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Bob Dudley Brian Gilvary 4Q & FULL YEAR 2017 RESULTS &BP STRATEGY 4Q & FULL UPDATE YEAR 2017 RESULTS & STRATEGY UPDATE BobBrian Dudley Gilvary Group Chief Executive Chief Financial Officer 14 Environment Brent oil price1 Henry Hub gas price Refining Marker Margin2 $/bbl $/mmbtu $/bbl 75 3.9 24 70 3.7 22 20 65 3.5 18 60 3.3 16 55 3.1 14 50 2.9 12 45 2.7 10 40 2.5 8 4 Q16 1 Q17 2 Q17 3 Q17 4 Q17 1 Q18 4 Q16 1 Q17 2 Q17 3 Q17 4 Q17 1 Q18 4 Q16 1 Q17 2 Q17 3 Q17 4 Q17 1 Q18 (1) Source: Factset (2) Refining Marker Margin (RMM) based on BP’s portfolio All data 1 October 2016 to 2 February 2018 BP 4Q 2017& FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 15 Thanks Bob, starting with the environment. Brent crude averaged $54 per barrel in 2017 and $61 per barrel in the fourth quarter, up from $52 per barrel in the third quarter and $49 per barrel in the fourth quarter of 2016. So far this year Brent crude has averaged around $70 per barrel. Henry Hub gas prices averaged $3.10 per million British Thermal Units in 2017 and $2.90 in the fourth quarter, compared to $3.00 in both the third quarter of 2017 and the fourth quarter of 2016. BP’s global refining marker margin averaged $14.10 per barrel in 2017 and $14.40 per barrel in the fourth quarter, compared to $16.30 in the third quarter and $11.40 per barrel a year ago. 15 4Q 2017 summary $bn 4Q16 3Q17 4Q17 % Y-o-Y % Q-o-Q Upstream 0.4 1.6 2.2 Downstream 0.9 2.3 1.5 Other businesses & corporate (0.4) (0.4) (0.4) Underlying business RCPBIT1 0.9 3.5 3.3 287% (6%) Rosneft2 0.1 0.1 0.3 Consolidation adjustment - unrealised profit in inventory (0.1) (0.1) (0.1) Underlying RCPBIT1 0.9 3.5 3.5 306% (1%) Finance costs3 (0.4) (0.4) (0.6) Tax (0.1) (1.2) (0.8) Minority interest (0.0) 0.0 (0.0) Underlying replacement cost profit 0.4 1.9 2.1 427% 13% Underlying operating cash flow4 4.5 6.6 6.4 42% (4%) Underlying earnings per share (cents) 2.1 9.4 10.6 405% 13% Dividend paid per share (cents) 10 10 10 0% 0% (1) Replacement cost profit before interest and tax (RCPBIT), adjusted for non-operating items and fair value accounting effects (2) BP estimate of Rosneft earnings after interest, tax and minority interest (3) Finance costs and net finance income or expense relating to pensions and other post-retirement benefits (4) Underlying operating cash flow is net cash provided by/(used in) operating activities excluding pre-tax Gulf of Mexico oil spill payments BP 4Q 2017& FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 16 Turning to a summary of BP’s earnings in the fourth quarter. Underlying replacement cost profit was $2.1 billion, compared with $400 million in the same period a year ago, and $1.9 billion in the third quarter of 2017. Compared to a year ago, today’s result benefited from a stronger environment with improved oil prices and refining margins. It also reflects progress across our businesses with higher production volumes in the Upstream and continued underlying growth in the Downstream. Looking quarter-on-quarter, oil prices improved in 4Q and Upstream production grew with the ramp up of major projects. This was partially offset by exploration write-offs, seasonally lower refining margins and a weak oil supply and trading contribution. The fourth-quarter dividend, payable in the first quarter of 2018, remains unchanged at 10 cents per ordinary share. 16 Upstream Realisations1 Volume Underlying RCPBIT3 mboe/d $bn Group production2 Liquids ($/bbl) Gas ($/mcf) Upstream production excluding Rosneft Non-US US Total RCPBIT 60 12 4000 2.5 2.2 50 10 2.0 3500 1.6 1.4 40 8 1.5 3000 30 6 1.0 0.7 2500 0.4 20 4 0.5 2000 10 2 0.0 0 0 1500 (0.5) 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 (1) Realisations based on sales of consolidated subsidiaries only, excluding equity-accounted entities (2) Group reported oil and gas production including Rosneft estimate (3) Replacement cost profit (loss) before interest and tax (RCPBIT), adjusted for non-operating items and fair value accounting effects BP 4Q 2017& FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 17 In Upstream, the fourth-quarter underlying replacement cost profit before interest and tax of $2.2 billion compares with $400 million a year ago and $1.6 billion in the third quarter of 2017. Compared to the third quarter, the result reflects: − Higher liquids realisations; along with − Higher production from major project start-ups. − Partly offset by higher exploration write offs. Fourth quarter reported production was 2.6 million barrels of oil equivalent per day, 18% higher than a year ago. Looking ahead, we expect first quarter 2018 reported production to be broadly flat with the fourth quarter reflecting continued ramp up from 2017 major project start ups offset by the expiration of the ADMA concession and other divestment impacts. 17 Downstream Refining environment Refining availability Underlying RCPBIT2 $/bbl % $bn Fuels Lubricants Petrochemicals Total RCPBIT RMM WTI CMA-WCS spread1 24 98 2.5 2.3 20 96 2.0 1.7 16 94 1.4 1.5 1.5 12 92 0.9 1.0 8 90 0.5 4 88 0 86 0.0 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 (1) Source: Platts (CMA: Calendar Month Average); lagged by one month (2) Replacement cost profit before interest and tax (RCPBIT), adjusted for non-operating items and fair value accounting effects BP 4Q 2017& FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 18 Turning to Downstream, the fourth-quarter underlying replacement cost profit before interest and tax was $1.5 billion compared with $900 million a year ago and $2.3 billion in the third quarter. Compared to the third quarter, the result reflects: − Stronger refining performance with availability at 96.1%, the highest in over a decade. More than offset by: − A slightly below breakeven performance in oil supply and trading; − Seasonally lower industry refining margins and fuels marketing results; − More turnaround activity; and − The absence of earnings following the divestment of the SECCO joint venture in our Petrochemicals business. Looking to the first quarter of 2018, we expect higher discounts for North American heavy crude oil but lower industry refining margins. We also expect turnaround activity to be lower in refining, but significantly higher in Petrochemicals. 18 Rosneft Average Urals price BP share of underlying BP share of Rosneft $/bbl net income1 dividend $bn $bn 70 0.4 2 Half yearly dividend 3 Annual dividend for previous year 60 0.4 0.3 50 40 0.2 30 0.2 20 0.1 10 0 0.0 0.0 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 2015 2016 2017 (1) On a replacement cost basis and adjusted for non-operating items; 4Q17 represents BP estimate (2) Half yearly dividend declared representing 50% of Rosneft’s IFRS net income for 1H 2017, paid in the fourth quarter (3) Annual dividends paid in the third quarter, in respect of the previous year BP 4Q 2017& FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 19 Based on preliminary estimates, we have recognised $320 million as BP’s share of Rosneft’s underlying net income for the fourth quarter, compared to $140 million a year ago and $140 million in the third quarter of 2017. Along with a higher Urals price, the estimate reflects a one-off legal settlement in Rosneft’s favour and adverse foreign exchange impacts. Our estimate of BP’s share of Rosneft’s production for the fourth quarter is 1.1 million barrels of oil equivalent per day, a decrease of 2% reflecting participation in Non-OPEC oil production cuts. Further details will be available when Rosneft report their fourth-quarter results. 19 Other items OB&C underlying RCPBIT1 Adjusted effective tax rate2 $bn % 4Q16 1Q17 2Q17 3Q17 4Q17 0.0 70 60 (0.1) 50 (0.2) 40 30 (0.3) 20 (0.4) 10 (0.5) 0 4Q16 1Q17 2Q17 3Q17 4Q17 (1) Other businesses and corporate replacement cost profit before interest and tax (RCPBIT), adjusted for non-operating items (2) Effective tax rate on replacement cost profit adjusted to remove the effects of non-operating items and fair value accounting effects BP 4Q 2017& FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 20 In Other Businesses and Corporate, we reported a pre-tax underlying replacement cost charge of $390 million for the fourth quarter. This was higher than our guidance of $350 million as a result of adverse foreign exchange impacts. The adjusted effective tax rate for the fourth quarter was 27%. This reflects a benefit from the reassessment of the recognition of deferred tax assets. The full-year adjusted effective tax rate was 38%. 20 Sources and uses of cash 2016 organic cash inflows/outflows $bn 2017 organic cash inflows/outflows $bn 28 28 24 24 Share buybacks 20 20 2 Dividends2 Dividends 16 16 12 Underlying 12 Underlying Organic capex Organic capex cash flow1 cash flow1 8 8 4 4 0 0 Other inflows/outflows $bn Other inflows/outflows $bn 9 9 Inorganic capex 6 6 Inorganic capex Gulf of Mexico 3 oil spill 3 Gulf of Mexico Disposals3 Disposals3 oil spill 0 0 (1) Underlying operating cash flow is net cash provided by/(used in) operating activities excluding pre-tax Gulf of Mexico oil spill payments (2) Cash dividends paid (3) 2016 includes proceeds for sale of partial shareholding in Castrol India, 2017 includes net proceeds received from the initial public offering of BP Midstream Partners LP BP 4Q 2017& FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 21 Moving to cash flows, this slide compares our sources and uses of cash in 2016 and 2017.
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