 2024 reported upstream* production to be higher compared to fourth-quarter 2023.

• In its customers business, bp expects seasonally lower volumes across most businesses and the absence of one-off positive effects from the fourth quarter. In addition, bp expects fuels margins to remain sensitive to movements in cost of supply.

• In products, bp expects a significantly lower level of refinery turnaround activity compared to the fourth quarter. In addition, bp expects lower industry refining margins, with a larger reduction in realized margins due to narrower North American heavy crude oil differentials.

2024 guidance

In addition to the guidance on page 2:

• bp expects both reported and underlying upstream production* to be slightly higher compared with 2023. Within this, bp expects underlying production from oil production & operations to be higher and production from gas & low carbon energy to be lower.

• In its customers business, bp expects continued growth from convenience, including a full year contribution from TravelCenters of America; a stronger contribution from Castrol underpinned by volume growth in focus markets; and continued margin growth from bp pulse driven by higher energy sold. In addition, bp expects fuels margins to remain sensitive to the cost of supply.

• In products, bp expects a lower level of industry refining margins, with realized margins impacted by narrower North American heavy crude oil differentials. bp expects refinery turnaround activity to have a similar impact on both throughput and financial performance compared to 2023, with phasing of activity in 2024 heavily weighted towards the second half.

• bp expects the other businesses & corporate underlying annual charge to be around $1.0 billion for 2024. The charge may vary from quarter to quarter.

• bp expects the depreciation, depletion and amortization to be slightly higher than 2023.

• bp expects the underlying ETR* for 2024 to be around 40% but it is sensitive to the impact that volatility in the current price environment may have on the geographical mix of the group’s profits and losses.

• bp expects capital expenditure* of around $16 billion, weighted to the first half.

• bp expects divestment and other proceeds of $2-3 billion in 2024, weighted towards the second half. Having realized $17.8 billion of divestment and other proceeds since the second quarter of 2020, bp continues to expect to reach $25 billion of divestment and other proceeds between the second half of 2020 and 2025.

• bp expects Gulf of Mexico oil spill payments for the year to be around $1.2 billion pre-tax including $1.1 billion pre-tax to be paid during the second quarter.

The commentary above contains forward-looking statements and should be read in conjunction with the cautionary statement on page 41.

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gas & low carbon energy*

Financial results

•      The replacement cost (RC) profit before interest and tax for the fourth quarter and full year was $2,169 million and $14,080 million respectively, compared with $16,439 million and $14,696 million for the same periods in 2022. The fourth quarter and full year are adjusted by a favourable impact of net adjusting items* of $392 million and $5,358 million respectively, compared with a favourable impact of net adjusting items of $13,291 million and an adverse impact of $1,367 million for the same periods in 2022. Adjusting items include impacts of fair value accounting effects*, relative to management’s internal measure of performance, which are a favourable impact of $1,887 million and $8,859 million for the fourth quarter and full year in 2023 and a favourable impact of $12,502 million and an adverse impact of $1,811 million for the same periods in 2022. Under IFRS, reported earnings include the mark-to-market value of the hedges used to risk-manage LNG contracts, but not of the LNG contracts themselves. The underlying result includes the mark-to-market value of the hedges but also recognizes changes in value of the LNG contracts being risk managed. Adjusting items also include net impairment charges, see Note 3 for further information.

•      After adjusting RC profit before interest and tax for adjusting items, the underlying RC profit before interest and tax* for the fourth quarter and full year was $1,777 million and $8,722 million respectively, compared with $3,148 million and $16,063 million for the same periods in 2022.

•      The underlying RC profit for the fourth quarter, compared with the same period in 2022, reflects lower realizations and lower production, partially offset by a strong gas marketing and trading result. The underlying RC profit for the full year, compared with 2022, reflects lower realizations, and a higher depreciation, depletion and amortization charge.

Operational update

•      Reported production for the quarter was 899mboe/d, 6.0% lower than the same period in 2022. Underlying production* was 3.8% lower, mainly due to base decline, particularly in Egypt, partly offset by major project* delivery.

•      Reported production for the full year was 929mboe/d, 2.9% lower than the same period in 2022. Underlying production was 2.3% lower, mainly due to base decline, partly offset by major project delivery.

•      Renewables pipeline* at the end of the quarter was 58.3GW (bp net), including 19.3GW bp net share of Lightsource bp’s (LSbp’s) pipeline. The renewables pipeline increased by 21.1GW net during the full year, including bp being awarded the rights to develop two North Sea offshore wind projects in Germany (4GW), increases to LSbp’s pipeline (5.3GW), and an increase in dedicated hydrogen renewables (12.4GW). In addition, there is over 12GW (bp net) of early stage opportunities in LSbp’s hopper.

Strategic progress

gas

•        On 5 December, bp announced the restructuring of the ownership and commercial framework of the Atlantic LNG joint venture with its partners Shell and the National Gas Company of Trinidad & Tobago. The restructuring helps provide the certainty required for sanctioning the next wave of upstream gas projects and secures the long term LNG equity offtake for shareholders including bp.

•        On 18 January the government of the Republic of Senegal approved bp’s exit from the Cayar Offshore Profond production sharing contract and designation of Kosmos Energy as the Operator of the Yakaar-Teranga gas resource.

•        On 16 November, bp signed a 9-year sales and purchase agreement (SPA) with State-owned Oman LNG to buy one million metric tonnes per annum of LNG starting 2026.

low carbon energy

•        During the quarter, we secured US Department of Energy funding confirmation for the MachH2 Hub hydrogen project in the US Midwest.

•        On 25 January 2024 bp and Equinor announced they had signed an agreement under which they will restructure their investments in their US offshore wind projects. Subject to approvals, bp will assume full ownership of the Beacon projects and Equinor the Empire projects. bp will independently pursue future US offshore wind opportunities.

•        On 30 November bp announced it has agreed to acquire the remaining 50.03% of Lightsource bp. LSbp is one of the world’s leading developers and operator of utility-scale solar and battery storage assets, with 1,200 employees in 19 countries. The acquisition includes LSbp’s hopper of 38GW renewables pipeline and an additional 25GW of early stage opportunities. The transaction is expected to close in the second half of 2024, subject to regulatory approvals.

•        On 17 January 2024 bp announced it has agreed to acquire GETEC ENERGIE GmbH, a leading independent supplier of energy to commercial and industrial customers in Germany.

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gas & low carbon energy (continued)

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Profit before interest and tax		2,169	2,275	16,429		14,081	14,688
Inventory holding (gains) losses*		–	–	10		(1)	8
RC profit before interest and tax		2,169	2,275	16,439		14,080	14,696
Net (favourable) adverse impact of adjusting items		(392)	(1,019)	(13,291)		(5,358)	1,367
Underlying RC profit before interest and tax		1,777	1,256	3,148		8,722	16,063
Taxation on an underlying RC basis		(746)	(448)	(1,163)		(2,730)	(4,367)
Underlying RC profit before interest		1,031	808	1,985		5,992	11,696

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Depreciation, depletion and amortization
Total depreciation, depletion and amortization		1,290	1,543	1,373		5,680	5,008
Exploration write-offs
Exploration write-offs		349	15	(6)		362	2
Adjusted EBITDA*
Total adjusted EBITDA		3,416	2,814	4,515		14,764	21,073
Capital expenditure*
gas		848	833	1,032		3,025	3,227
low carbon energy		478	222	577		1,256	1,024
Total capital expenditure		1,326	1,055	1,609		4,281	4,251

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
		2023	2023	2022		2023	2022
Production (net of royalties)(a)
Liquids* (mb/d)		99	106	121		105	118
Natural gas (mmcf/d)		4,637	4,875	4,844		4,778	4,866
Total hydrocarbons* (mboe/d)		899	946	956		929	957
Average realizations*(b)
Liquids ($/bbl)		78.87	76.69	80.50		77.03	89.86
Natural gas ($/mcf)		6.18	5.38	9.40		6.13	8.91
Total hydrocarbons* ($/boe)		40.17	36.82	57.60		40.21	56.34

(a)      Includes bp’s share of production of equity-accounted entities in the gas & low carbon energy segment.

(b)     Realizations are based on sales by consolidated subsidiaries only – this excludes equity-accounted entities.

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gas & low carbon energy (continued)

		31 December	30 September	31 December
low carbon energy(c)		2023	2023	2022
Renewables (bp net, GW)
Installed renewables capacity*		2.7	2.5	2.2
Developed renewables to FID*		6.2	6.1	5.8
Renewables pipeline		58.3	43.9	37.2
of which by geographical area:
Renewables pipeline – Americas		18.8	18.4	17.0
Renewables pipeline – Asia Pacific		21.3	12.1	11.8
Renewables pipeline – Europe		14.6	13.4	8.3
Renewables pipeline – Other		3.5	–	0.1
of which by technology:
Renewables pipeline – offshore wind		9.3	9.3	5.2
Renewables pipeline – onshore wind		12.7	6.1	6.3
Renewables pipeline – solar		36.3	28.5	25.7
Total Developed renewables to FID and Renewables pipeline		64.5	50.0	43.0

(c)      Because of rounding, some totals may not agree exactly with the sum of their component parts.

Top of page 9

oil production & operations

Financial results

•      The replacement cost (RC) profit before interest and tax for the fourth quarter and full year was $1,879 million and $11,191 million respectively, compared with $1,688 million and $19,721 million for the same periods in 2022. The fourth quarter and full year are adjusted by an adverse impact of net adjusting items* of $1,670 million and $1,590 million respectively, mainly relating to net impairment charges (see Note 3), compared with an adverse impact of net adjusting items of $2,740 million and $503 million for the same periods in 2022.

•      After adjusting items, the underlying RC profit before interest and tax* for the fourth quarter and full year was $3,549 million and $12,781 million respectively, compared with $4,428 million and $20,224 million for the same periods in 2022.

•      The underlying RC profit for the fourth quarter, compared with the same period in 2022, primarily reflects the impact of lower realizations. The underlying RC profit for the full year, compared with the same period in 2022, reflects lower realizations, and the impact of portfolio changes, partly offset by higher volumes.

Operational update

•      Reported production for the quarter was 1,421mboe/d, 8.6% higher than the fourth quarter of 2022. Underlying production* for the quarter was 8.5% higher compared with the fourth quarter of 2022 reflecting bpx energy performance and major projects*.

•      Reported production for the full year was 1,383mboe/d, 6.7% higher than the same period of 2022. Underlying production for the full year was 6.3% higher compared with the same period of 2022 reflecting bpx energy performance and major projects and base performance.

Strategic Progress

•      In October bp, with partners Neptune Energy and JAPEX, successfully started production from the Seagull oil and gas field in the UK North Sea. Seagull is a four-well development tied back to the Eastern Trough Area Project (ETAP) hub (bp 50% operator).

•      The first of two wells for the Murlach oil and gas field in the UK North Sea were spudded in October, following regulatory approval of the field development plan in September (bp 80% operator).

•      bp and its partners approved the development of the Argos Southwest Extension project in the Gulf of Mexico which will be a three well subsea tie-back to the Argos platform (bp operator 60.5%).

•      Partners approved the expansion of the Shell operated Great White development in the Gulf of Mexico through a phased three well campaign (bp 33.33%).

•      In November, bpx energy production surpassed 400mboe/d, up more than 25% versus fourth-quarter 2022 levels with contributions across each operating basin. bpx energy remains on track to deliver 2025 volumes 30 to 40% higher than 2022 levels.

•      bp was the apparent high bidder on 24 lease blocks in the Gulf of Mexico lease sale 261 held on 20 December 2023.

•      In December bp was awarded operatorship of the Tupinamba block, in the Santos Pre Salt Basin, in Brazil.

•      Our Angolan 50:50 joint venture with Eni, Azule Energy, progressed with four new exploration agreements in blocks adjacent to existing operations (46, 47, 14/23 and 18/15).

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Profit before interest and tax		1,879	3,426	1,686		11,191	19,714
Inventory holding (gains) losses*		–	1	2		–	7
RC profit before interest and tax		1,879	3,427	1,688		11,191	19,721
Net (favourable) adverse impact of adjusting items		1,670	(291)	2,740		1,590	503
Underlying RC profit before interest and tax		3,549	3,136	4,428		12,781	20,224
Taxation on an underlying RC basis		(1,433)	(1,386)	(2,015)		(5,998)	(9,143)
Underlying RC profit before interest		2,116	1,750	2,413		6,783	11,081

Top of page 10

oil production & operations (continued)

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Depreciation, depletion and amortization
Total depreciation, depletion and amortization		1,563	1,432	1,383		5,692	5,564
Exploration write-offs
Exploration write-offs		32	59	73		384	383
Adjusted EBITDA*
Total adjusted EBITDA		5,144	4,627	5,884		18,857	26,171
Capital expenditure*
Total capital expenditure		1,636	1,644	1,430		6,278	5,278

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
		2023	2023	2022		2023	2022
Production (net of royalties)(a)
Liquids* (mb/d)		1,024	1,011	966		1,010	952
Natural gas (mmcf/d)		2,305	2,155	1,989		2,165	1,998
Total hydrocarbons* (mboe/d)		1,421	1,382	1,309		1,383	1,297
Average realizations*(b)
Liquids ($/bbl)		76.22	71.10	80.43		72.09	89.62
Natural gas ($/mcf)		3.65	3.44	10.20		4.17	10.46
Total hydrocarbons* ($/boe)		59.69	56.76	74.60		58.34	82.23

(a)      Includes bp’s share of production of equity-accounted entities in the oil production & operations segment.

(b)     Realizations are based on sales by consolidated subsidiaries only – this excludes equity-accounted entities.

Top of page 11

customers & products

Financial results

•      The replacement cost (RC) result before interest and tax for the fourth quarter and full year was a loss of $554 million and a profit of $4,230 million respectively, compared with a profit of $771 million and $8,869 million for the same periods in 2022. The fourth quarter and full year are adjusted by an adverse impact of net adjusting items* of $1,357 million and $2,183 million respectively, mainly relating to an impairment of the Gelsenkirchen refinery (see Note 3), compared with an adverse impact of net adjusting items of $1,131 million and $1,920 million for the same periods in 2022. Adjusting items include impacts of fair value accounting effects*, relative to management’s internal measure of performance, which are a favourable impact of $144 million for the quarter and an adverse impact of $86 million for the full year in 2023, compared with a favourable impact of $189 million and an adverse impact of $309 million for the same periods in 2022.

•      After adjusting items, the underlying RC profit before interest and tax* for the fourth quarter and full year was $803 million and $6,413 million respectively, compared with $1,902 million and $10,789 million for the same periods in 2022.

•      The customers & products result for the fourth quarter was lower than the same period in 2022, primarily reflecting the impact of significantly lower refining margins and a lower contribution from oil trading, partly offset by significantly lower turnaround impacts and a stronger customers performance. The result for the full year was significantly lower than the same period in 2022, primarily reflecting the impact of lower refining margins and a lower oil trading performance.

•      customers – the convenience and mobility result, excluding Castrol, for the fourth quarter was higher than the same period in 2022, with the benefit of higher fuels margins, a strong aviation result underpinned by higher volumes and margins, and continued strong growth in convenience. The fourth quarter and full year results were also impacted by higher costs, including increased expenditure in our transition growth engines*, inflationary impacts and increased depreciation.

The Castrol result for the fourth quarter was higher compared to the same period in 2022, primarily due to higher margins underpinned by lower cost of supply and higher volumes, with the fourth quarter of 2022 impacted by COVID restrictions, notably in China.  

•      products – the products results for the fourth quarter and full year were lower compared with the same periods in 2022. In refining, the result for the fourth quarter reflected significantly lower industry refining margins, partially offset by a significantly lower impact from turnaround and maintenance activity. The full year result was primarily impacted by significantly lower industry refining margins, higher turnaround activity albeit with a lower margin impact, partly offset by a lower level of maintenance activity. The oil trading contribution for the fourth quarter was weak compared to the average result in the same period last year. The full year result was also lower, as the first half of 2022 benefited from an exceptionally strong oil trading performance.

Operational update 

•      bp-operated refining availability* for the fourth quarter and full year was 96.1%, higher compared with 95.0% and 94.5% for the same periods in 2022 due to a lower level of maintenance activity. Utilization for the fourth quarter and full year, adjusted for portfolio changes, was lower than the same periods in 2022, with the fourth quarter utilization impacted by higher turnaround activity.

Strategic progress

•      Strong underlying convenience gross margin* delivery with around 9%_(a)(b) year over year growth, underpinned by customer offers driving stronger margin mix, continued roll-out of strategic convenience sites*, and strategic convenience partnerships.

•      In November, bp entered into an agreement to sell its Türkiye ground fuels business to Petrol Ofisi. This includes the group’s interest in three joint venture terminals in Türkiye. Completion of the sale is subject to regulatory approvals.

•      EV charge points* installed and energy sold in the year grew by around 35% and 150% respectively, compared to 2022, with charge points now over 29,000. In addition, on 1 December bp and Iberdrola formed a joint venture to accelerate EV charging infrastructure roll-out in Spain and Portugal, with plans to invest up to €1 billion and install 5,000 fast_(c) EV charge points by 2025 and around 11,700 by 2030; and in China, bp continues to invest in fast growing southern districts, and in January acquired 3,000 charge points through the bp Xiajou joint venture.

•      In November, Air bp collaborated with Virgin Atlantic, Rolls Royce, Boeing, and others, to fuel the first 100% sustainable aviation fuel (SAF) transatlantic flight by a commercial airline. The SAF was a blend derived from inputs supplied by Air bp and Virent. Together, this enabled up to 70% lifecycle carbon emission savings compared to the conventional jet fuel it replaces.

•      In Castrol, our market leading position in advanced EV-fluids was further strengthened, now three out of four of the world’s major vehicle manufacturers use Castrol ON products as part of their factory fill_(d). In addition, Castrol has continued to grow its independent branded workshops, adding around 4,500 workshops in 2023, compared to 2022, with workshops now over 34,000 in total.

•      In December, bp’s Archaea Energy announced it had brought two more renewable natural gas plants online, the Monty plant in Kentucky and the Red Top plant in California.

(a)       Nearest equivalent IFRS measure: Replacement cost profit before interest and tax for the customers & products segment is -52% for 2023 compared with 2022.

(b)       At constant foreign exchange – values are at end 2023 foreign exchange rates, excluding TravelCenters of America and adjusted for other portfolio changes.

(c)       “fast charging” includes rapid charging ≥50kW and ultra-fast charging ≥150kW.

(d)       Based on GlobalData report for 2023 for top 20 selling global OEMs (total new vehicles sales).

Top of page 12

customers & products (continued)

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Profit (loss) before interest and tax		(2,051)	3,143	(645)		2,993	10,235
Inventory holding (gains) losses*		1,497	(1,594)	1,416		1,237	(1,366)
RC profit (loss) before interest and tax		(554)	1,549	771		4,230	8,869
Net (favourable) adverse impact of adjusting items		1,357	506	1,131		2,183	1,920
Underlying RC profit before interest and tax		803	2,055	1,902		6,413	10,789
Of which:(a)
customers – convenience & mobility		882	670	628		2,644	2,966
Castrol – included in customers		213	185	70		730	700
products – refining & trading		(79)	1,385	1,274		3,769	7,823
Taxation on an underlying RC basis		(239)	(167)	(400)		(1,454)	(2,308)
Underlying RC profit before interest		564	1,888	1,502		4,959	8,481

(a)      A reconciliation to RC profit before interest and tax by business is provided on page 31.

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Adjusted EBITDA*(b)
customers – convenience & mobility		1,348	1,151	962		4,380	4,252
Castrol – included in customers		256	228	110		897	853
products – refining & trading		397	1,819	1,681		5,581	9,407
		1,745	2,970	2,643		9,961	13,659
Depreciation, depletion and amortization
Total depreciation, depletion and amortization		942	915	741		3,548	2,870
Capital expenditure*
customers – convenience & mobility		790	435	694		3,135	1,779
Castrol – included in customers		90	60	98		262	235
products – refining & trading(c)		813	367	3,455		2,118	4,473
Total capital expenditure		1,603	802	4,149		5,253	6,252

(b)     A reconciliation to RC profit before interest and tax by business is provided on page 31.

(c)      Fourth quarter and full year 2022 include $3,030 million in respect of the Archaea Energy acquisition.

Retail(d)		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
		2023	2023	2022		2023	2022
bp retail sites* – total (#)		21,100	21,150	20,650		21,100	20,650
Strategic convenience sites*		2,850	2,750	2,400		2,850	2,400

(d)     Reported to the nearest 50.

Marketing sales of refined products (mb/d)		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
		2023	2023	2022		2023	2022
US		1,205	1,280	1,126		1,210	1,136
Europe		1,037	1,093	1,069		1,040	1,021
Rest of World		465	474	461		468	456
		2,707	2,847	2,656		2,718	2,613
Trading/supply sales of refined products		355	392	325		358	350
Total sales volume of refined products		3,062	3,239	2,981		3,076	2,963

Top of page 13

customers & products (continued)

Refining marker margin*		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
		2023	2023	2022		2023	2022
bp average refining marker margin (RMM)(e) ($/bbl)		18.5	31.8	32.2		25.8	33.1

(e)      The RMM in the quarter is calculated based on bp’s current refinery portfolio. On a comparative basis, the fourth quarter and full year 2022 RMM would be $32.2/bbl and $33.1/bbl respectively.

Refinery throughputs (mb/d)		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
		2023	2023	2022		2023	2022
US		634	690	615		662	678
Europe		678	760	763		749	804
Rest of World		–	–	–		–	22
Total refinery throughputs		1,312	1,450	1,378		1,411	1,504
bp-operated refining availability* (%)		96.1	96.3	95.0		96.1	94.5

Top of page 14

other businesses & corporate

Other businesses & corporate comprises innovation & engineering, bp ventures, Launchpad, regions, corporates & solutions, our corporate activities & functions and any residual costs of the Gulf of Mexico oil spill. It also includes Rosneft results up to 27 February 2022.

Financial results

•      The replacement cost (RC) loss before interest and tax for the fourth quarter and full year was $16 million and $903 million respectively, compared with a profit of $103 million and a loss of $26,737 million for the same periods in 2022. The fourth quarter and full year are adjusted by a favourable impact of net adjusting items* of $81 million and an adverse impact of $37 million respectively, compared with a favourable impact of net adjusting items of $409 million and an adverse impact of $25,566 million for the same periods in 2022. Adjusting items include impacts of fair value accounting effects* which are a favourable impact of $579 million for the quarter and a favourable impact of $630 million for the full year in 2023, and a favourable impact of $515 million and an adverse impact of $1,381 million for the same periods in 2022. Adjusting items also include impacts of environmental charges which are an adverse impact of $565 million for the quarter. The adjusting items for the full year in 2022 mainly relate to Rosneft.

•      After adjusting RC loss for net adjusting items, the underlying RC loss before interest and tax* for the fourth quarter and full year was $97 million and $866 million respectively, compared with a loss of $306 million and $1,171 million for the same periods in 2022, mainly reflecting foreign exchange impacts for the fourth quarter and increased interest income for the full year.

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Profit (loss) before interest and tax		(16)	(500)	103		(903)	(26,737)
Inventory holding (gains) losses*		–	–	–		–	–
RC profit (loss) before interest and tax		(16)	(500)	103		(903)	(26,737)
Net (favourable) adverse impact of adjusting items(a)		(81)	197	(409)		37	25,566
Underlying RC profit (loss) before interest and tax		(97)	(303)	(306)		(866)	(1,171)
Taxation on an underlying RC basis		121	162	43		322	439
Underlying RC profit (loss) before interest		24	(141)	(263)		(544)	(732)

(a)      Includes fair value accounting effects relating to the hybrid bonds that were issued on 17 June 2020. See page 35 for more information.

other businesses & corporate (excluding Rosneft)

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Profit (loss) before interest and tax		(16)	(500)	103		(903)	(2,704)
Inventory holding (gains) losses*		–	–	–		–	–
RC profit (loss) before interest and tax		(16)	(500)	103		(903)	(2,704)
Net (favourable) adverse impact of adjusting items		(81)	197	(409)		37	1,533
Underlying RC profit (loss) before interest and tax		(97)	(303)	(306)		(866)	(1,171)
Taxation on an underlying RC basis		121	162	43		322	439
Underlying RC profit (loss) before interest		24	(141)	(263)		(544)	(732)

other businesses & corporate (Rosneft)

		Fourth	Third	Fourth
		quarter	quarter	quarter		Year	Year
$ million		2023	2023	2022		2023	2022
Profit (loss) before interest and tax		–	–	–		–	(24,033)
Inventory holding (gains) losses*		–	–	–		–	–
RC profit (loss) before interest and tax		–	–	–		–	(24,033)
Net (favourable) adverse impact of adjusting items		–	–	–		–	24,033
Underlying RC profit (loss) before interest and tax		–	–	–		–	–
Taxation on an underlying RC basis		–	–	–		–	–
Underlying RC profit (loss) before interest		–	–	–		–	–