BP P.l.c. Group Results  Third Quarter and Nine Months 2023

Source Press Release
Company BP Plc. 
Tags Carbon Capture (CCS/CCUS), Hedging, Production/Development, Exploration, Upstream Activities, Capital Spending, Guidance, Strategy - Corporate, Financial & Operating Data
Date October 31, 2023
Performing while transforming 
Financial summary    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Profit (loss) for the period attributable to bp shareholders    4,858  1,792  (2,163)    14,868  (13,290) 
Inventory holding (gains) losses*, net of tax    (1,212)  549  2,186    (211)  (2,085) 
Replacement cost (RC) profit (loss)*    3,646  2,341  23    14,657  (15,375) 
Net (favourable) adverse impact of adjusting items*, net of tax    (353)  248  8,127    (3,812)  38,221 
Underlying RC profit*    3,293  2,589  8,150    10,845  22,846 
Operating cash flow*    8,747  6,293  8,288    22,662  27,361 
Capital expenditure*    (3,603)  (4,314)  (3,194)    (11,542)  (8,961) 
Divestment and other proceeds(a)    655  88  606    1,543  2,509 
Surplus cash flow*    3,107  (269)  3,496    5,121  14,080 
Net issue (repurchase) of shares    (2,047)  (2,073)  (2,876)    (6,568)  (6,756) 
Net debt*(b)    22,324  23,660  22,002    22,324  22,002 
Adjusted EBITDA*    10,306  9,770  17,407    33,142  47,647 
Announced dividend per ordinary share (cents per share)    7.270  7.270  6.006    21.150  17.472 
Underlying RC profit per ordinary share* (cents)    19.14  14.77  43.15    61.83  118.61 
Underlying RC profit per ADS* (dollars)    1.15  0.89  2.59    3.71  7.12  
Highlights   
  Underlying replacement cost profit* $3.3 billion   
  •     Underlying replacement cost profit for the quarter was $3.3 billion, compared with $2.6 billion for the previous quarter. Compared to the second quarter 2023, the result reflects: higher realized refining margins, lower level of refining turnaround activity, a very strong oil trading result, higher oil and gas production, partly offset by a weak gas marketing and trading result. •     Reported profit for the quarter was $4.9 billion, compared with $1.8 billion for the second quarter 2023. The reported result for the third quarter is adjusted for inventory holding gains* of $1.2 billion (net of tax) and a net favourable impact of adjusting items* of $0.4 billion (net of tax) to derive the underlying replacement cost profit. Adjusting items include impairments of $1.2 billion and favourable fair value accounting effects* of $1.5 billion.    
  Operating cash flow* $8.7 billion and net debt* reduced to $22.3 billion   
  •     Operating cash flow in the quarter of $8.7 billion includes a working capital* release (after adjusting for inventory holding gains, fair value accounting effects and other adjusting items) of $2.0 billion (see page 27). •     Capital expenditure* in the third quarter was $3.6 billion. bp now expects capital expenditure, including inorganic capital expenditure* to be around $16 billion in 2023. •     During the third quarter, bp completed $2.0 billion of share buybacks. This included $225 million as part of the $675 million programme announced on 7 February 2023 to offset the expected full-year dilution from the vesting of awards under employee share schemes in 2023. bp completed the $675 million buyback programme on 1 September 2023. •     The $1.5 billion share buyback programme announced with the second quarter results was completed on 27 October 2023. •     Net debt was reduced by $1.3 billion to $22.3 billion at the end of the third quarter.   
  Further $ 1.5 billion share buyback within a disciplined financial frame   
  •     A resilient dividend is bp's first priority within its disciplined financial frame, underpinned by a cash balance point* of around $40 per barrel Brent, $11 per barrel RMM and $3 per mmBtu Henry Hub (all 2021 real). •     For the third quarter, bp has announced a dividend per ordinary share of 7.270 cents. •     bp remains committed to using 60% of 2023 surplus cash flow* for share buybacks, subject to maintaining a strong investment grade credit rating. •     bp intends to execute a further $1.5 billion share buyback prior to reporting fourth quarter results. •     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 the maintenance of a strong investment grade credit rating. •     bp's guidance for distributions remains unchanged. Based on bp's current forecasts, at around $60 per barrel Brent and subject to the board's discretion each quarter, bp expects to be able to deliver share buybacks of around $4.0 billion per annum, at the lower end of its $14-18 billion capital expenditure range, and have capacity for an annual increase in the dividend per ordinary share of around 4%.    
  Continued progress in transformation to an integrated energy company   
  •     In resilient hydrocarbons, bp has announced the start-up of Tangguh Expansion - the third major project* in 2023 - adding around 3.8mtpa of producing capacity to the existing 7.6mtpa facility. It has safely produced the first commercial cargo. In August, bpx energy successfully brought online 'Bingo', its second central processing facility in the Permian Basin. In September, a regulatory approval was received for the Murlach oil and gas development in the North Sea, a two well redevelopment of the Marnock-Skua field back to the ETAP (Eastern Trough Area Project) hub. bp has accelerated its biogas strategy - part of its bioenergy transition growth* engine - bp's Archaea Energy announced the start-up of its original Archaea Modular Design (AMD) renewable natural gas plant in Medora, Indiana. •     In convenience and mobility, bp continued to advance its growth strategy in EV charging and convenience: announcing an agreement in October with Tesla for the future purchase of $100 million of ultra-fast chargers in the US - this is part of the approved $500 million of investment in the US; and expanding its successful strategic convenience partnership with Auchan in Poland, with plans to add more than 100 EasyAuchan stores to its retail network by the end of 2025. •     In low carbon energy, bp has strengthened its renewables pipeline to 43.9GW net to bp from the rights awarded to develop two offshore wind projects, with total potential generating capacity of 4GW, in the German tender round. 

Financial results

In addition to the highlights on page 2:

• Profit attributable to bp shareholders in the third quarter and nine months was $4.9 billion and $14.9 billion respectively, compared with a loss of $2.2 billion and $13.3 billion in the same periods of 2022.

- After adjusting profit attributable to bp shareholders for inventory holding gains* and net impact of adjusting items*, underlying replacement cost profit* for the third quarter and nine months was $3.3 billion and $10.8 billion respectively, compared with $8.2 billion and $22.8 billion for the same periods of 2022. This reduction in underlying replacement cost profit for the third quarter mainly reflects lower oil and gas realizations and a weak gas marketing and trading result. For the nine months, the reduction reflects lower oil and gas realizations; the impact of portfolio changes in oil production & operations; a lower refining and oil trading performance; and a weak gas marketing and trading result in the third quarter.

- Adjusting items in the third quarter and nine months had a net favourable pre-tax impact of $0.5 billion and $3.8 billion respectively, compared with an adverse pre-tax impact of $8.3 billion and $39.4 billion in the same periods of 2022.

- Adjusting items for the third quarter and nine months of 2023 include a favourable impact of pre-tax fair value accounting effects*, relative to management's internal measure of performance, of $1.5 billion and $6.8 billion respectively, compared with an adverse pre-tax impact of $10.1 billion and $16.7 billion in the same periods of 2022. This is primarily due to a decline in the forward price of LNG during the 2023 periods, but an increase in the 2022 comparative periods. 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 nine months 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 third quarter and nine months was 33% and 32% respectively, compared with 96% and -242% for the same periods in 2022. Excluding adjusting items, the underlying ETR* for the third quarter and nine months was 33% and 39% respectively, compared with 37% and 33% for the same periods a year ago. The lower underlying ETR for the third quarter reflects adjustments in respect of prior periods. The higher underlying ETR for the nine months 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 third quarter and nine months was $8.7 billion and $22.7 billion respectively, compared with $8.3 billion and $27.4 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 third quarter and nine months was $3.6 billion and $11.5 billion respectively, compared with $3.2 billion and $9.0 billion in the same periods of 2022. The nine months 2023 reflected the inorganic $1.1 billion spend on the acquisition of TravelCenters of America in the second quarter 2023.

• Total divestment and other proceeds for the third quarter and nine months were $0.7 billion and $1.5 billion respectively, compared with $0.6 billion and $2.5 billion for the same periods in 2022. Other proceeds for the third quarter and nine months of 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 the nine months of 2022 were $0.6 billion of proceeds from the disposal of a loan note related to the Alaska divestment.

• At the end of the third quarter, net debt* was $22.3 billion, compared with $23.7 billion at the end of the second quarter 2023 and $22.0 billion at the end of the third quarter 2022.

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

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
RC profit (loss) before interest and tax               
gas & low carbon energy    2,275  2,289  (2,956)    11,911  (1,743) 
oil production & operations    3,427  2,568  6,965    9,312  18,033 
customers & products    1,549  555  2,586    4,784  8,098 
other businesses & corporate    (500)  (297)  (1,093)    (887)  (26,840) 
Of which:               
other businesses & corporate excluding Rosneft    (500)  (297)  (1,093)    (887)  (2,807) 
Rosneft      (24,033) 
Consolidation adjustment - UPII*    (57)  (30)  (21)    (109)  (8) 
RC profit (loss) before interest and tax    6,694  5,085  5,481    25,011  (2,460) 
Finance costs and net finance expense relating to pensions and other post-retirement benefits    (978)  (859)  (633)    (2,622)  (1,816) 
Taxation on a RC basis    (1,859)  (1,724)  (4,646)    (7,156)  (10,327) 
Non-controlling interests    (211)  (161)  (179)    (576)  (772) 
RC profit (loss) attributable to bp shareholders*    3,646  2,341  23    14,657  (15,375) 
Inventory holding gains (losses)*    1,593  (732)  (2,868)    261  2,779 
Taxation (charge) credit on inventory holding gains and losses    (381)  183  682    (50)  (694) 
Profit (loss) for the period attributable to bp shareholders    4,858  1,792  (2,163)    14,868  (13,290) 

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

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Underlying RC profit (loss) before interest and tax               
gas & low carbon energy    1,256  2,233  6,240    6,945  12,915 
oil production & operations    3,136  2,777  5,211    9,232  15,796 
customers & products    2,055  796  2,725    5,610  8,887 
other businesses & corporate    (303)  (170)  (405)    (769)  (865) 
Of which:               
other businesses & corporate excluding Rosneft    (303)  (170)  (405)    (769)  (865) 
Rosneft     
Consolidation adjustment - UPII    (57)  (30)  (21)    (109)  (8) 
Underlying RC profit before interest and tax    6,087  5,606  13,750    20,909  36,725 
Finance costs and net finance expense relating to pensions and other post-retirement benefits    (882)  (740)  (565)    (2,303)  (1,560) 
Taxation on an underlying RC basis    (1,701)  (2,116)  (4,856)    (7,185)  (11,547) 
Non-controlling interests    (211)  (161)  (179)    (576)  (772) 
Underlying RC profit attributable to bp shareholders*    3,293  2,589  8,150    10,845  22,846 

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.

Operating Metrics

Operating metrics    Nine months 2023    vs Nine months 2022 
Tier 1 and tier 2 process safety events*    29    -7 
Reported recordable injury frequency*    0.255    +31.8% 
upstream* production(a) (mboe/d)    2,310    +2.7% 
upstream unit production costs*(b) ($/boe)    5.88    -5.9% 
bp-operated upstream plant reliability*    95.7%    -0.1 
bp-operated refining availability*(a)    96.0%    1.6  

Outlook & Guidance

Macro outlook

In the fourth quarter:

• bp expects oil prices to be supported by OPEC+ production restrictions and the continued demand rebound;

• European gas and Asian LNG prices will be driven by weather, demand recovery in Europe and China and ongoing geopolitical tension. In the US, weather is also a risk factor, but higher than normal storage levels and higher production should help to dampen volatility; and

• bp expects industry refining margins to be significantly lower than the third quarter.

4Q23 guidance

• Looking ahead, we expect fourth-quarter 2023 reported upstream* production to be broadly flat compared to third-quarter 2023.

• In its customers business, bp expects seasonally lower volumes with marketing margins to remain sensitive to movements in the cost of supply. In refining, we expect significantly lower realized refining margins and a higher level of turnaround activity in the fourth quarter.

2023 guidance

In addition to the guidance on page 2:

• bp expects both reported and underlying upstream production to be higher compared with 2022. Within this, bp expects underlying production from oil production & operations to be higher and production from gas & low carbon energy to be slightly lower. bp continues to expect four major project start-ups during 2023.

• bp expects the other businesses & corporate underlying annual charge to be at the lower end of the range $1.1-1.3 billion for 2023. The charge may vary from quarter to quarter.

• bp continues to expect the depreciation, depletion and amortization to be slightly above 2022.

• bp continues to expect the underlying ETR* for 2023 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.

• Having realized $17.5 billion of divestment and other proceeds since the second quarter of 2020, bp continues to expect divestment and other proceeds of $2-3 billion in 2023 and continues to expect to reach $25 billion of divestment and other proceeds between the second half of 2020 and 2025.

• bp continues to expect Gulf of Mexico oil spill payments for the year to be around $1.3 billion pre-tax including the $1.2 billion pre-tax payment made during the second quarter.

• bp now expects capital expenditure* of around $16 billion in 2023 including inorganic capital expenditure*.

• bp is committed to maintaining a strong investment grade credit rating, targeting further progress within an 'A' grade credit rating. For 2023 bp continues to intend to allocate 40% of surplus cash flow* to further strengthen the balance sheet.

• For 2023 and subject to maintaining a strong investment grade credit rating, bp remains committed to using 60% of surplus cash flow for share buybacks.

• 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 the maintenance of a strong investment grade credit rating.

• Based on bp's current forecasts, at around $60 per barrel Brent and subject to the board's discretion each quarter, bp continues to expect to be able to deliver share buybacks of around $4.0 billion per annum, at the lower end of its $14-18 billion capital expenditure range, and have capacity for an annual increase in the dividend per ordinary share of around 4%.

Adjusted EBITDA* aims(a)

• bp has increased its 2030 Adjusted EBITDA aims for resilient hydrocarbons and group by $2 billion to a range of $41-44 billion and $53-58 billion respectively.

(a)      Brent $70/bbl 2021 real, at bp planning assumptions, and at the upper end of the respective expected capital expenditure* ranges.

gas & low carbon energy*

Financial results

•      The replacement cost (RC) profit before interest and tax for the third quarter and nine months was $2,275 million and $11,911 million respectively, compared with a loss of $2,956 million and $1,743 million for the same periods in 2022. The third quarter and nine months are adjusted by a favourable impact of net adjusting items* of $1,019 million and $4,966 million respectively, compared with an adverse impact of net adjusting items of $9,196 million and $14,658 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 $1,816 million and $6,972 million for the third quarter and nine months in 2023 and an adverse impact of $9,224 million and $14,313 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, which decreased as forward prices fell during the nine months. Adjusting items also include a net impairment charge of $224 million and $1,284 million respectively, compared with net charges of $6 million and $523 million for the same periods in 2022.

•      After adjusting RC profit before interest and tax for adjusting items, the underlying RC profit before interest and tax* for the third quarter and nine months was $1,256 million and $6,945 million respectively, compared with $6,240 million and $12,915 million for the same periods in 2022.

•      The underlying RC profit for the third quarter and nine months, compared with the same periods in 2022, both reflect lower realizations, a higher depreciation, depletion and amortization charge, and a weak gas marketing and trading result in the third quarter.

Operational update

•      Reported production for the quarter was 946mboe/d, 3.6% lower than the same period in 2022. Underlying production* was 2.6% lower, mainly due to base decline and increased planned maintenance offset by major project* delivery.

•      Reported production for the nine months was 940mboe/d, 1.8% lower than the same period in 2022. Underlying production was 2.2% lower, mainly due to base decline partly offset by major project delivery.

•      Renewables pipeline* at the end of the quarter was 43.9GW (bp net), including 17.7GW bp net share of Lightsource bp's (LSbp's) pipeline. The renewables pipeline increased by 6.7GW during the nine months due to bp being awarded the rights to develop two North Sea offshore wind projects in Germany (4GW) and increases to LSbp's pipeline. In addition, there is over 13GW (bp net) of early stage opportunities in LSbp's hopper.

Strategic progress

gas

•        On 19 October bp, on behalf of the Tangguh production-sharing contract* partners (bp 40.22% operator), announced that the first cargo of liquefied natural gas (LNG) produced by the new third liquefaction train at the Tangguh LNG facility, in Papua Barat, Indonesia, has safely been loaded and sailed. The start-up of Tangguh Train 3 will add 3.8 million tonnes per annum (mtpa) of gross LNG production capacity to the existing facility, bringing total plant capacity to 11.4mtpa gross.

•        On 26 September bp announced that a bp and Shell joint venture (bp 50%, Shell 50%) had been awarded three deepwater exploration blocks off Trinidad's east coast. 

•        bp continues to work towards its aim of building an LNG portfolio of 30 million tonnes per year (mpta) by 2030:

◦       On July 28, bp and OMV announced the signing of a long-term agreement to supply of up to 1mtpa of LNG for 10 years from 2026. This builds on bp in May 2023 agreeing 2bcm per year of regasification capacity for 20 years at the Gate terminal in Rotterdam.

◦       On 5 September, bp announced its third long-term LNG offtake contract from Woodfibre's British Columbia LNG facility with firm offtake totalling 1.95mtpa and any additional production on a flexible offtake basis.

low carbon energy

•        Hydrogen and CCS

◦     On 13 October the Midwest Alliance for Clean Hydrogen (MachH2), of which bp is a member, announced it has been selected by the U.S. Department of Energy's Office of Clean Energy Demonstrations to develop a Regional Clean Hydrogen Hub. Under the proposals, it would include blue hydrogen* production at or near bp's Whiting refinery and a potential hydrogen mobility corridor across Indiana and neighbouring states.

◦     Hydrogen pipeline* at the end of the third quarter was 2.9mtpa, an increase of 1.1mtpa compared with the start of the year.

•        Offshore wind 

◦     bp and its partner Equinor continue to work on options for their US offshore wind projects to mitigate the effect of inflationary pressures and permitting delays. A filing on 7 June with the New York Public Services Commission (PSC) requesting to renegotiate the power purchase agreements associated with three wind farms off the coast of New York (Empire Wind 1 and 2, Beacon Wind 1) was rejected on 12 October. Equinor and bp are assessing the impact of the decision on these projects and future development plans. We have recognized a pre-tax impairment charge of $540 million in the third quarter related to these assets. The pre-tax charge is recorded through equity-accounted earnings and is classified as an 'other' adjusting item.

gas & low carbon energy (continued)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Profit (loss) before interest and tax    2,275  2,289  (2,970)    11,912  (1,741) 
Inventory holding (gains) losses*    14    (1)  (2) 
RC profit (loss) before interest and tax    2,275  2,289  (2,956)    11,911  (1,743) 
Net (favourable) adverse impact of adjusting items    (1,019)  (56)  9,196    (4,966)  14,658 
Underlying RC profit before interest and tax    1,256  2,233  6,240    6,945  12,915 
Taxation on an underlying RC basis    (448)  (575)  (1,478)    (1,984)  (3,204) 
Underlying RC profit before interest    808  1,658  4,762    4,961  9,711 
    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Depreciation, depletion and amortization               
Total depreciation, depletion and amortization    1,543  1,407  1,177    4,390  3,635 
               
Exploration write-offs               
Exploration write-offs    15  (1)  10    13 
               
Adjusted EBITDA*               
Total adjusted EBITDA    2,814  3,639  7,427    11,348  16,558 
               
Capital expenditure*               
gas    833  697  872    2,177  2,195 
low carbon energy    222  190  86    778  447 
Total capital expenditure    1,055  887  958    2,955  2,642 
    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2023  2023  2022    2023  2022 
Production (net of royalties)(a)               
Liquids* (mb/d)    106  103  117    107  117 
Natural gas (mmcf/d)    4,875  4,641  5,011    4,826  4,873 
Total hydrocarbons* (mboe/d)    946  903  981    940  957 
               
Average realizations*(b)               
Liquids ($/bbl)    76.69  73.57  88.03    76.51  92.93 
Natural gas ($/mcf)    5.38  5.53  9.85    6.11  8.74 
Total hydrocarbons* ($/boe)    36.82  36.96  60.80    40.23  55.91  
    30 September  30 June  30 September 
low carbon energy(c)    2023  2023  2022 
         
Renewables (bp net, GW)         
Installed renewables capacity*    2.5  2.4  2.0 
         
Developed renewables to FID*    6.1  6.1  4.6 
Renewables pipeline    43.9  39.6  26.9 
of which by geographical area:         
Renewables pipeline - Americas    18.4  17.8  17.5 
Renewables pipeline - Asia Pacific(d)    12.1  12.2  1.7 
Renewables pipeline - Europe    13.4  9.5  7.6 
Renewables pipeline - Other    0.1  0.1 
of which by technology:         
Renewables pipeline - offshore wind    9.3  5.3  5.2 
Renewables pipeline - onshore wind    6.1  6.3 
Renewables pipeline - solar    28.5  28.1  21.7 
Total Developed renewables to FID and Renewables pipeline    50.0  45.7  31.5  

oil production & operations

Financial results

•      The replacement cost (RC) profit before interest and tax for the third quarter and nine months was $3,427 million and $9,312 million respectively, compared with $6,965 million and $18,033 million for the same periods in 2022. The third quarter and nine months are adjusted by a favourable impact of net adjusting items* of $291 million and $80 million respectively, compared with a favourable impact of net adjusting items of $1,754 million and $2,237 million for the same periods in 2022.

•      After adjusting items, the underlying RC profit before interest and tax* for the third quarter and nine months was $3,136 million and $9,232 million respectively, compared with $5,211 million and $15,796 million for the same periods in 2022.

•      The underlying RC profit for the third quarter and nine months compared to the same periods in 2022, reflects lower realizations, and the impact of portfolio changes, partly offset by higher volumes.

Operational update

•      Reported production for the quarter was 1,382mboe/d, 5.0% higher than the third quarter of 2022. Underlying production* for the quarter was 5.1% higher compared with the third quarter of 2022 reflecting reduced seasonal maintenance, major projects* and bpx energy performance.

•      Reported production for the nine months was 1,371mboe/d, 6.1% higher than the same period of 2022. Underlying production for the nine months was 5.6% higher compared with the same period of 2022 reflecting bpx energy performance, reduced seasonal maintenance and major projects.

Strategic Progress

•      In August bpx energy successfully brought online 'Bingo', its second central processing facility in the Permian Basin. It is a low-emission, electrified facility that will enable further production growth for bpx energy in the basin (bp 100% operator).

•      During the third quarter the Azeri Central East (ACE) platform topsides were safely installed in the field. This is the 9th and most automated platform installed in the giant Azeri Chirag Gunashli (ACG) field with approximately 90,000 barrels a day installed capacity (bp 30.37% operator).

•      Regulatory approval was received on 8 September 2023 for the Murlach oil and gas development in the North Sea, a two well redevelopment of the Marnock-Skua field back to the ETAP (Eastern Trough Area Project) hub (bp 80% operator).

•      In September, bp and its coventurers in the Clair joint venture, made the final investment decision to proceed with the construction and operation of the Shetland Crossover Pipeline, reinforcing the gas export network and supporting UK security of supply (bp 45% operator).

•      Moving forward with concept selection for a bp-operated Tiber development project in the Gulf of Mexico.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Profit before interest and tax    3,426  2,568  6,966    9,312  18,028 
Inventory holding (gains) losses*    (1)   
RC profit before interest and tax    3,427  2,568  6,965    9,312  18,033 
Net (favourable) adverse impact of adjusting items    (291)  209  (1,754)    (80)  (2,237) 
Underlying RC profit before interest and tax    3,136  2,777  5,211    9,232  15,796 
Taxation on an underlying RC basis    (1,386)  (1,413)  (2,921)    (4,565)  (7,128) 
Underlying RC profit before interest    1,750  1,364  2,290    4,667  8,668  
    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Depreciation, depletion and amortization               
Total depreciation, depletion and amortization    1,432  1,370  1,381    4,129  4,181 
               
Exploration write-offs               
Exploration write-offs    59  242  180    352  310 
               
Adjusted EBITDA*               
Total adjusted EBITDA    4,627  4,389  6,772    13,713  20,287 
               
Capital expenditure*               
Total capital expenditure    1,644  1,478  1,386    4,642  3,848 
    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2023  2023  2022    2023  2022 
Production (net of royalties)(a)               
Liquids* (mb/d)    1,011  1,000  959    1,005  947 
Natural gas (mmcf/d)    2,155  2,140  2,075    2,118  2,001 
Total hydrocarbons* (mboe/d)    1,382  1,369  1,317    1,371  1,292 
               
Average realizations*(b)               
Liquids ($/bbl)    71.10  69.19  93.14    70.65  92.35 
Natural gas(c) ($/mcf)    3.44  3.23  12.12    4.37  10.54 
Total hydrocarbons*(c) ($/boe)    56.76  54.57  86.83    57.86  84.57  

Financial results

•      The replacement cost (RC) profit before interest and tax for the third quarter and nine months was $1,549 million and $4,784 million respectively, compared with $2,586 million and $8,098 million for the same periods in 2022. The third quarter and nine months are adjusted by an adverse impact of net adjusting items* of $506 million and $826 million respectively, compared with an adverse impact of net adjusting items of $139 million and $789 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 an adverse impact of $198 million for the quarter and $230 million for the nine months in 2023, compared with an adverse impact of $59 million and $498 million for the same periods in 2022.

•      After adjusting items, the underlying RC profit before interest and tax* for the third quarter and nine months was $2,055 million and $5,610 million respectively, compared with $2,725 million and $8,887 million for the same periods in 2022.

•      The customers & products result for the third quarter was lower than the same period in 2022, with lower results in both customers and refining. The result for the nine months was significantly lower than the same period in 2022, primarily reflecting a lower refining and oil trading performance.

•      customers - the convenience and mobility results, excluding Castrol, for the third quarter and nine months were lower than the same periods in 2022. In the third quarter, the benefits of a strong convenience performance and higher volumes were more than offset by a weaker retail performance, compared with the same period last year, which had benefited from higher margins as a result of falling cost of supply. In addition, the result included higher costs, including increased expenditure in our transition growth* engines, inflationary impacts and increased depreciation.

Castrol result for the third quarter was higher than the same period in 2022, primarily due to higher margins. The result for the nine months was lower, with higher margins more than offset by higher costs and adverse foreign exchange impacts.

•      products - the products results for the third quarter and nine months were lower compared with the same periods in 2022, primarily due to lower industry refining margins. In refining, the result for the third quarter reflected lower realized refining margins, including the impact of narrower North American heavy crude differentials, and lower commercial optimization opportunities compared to the strong performance in the same period last year. This was partially offset by lower maintenance activity. In addition, the result for the nine months was impacted by higher turnaround activity. The oil trading contribution for the third quarter was very strong compared to the average result in the same period last year. The result for the nine months however was lower, as the first half of 2022 benefited from an exceptionally strong oil trading performance.

Operational update 

•      bp-operated refining availability* for the third quarter and nine months was 96.3% and 96.0% respectively, higher compared with 94.3% and 94.4% for the same periods in 2022.

Strategic progress

•      In support of bp's convenience transition growth engine delivery, bp signed an agreement in August with Auchan to extend its successful strategic convenience partnership in Poland, with plans to add more than 100 EasyAuchan stores to its retail network by the end of 2025. In addition, in September, bp strengthened its BPme Rewards loyalty scheme with the launch of loyalty pricing, giving customers exclusive discounts on retail store products at around 300 bp company-owned retail sites across the UK.

•      In August, bp announced it had approved $500 million of investment in the US to begin building its EV network over the next two to three years. As part of this investment, in October, bp announced it had entered into an agreement with Tesla for the future purchase of $100 million of ultra-fast chargers.

•      In September, bp pulse, The EV Network and NEC Group, launched the UK's largest public EV charging hub at the NEC campus in Birmingham, UK. The new Gigahub™ at the NEC boasts 30 ultra-fast 150KW and 150 fast 7kW charge points enabling 180 EVs to charge simultaneously.

•      In September, Castrol opened the Castrol Americas Technology Center, in Wayne, New Jersey. This is a 12,000 square foot, state-of-the-art laboratory to develop and test fluids for electric vehicles, engine and driveline oils and industrial lubricants.   

•      In October, bp's Archaea Energy announced the official start-up of its original Archaea Modular Design (AMD) renewable natural gas plant in Medora, Indiana, located next to a landfill site owned by Rumpke Waste and Recycling.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Profit (loss) before interest and tax    3,143  (177)  (269)    5,044  10,880 
Inventory holding (gains) losses*    (1,594)  732  2,855    (260)  (2,782) 
RC profit before interest and tax    1,549  555  2,586    4,784  8,098 
Net (favourable) adverse impact of adjusting items    506  241  139    826  789 
Underlying RC profit before interest and tax    2,055  796  2,725    5,610  8,887 
Of which:(a)               
customers - convenience & mobility    670  701  1,137    1,762  2,338 
Castrol - included in customers    185  171  151    517  630 
products - refining & trading    1,385  95  1,588    3,848  6,549 
Taxation on an underlying RC basis    (167)  (271)  (725)    (1,215)  (1,908) 
Underlying RC profit before interest    1,888  525  2,000    4,395  6,979 

(a)      A reconciliation to RC profit before interest and tax by business is provided on page 29.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Adjusted EBITDA*(b)               
customers - convenience & mobility    1,151  1,149  1,448    3,032  3,290 
Castrol - included in customers    228  213  187    641  743 
products - refining & trading    1,819  541  1,974    5,184  7,726 
    2,970  1,690  3,422    8,216  11,016 
               
Depreciation, depletion and amortization               
Total depreciation, depletion and amortization    915  894  697    2,606  2,129 
               
Capital expenditure*               
customers - convenience & mobility    435  1,452  404    2,345  1,085 
Castrol - included in customers    60  44  42    172  137 
products - refining & trading    367  406  309    1,305  1,018 
Total capital expenditure    802  1,858  713    3,650  2,103 

(b)     A reconciliation to RC profit before interest and tax by business is provided on page 29.

Retail(c)    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2023  2023  2022    2023  2022 
bp retail sites* - total (#)    21,150  21,100  20,550    21,150  20,550 
Strategic convenience sites*    2,750  2,750  2,250    2,750  2,250 

(c)      Reported to the nearest 50.

Marketing sales of refined products (mb/d)    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2023  2023  2022    2023  2022 
US    1,280  1,275  1,143    1,212  1,140 
Europe    1,093  1,056  1,098    1,041  1,005 
Rest of World    474  472  451    469  454 
    2,847  2,803  2,692    2,722  2,599 
Trading/supply sales of refined products    392  353  355    359  359 
Total sales volume of refined products    3,239  3,156  3,047    3,081  2,958  
Refining marker margin*    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2023  2023  2022    2023  2022 
bp average refining marker margin (RMM)(d) ($/bbl)    31.8  24.7  35.5    28.2  33.4 

(d)     The RMM in the quarter is calculated based on bp's current refinery portfolio. On a comparative basis, the third quarter and nine months 2022 RMM would be $35.4/bbl and $33.4/bbl respectively.

Refinery throughputs (mb/d)    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2023  2023  2022    2023  2022 
US    690  638  703    671  700 
Europe    760  726  809    773  818 
Rest of World      29 
Total refinery throughputs    1,450  1,364  1,512    1,444  1,547 
bp-operated refining availability* (%)    96.3  95.7  94.3    96.0  94.4  

Financial results

•      The replacement cost (RC) loss before interest and tax for the third quarter and nine months was $500 million and $887 million respectively, compared with a loss of $1,093 million and $26,840 million for the same periods in 2022. The third quarter and nine months are adjusted by an adverse impact of net adjusting items* of $197 million and $118 million respectively, compared with an adverse impact of net adjusting items of $688 million and $25,975 million for the same periods in 2022. Adjusting items include impacts of fair value accounting effects* which are an adverse impact of $146 million for the quarter and a favourable impact of $51 million for the nine months in 2023, an adverse impact of $785 million and $1,896 million for the same periods in 2022. The adjusting items for the nine months in 2022 mainly relate to Rosneft.

•      After adjusting RC loss for net adjusting items, the underlying RC loss before interest and tax* for the third quarter and nine months was $303 million and $769 million respectively, compared with a loss of $405 million and $865 million for the same periods in 2022.

Strategic progress

•      In August bp ventures invested $5 million in Advanced Ionics, a company developing a new category of hydrogen electrolyzers, supporting the expansion of green hydrogen* production.

•      In August bp ventures announced that it had invested $5 million in Dynamon, which provides advanced data analytics and AI tools helping the road transport industry maximize sustainability.

•      In July bp ventures invested $30 million in Electric Hydrogen, a company which is developing high efficiency and lower cost electrolyzers with the aim of delivering its first 100MW product in 2024.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Profit (loss) before interest and tax    (500)  (297)  (1,093)    (887)  (26,840) 
Inventory holding (gains) losses*     
RC profit (loss) before interest and tax    (500)  (297)  (1,093)    (887)  (26,840) 
Net (favourable) adverse impact of adjusting items(a)    197  127  688    118  25,975 
Underlying RC profit (loss) before interest and tax    (303)  (170)  (405)    (769)  (865) 
Taxation on an underlying RC basis    162  10  206    201  396 
Underlying RC profit (loss) before interest    (141)  (160)  (199)    (568)  (469) 

(a)      Includes fair value accounting effects relating to the hybrid bonds that were issued on 17 June 2020. See page 32 for more information.

other businesses & corporate (excluding Rosneft)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Profit (loss) before interest and tax    (500)  (297)  (1,093)    (887)  (2,807) 
Inventory holding (gains) losses*     
RC profit (loss) before interest and tax    (500)  (297)  (1,093)    (887)  (2,807) 
Net (favourable) adverse impact of adjusting items    197  127  688    118  1,942 
Underlying RC profit (loss) before interest and tax    (303)  (170)  (405)    (769)  (865) 
Taxation on an underlying RC basis    162  10  206    201  396 
Underlying RC profit (loss) before interest    (141)  (160)  (199)    (568)  (469) 

other businesses & corporate (Rosneft)

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ 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     

Financial statements

Group income statement

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
               
Sales and other operating revenues (Note 5)    53,269  48,538  55,011    157,989  172,135 
Earnings from joint ventures - after interest and tax    (198)  360  498    357  939 
Earnings from associates - after interest and tax    271  231  275    675  1,273 
Interest and other income    410  378  159    1,036  495 
Gains on sale of businesses and fixed assets    264  (28)  1,866    389  3,693 
Total revenues and other income    54,016  49,479  57,809    160,446  178,535 
Purchases    29,951  29,172  39,993    88,245  106,942 
Production and manufacturing expenses    6,080  6,231  7,193    19,293  21,769 
Production and similar taxes    456  404  639    1,334  1,768 
Depreciation, depletion and amortization (Note 6)    4,145  3,923  3,467    11,868  10,604 
Net impairment and losses on sale of businesses and fixed assets (Note 3)    542  1,269  417    1,899  26,893 
Exploration expense    97  293  225    496  445 
Distribution and administration expenses    4,458  3,834  3,262    12,039  9,795 
Profit (loss) before interest and taxation    8,287  4,353  2,613    25,272  319 
Finance costs    1,039  920  649    2,802  1,869 
Net finance (income) expense relating to pensions and other post-retirement benefits    (61)  (61)  (16)    (180)  (53) 
Profit (loss) before taxation    7,309  3,494  1,980    22,650  (1,497) 
Taxation    2,240  1,541  3,964    7,206  11,021 
Profit (loss) for the period    5,069  1,953  (1,984)    15,444  (12,518) 
Attributable to               
bp shareholders    4,858  1,792  (2,163)    14,868  (13,290) 
Non-controlling interests    211  161  179    576  772 
    5,069  1,953  (1,984)    15,444  (12,518) 
               
Earnings per share (Note 7)               
Profit (loss) for the period attributable to bp shareholders               
Per ordinary share (cents)               
Basic    28.24  10.22  (11.45)    84.77  (69.01) 
Diluted    27.59  10.01  (11.45)    82.99  (69.01) 
Per ADS (dollars)               
Basic    1.69  0.61  (0.69)    5.09  (4.14) 
Diluted    1.66  0.60  (0.69)    4.98  (4.14) 

Condensed group statement of comprehensive income

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
               
Profit (loss) for the period    5,069  1,953  (1,984)    15,444  (12,518) 
Other comprehensive income               
Items that may be reclassified subsequently to profit or loss               
Currency translation differences(a)    (590)  11  (1,725)    (126)  (5,928) 
Exchange (gains) losses on translation of foreign operations reclassified to gain or loss on sale of businesses and fixed assets(b)    (2)    (2)  10,791 
Cash flow hedges and costs of hedging    (56)  (56)  (142)    434  179 
Share of items relating to equity-accounted entities, net of tax    25  (27)  (134)    (205)  10 
Income tax relating to items that may be reclassified    (69)  71  (54)    (74)  (226) 
    (692)  (1)  (2,055)    27  4,826 
Items that will not be reclassified to profit or loss               
Remeasurements of the net pension and other post-retirement benefit liability or asset    (111)  (855)  112    (1,053)  1,848 
Cash flow hedges that will subsequently be transferred to the balance sheet    (1)  (1)    (1)  (5) 
Income tax relating to items that will not be reclassified    57  308  19    388  (470) 
    (55)  (547)  130    (666)  1,373 
Other comprehensive income    (747)  (548)  (1,925)    (639)  6,199 
Total comprehensive income    4,322  1,405  (3,909)    14,805  (6,319) 
Attributable to               
bp shareholders    4,140  1,240  (4,042)    14,241  (6,978) 
Non-controlling interests    182  165  133    564  659 
    4,322  1,405  (3,909)    14,805  (6,319)  

Condensed group statement of changes in equity

    bp shareholders'  Non-controlling interests  Total 
$ million    equity  Hybrid bonds  Other interest  equity 
At 1 January 2023    67,553  13,390  2,047  82,990 
           
Total comprehensive income    14,241  438  126  14,805 
Dividends    (3,598)  (326)  (3,924) 
Repurchase of ordinary share capital    (6,666)  (6,666) 
Share-based payments, net of tax    531  531 
Issue of perpetual hybrid bonds    (1)  163  162 
Payments on perpetual hybrid bonds    (5)  (494)  (499) 
Transactions involving non-controlling interests, net of tax    363  (86)  277 
At 30 September 2023    72,418  13,497  1,761  87,676 
           
    bp shareholders'  Non-controlling interests  Total 
$ million    equity(a)  Hybrid bonds  Other interest  equity 
At 1 January 2022    75,463  13,041  1,935  90,439 
           
Total comprehensive income    (6,978)  383  276  (6,319) 
Dividends    (3,267)  (194)  (3,461) 
Issue of ordinary share capital(b)    820  820 
Repurchase of ordinary share capital    (7,988)  (7,988) 
Share-based payments, net of tax    631  631 
Issue of perpetual hybrid bonds    (3)  325  322 
Payments on perpetual hybrid bonds    15  (462)  (447) 
Transactions involving non-controlling interests, net of tax    (512)  (152)  (664) 
At 30 September 2022    58,181  13,287  1,865  73,333  

Group balance sheet

    30 September  31 December 
$ million    2023  2022 
Non-current assets       
Property, plant and equipment    107,163  106,044 
Goodwill    12,283  11,960 
Intangible assets    9,997  10,200 
Investments in joint ventures    12,635  12,400 
Investments in associates    7,954  8,201 
Other investments    2,337  2,670 
Fixed assets    152,369  151,475 
Loans    1,656  1,271 
Trade and other receivables    1,066  1,092 
Derivative financial instruments    9,495  12,841 
Prepayments    600  576 
Deferred tax assets    3,470  3,908 
Defined benefit pension plan surpluses    8,173  9,269 
    176,829  180,432 
Current assets       
Loans    363  315 
Inventories    25,671  28,081 
Trade and other receivables    31,558  34,010 
Derivative financial instruments    12,950  11,554 
Prepayments    1,333  2,092 
Current tax receivable    674  621 
Other investments    932  578 
Cash and cash equivalents    29,926  29,195 
    103,407  106,446 
Assets classified as held for sale (Note 2)    1,242 
    103,407  107,688 
Total assets    280,236  288,120 
Current liabilities       
Trade and other payables    60,440  63,984 
Derivative financial instruments    6,542  12,618 
Accruals    5,958  6,398 
Lease liabilities    2,536  2,102 
Finance debt    2,872  3,198 
Current tax payable    3,054  4,065 
Provisions    4,193  6,332 
    85,595  98,697 
Liabilities directly associated with assets classified as held for sale (Note 2)    321 
    85,595  99,018 
Non-current liabilities       
Other payables    9,465  10,387 
Derivative financial instruments    11,409  13,537 
Accruals    1,273  1,233 
Lease liabilities    8,343  6,447 
Finance debt    45,938  43,746 
Deferred tax liabilities    10,293  10,526 
Provisions    15,497  14,992 
Defined benefit pension plan and other post-retirement benefit plan deficits    4,747  5,244 
    106,965  106,112 
Total liabilities    192,560  205,130 
Net assets    87,676  82,990 
Equity       
bp shareholders' equity    72,418  67,553 
Non-controlling interests    15,258  15,437 
Total equity    87,676  82,990  

Condensed group cash flow statement

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Operating activities               
Profit (loss) before taxation    7,309  3,494  1,980    22,650  (1,497) 
Adjustments to reconcile profit (loss) before taxation to net cash provided by operating activities               
Depreciation, depletion and amortization and exploration expenditure written off    4,219  4,164  3,657    12,233  10,922 
Net impairment and (gain) loss on sale of businesses and fixed assets    278  1,297  (1,449)    1,510  23,200 
Earnings from equity-accounted entities, less dividends received    421  (31)  (391)    391  (1,412) 
Net charge for interest and other finance expense, less net interest paid    136  102  72    301  210 
Share-based payments    298  243  251    519  629 
Net operating charge for pensions and other post-retirement benefits, less contributions and benefit payments for unfunded plans    (40)  (47)  (15)    (130)  (197) 
Net charge for provisions, less payments    (342)  (221)  173    (1,662)  1,453 
Movements in inventories and other current and non-current assets and liabilities    (783)  (742)  6,764    (5,280)  577 
Income taxes paid    (2,749)  (1,966)  (2,754)    (7,870)  (6,524) 
Net cash provided by operating activities    8,747  6,293  8,288    22,662  27,361 
Investing activities               
Expenditure on property, plant and equipment, intangible and other assets    (3,456)  (3,453)  (3,105)    (10,038)  (8,373) 
Acquisitions, net of cash acquired    (9)  (804)  (3)    (761)  (8) 
Investment in joint ventures    (102)  (50)  (40)    (692)  (493) 
Investment in associates    (36)  (7)  (46)    (51)  (87) 
Total cash capital expenditure    (3,603)  (4,314)  (3,194)    (11,542)  (8,961) 
Proceeds from disposal of fixed assets    59  28  12    102  682 
Proceeds from disposal of businesses, net of cash disposed    79  60  594    924  1,254 
Proceeds from loan repayments    12  21  15    39  60 
Cash provided from investing activities    150  109  621    1,065  1,996 
Net cash used in investing activities    (3,453)  (4,205)  (2,573)    (10,477)  (6,965) 
Financing activities               
Net issue (repurchase) of shares (Note 7)    (2,047)  (2,073)  (2,876)    (6,568)  (6,756) 
Lease liability payments    (663)  (620)  (478)    (1,838)  (1,448) 
Proceeds from long-term financing    3,643    6,046  2,003 
Repayments of long-term financing    (264)  (2,828)  (4,035)    (3,891)  (9,500) 
Net increase (decrease) in short-term debt    (71)  (348)  (618)    (948)  (1,582) 
Issue of perpetual hybrid bonds    30  87  194    162  322 
Payments relating to perpetual hybrid bonds    (258)  (250)  (180)    (744)  (489) 
Payments relating to transactions involving non-controlling interests (Other interest)    (2)    (180)  (8) 
Receipts relating to transactions involving non-controlling interests (Other interest)    527    536  10 
Dividends paid - bp shareholders    (1,249)  (1,153)  (1,140)    (3,585)  (3,270) 
 - non-controlling interests    (191)  (67)  (66)    (326)  (194) 
Net cash provided by (used in) financing activities    (4,178)  (3,607)  (9,197)    (11,336)  (20,912) 
Currency translation differences relating to cash and cash equivalents    (104)  (322)    (118)  (861) 
Increase (decrease) in cash and cash equivalents    1,012  (1,519)  (3,804)    731  (1,377) 
Cash and cash equivalents at beginning of period    28,914  30,433  33,108    29,195  30,681 
Cash and cash equivalents at end of period    29,926  28,914  29,304    29,926  29,304  

 Analysis of replacement cost profit (loss) before interest and tax and reconciliation to profit (loss) before taxation

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
gas & low carbon energy    2,275  2,289  (2,956)    11,911  (1,743) 
oil production & operations    3,427  2,568  6,965    9,312  18,033 
customers & products    1,549  555  2,586    4,784  8,098 
other businesses & corporate    (500)  (297)  (1,093)    (887)  (26,840) 
    6,751  5,115  5,502    25,120  (2,452) 
Consolidation adjustment - UPII*    (57)  (30)  (21)    (109)  (8) 
RC profit (loss) before interest and tax    6,694  5,085  5,481    25,011  (2,460) 
Inventory holding gains (losses)*               
gas & low carbon energy    (14)   
oil production & operations    (1)    (5) 
customers & products    1,594  (732)  (2,855)    260  2,782 
Profit (loss) before interest and tax    8,287  4,353  2,613    25,272  319 
Finance costs    1,039  920  649    2,802  1,869 
Net finance expense/(income) relating to pensions and other post-retirement benefits    (61)  (61)  (16)    (180)  (53) 
Profit (loss) before taxation    7,309  3,494  1,980    22,650  (1,497) 
               
RC profit (loss) before interest and tax*               
US    1,467  2,244  3,954    6,786  9,553 
Non-US    5,227  2,841  1,527    18,225  (12,013) 
    6,694  5,085  5,481    25,011  (2,460) 

 . Sales and other operating revenues

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
By segment               
gas & low carbon energy    10,313  10,428  8,053    38,627  29,462 
oil production & operations    6,225  5,777  8,599    18,155  26,261 
customers & products    42,908  38,051  47,831    119,841  145,551 
other businesses & corporate    672  590  552    2,000  1,520 
    60,118  54,846  65,035    178,623  202,794 
               
Less: sales and other operating revenues between segments               
gas & low carbon energy    367  840  2,785    1,743  6,354 
oil production & operations    5,747  5,236  7,589    17,244  23,378 
customers & products    508  (180)  (276)    472  808 
other businesses & corporate    227  412  (74)    1,175  119 
    6,849  6,308  10,024    20,634  30,659 
               
External sales and other operating revenues               
gas & low carbon energy    9,946  9,588  5,268    36,884  23,108 
oil production & operations    478  541  1,010    911  2,883 
customers & products    42,400  38,231  48,107    119,369  144,743 
other businesses & corporate    445  178  626    825  1,401 
Total sales and other operating revenues    53,269  48,538  55,011    157,989  172,135 
               
By geographical area               
US    22,032  20,065  22,451    61,257  68,934 
Non-US    43,382  38,492  45,111    128,224  142,239 
    65,414  58,557  67,562    189,481  211,173 
Less: sales and other operating revenues between areas    12,145  10,019  12,551    31,492  39,038 
    53,269  48,538  55,011    157,989  172,135 
               
Revenues from contracts with customers               
Sales and other operating revenues include the following in relation to revenues from contracts with customers:               
Crude oil    496  520  1,322    1,653  5,500 
Oil products    35,486  31,218  40,036    96,845  115,054 
Natural gas, LNG and NGLs    6,396  5,841  11,106    21,881  30,730 
Non-oil products and other revenues from contracts with customers    2,765  2,750  2,267    7,387  6,437 
Revenue from contracts with customers    45,143  40,329  54,731    127,766  157,721 
Other operating revenues(a)    8,126  8,209  280    30,223  14,414 
Total sales and other operating revenues    53,269  48,538  55,011    157,989  172,135 

(a)      Principally relates to commodity derivative transactions including sales of bp own production in trading books. Depreciation, depletion and amortization

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Total depreciation, depletion and amortization by segment               
gas & low carbon energy    1,543  1,407  1,177    4,390  3,635 
oil production & operations    1,432  1,370  1,381    4,129  4,181 
customers & products    915  894  697    2,606  2,129 
other businesses & corporate    255  252  212    743  659 
    4,145  3,923  3,467    11,868  10,604 
Total depreciation, depletion and amortization by geographical area               
US    1,479  1,338  1,180    4,071  3,422 
Non-US    2,666  2,585  2,287    7,797  7,182 
    4,145  3,923  3,467    11,868  10,604 

. Earnings per share and shares in issue

Basic earnings per ordinary share (EpS) amounts are calculated by dividing the profit (loss) for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Against the authority granted at bp's 2022 annual general meeting, 331 million ordinary shares repurchased for cancellation were settled during the third quarter 2023 for a total cost of $2,047 million. A further 92 million ordinary shares were repurchased between the end of the reporting period and the date when the financial statements are authorised for issue for a total cost of $595 million. This amount has been accrued at 30 September 2023. The number of shares in issue is reduced when shares are repurchased, but is not reduced in respect of the period-end commitment to repurchase shares subsequent to the end of the period.

The calculation of EpS is performed separately for each discrete quarterly period, and for the year-to-date period. As a result, the sum of the discrete quarterly EpS amounts in any particular year-to-date period may not be equal to the EpS amount for the year-to-date period.

For the diluted EpS calculation the weighted average number of shares outstanding during the period is adjusted for the number of shares that are potentially issuable in connection with employee share-based payment plans using the treasury stock method.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Results for the period               
Profit (loss) for the period attributable to bp shareholders    4,858  1,792  (2,163)    14,868  (13,290) 
Less: preference dividend     
Profit (loss) attributable to bp ordinary shareholders    4,858  1,791  (2,163)    14,867  (13,291) 
               
Number of shares (thousand)(a)(b)               
Basic weighted average number of shares outstanding    17,204,488  17,523,778  18,885,725    17,537,170  19,260,486 
ADS equivalent(c)    2,867,414  2,920,629  3,147,620    2,922,861  3,210,081 
               
Weighted average number of shares outstanding used to calculate diluted earnings per share    17,609,601  17,900,984  18,885,725    17,914,383  19,260,486 
ADS equivalent(c)    2,934,933  2,983,497  3,147,620    2,985,730  3,210,081 
               
Shares in issue at period-end    17,061,004  17,379,366  18,566,848    17,061,004  18,566,848 
ADS equivalent(c)    2,843,500  2,896,561  3,094,474    2,843,500  3,094,474 

(a)      Excludes treasury shares and includes certain shares that will be issued in the future under employee share-based payment plans.

(b)     If the inclusion of potentially issuable shares would decrease loss per share, the potentially issuable shares are excluded from the weighted average number of shares outstanding used to calculate diluted earnings per share. The numbers of potentially issuable shares that have been excluded from the calculation for the third quarter 2022 and nine months 2022 are 274,005 thousand (ADS equivalent 45,668 thousand) and 217,311 thousand (ADS equivalent 36,218 thousand).

(c)      One ADS is equivalent to six ordinary shares.

Dividends

Dividends payable

BP today announced an interim dividend of 7.270 cents per ordinary share which is expected to be paid on 19 December 2023 to ordinary shareholders and American Depositary Share (ADS) holders on the register on 10 November 2023. The ex-dividend date will be 9 November 2023. The corresponding amount in sterling is due to be announced on 6 December 2023, calculated based on the average of the market exchange rates over three dealing days between 30 November 2023 and 4 December 2023. Holders of ADSs are expected to receive $0.43620 per ADS (less applicable fees). The board has decided not to offer a scrip dividend alternative in respect of the third quarter 2023 dividend. Ordinary shareholders and ADS holders (subject to certain exceptions) will be able to participate in a dividend reinvestment programme. Details of the third quarter dividend and timetable are available at bp.com/dividends and further details of the dividend reinvestment programmes are available at bp.com/drip.

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2023  2023  2022    2023  2022 
Dividends paid per ordinary share               
cents    7.270  6.610  6.006    20.490  16.926 
pence    5.732  5.309  5.168    16.592  13.683 
Dividends paid per ADS (cents)    43.62  39.66  36.04    122.94  101.56 

 Net debt

Net debt*    30 September  30 June  30 September 
$ million    2023  2023  2022 
Finance debt(a)    48,810  49,738  46,560 
Fair value (asset) liability of hedges related to finance debt(b)    3,440  2,836  4,746 
    52,250  52,574  51,306 
Less: cash and cash equivalents    29,926  28,914  29,304 
Net debt(c)    22,324  23,660  22,002 
Total equity    87,676  85,603  73,333 
Gearing*    20.3%  21.7%  23.1%  

Additional information

Capital expenditure*

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Capital expenditure               
Organic capital expenditure*    3,597  3,233  3,191    10,325  8,609 
Inorganic capital expenditure*(a)    1,081    1,217  352 
    3,603  4,314  3,194    11,542  8,961 
    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Capital expenditure by segment               
gas & low carbon energy    1,055  887  958    2,955  2,642 
oil production & operations    1,644  1,478  1,386    4,642  3,848 
customers & products(a)    802  1,858  713    3,650  2,103 
other businesses & corporate    102  91  137    295  368 
    3,603  4,314  3,194    11,542  8,961 
Capital expenditure by geographical area               
US    1,583  2,661  1,377    5,941  3,727 
Non-US    2,020  1,653  1,817    5,601  5,234 
    3,603  4,314  3,194    11,542  8,961  

Adjusting items*

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
gas & low carbon energy               
Gains on sale of businesses and fixed assets      16  12 
Net impairment and losses on sale of businesses and fixed assets(a)    (224)  (1,058)  (6)    (1,284)  (523) 
Environmental and other provisions     
Restructuring, integration and rationalization costs    (1)   
Fair value accounting effects(b)(c)    1,816  1,222  (9,224)    6,972  (14,313) 
Other(d)    (572)  (110)  31    (738)  161 
    1,019  56  (9,196)    4,966  (14,658) 
oil production & operations               
Gains on sale of businesses and fixed assets(e)    246  (31)  1,851    352  3,378 
Net impairment and losses on sale of businesses and fixed assets    (52)  (140)  (326)    (184)  (1,262) 
Environmental and other provisions    99  (44)  244    98 
Restructuring, integration and rationalization costs    (1)    (1)  (14) 
Fair value accounting effects     
Other    (2)  (18)    (93)  37 
    291  (209)  1,754    80  2,237 
customers & products               
Gains on sale of businesses and fixed assets    18  10    21  302 
Net impairment and losses on sale of businesses and fixed assets    (242)  (36)  (85)    (361)  (532) 
Environmental and other provisions    (1)  (1)    (11)  (36) 
Restructuring, integration and rationalization costs    (4)   
Fair value accounting effects(c)    (198)  (109)  (59)    (230)  (498) 
Other    (85)  (98)    (245)  (31) 
    (506)  (241)  (139)    (826)  (789) 
other businesses & corporate               
Gains on sale of businesses and fixed assets     
Net impairment and losses on sale of businesses and fixed assets    (23)  (31)    (60)  (16) 
Environmental and other provisions    (8)  (17)  67    (39)  (25) 
Restructuring, integration and rationalization costs    (3)    (13)  16 
Fair value accounting effects(c)    (146)  (48)  (785)    51  (1,896) 
Rosneft      (24,033) 
Gulf of Mexico oil spill    (19)  (18)  (21)    (46)  (61) 
Other    (13)  44    (11)  40 
    (197)  (127)  (688)    (118)  (25,975) 
Total before interest and taxation    607  (521)  (8,269)    4,102  (39,185) 
Finance costs(f)    (96)  (119)  (68)    (319)  (256) 
Total before taxation    511  (640)  (8,337)    3,783  (39,441) 
Taxation on adjusting items(g)    (158)  160  988    (203)  1,998 
Taxation - tax rate change effect of UK energy profits levy(h)    232  (778)    232  (778) 
Total after taxation for period(i)    353  (248)  (8,127)    3,812  (38,221)  

Net debt including leases

Net debt including leases*    30 September  30 June  30 September 
$ million    2023  2023  2022 
Net debt    22,324  23,660  22,002 
Lease liabilities    10,879  10,961  7,895 
Net partner (receivable) payable for leases entered into on behalf of joint operations    (124)  (136)  22 
Net debt including leases    33,079  34,485  29,919 
Total equity    87,676  85,603  73,333 
Gearing including leases*    27.4%  28.7%  29.0% 

Gulf of Mexico oil spill

    30 September  31 December 
$ million    2023  2022 
Gulf of Mexico oil spill payables and provisions    (8,639)  (9,566) 
Of which - current    (1,122)  (1,216) 
       
Deferred tax asset    1,306  1,444  

Working capital* reconciliation

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Movements in inventories and other current and non-current assets and liabilities as per condensed group cash flow statement(a)    (783)  (742)  6,764    (5,280)  577 
Adjusted for inventory holding gains (losses)* (Note 4)    1,593  (732)  (2,868)    261  2,779 
Adjusted for fair value accounting effects relating to subsidiaries    1,443  1,053  (10,068)    6,738  (16,561) 
Other adjusting items(b)    (300)  558  645    (1,040)  2,094 
Working capital release (build) after adjusting for net inventory gains (losses), fair value accounting effects and other adjusting items    1,953  137  (5,527)    679  (11,111)  

Surplus cash flow* reconciliation

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Sources:               
Net cash provided by operating activities    8,747  6,293  8,288    22,662  27,361 
Cash provided from investing activities    150  109  621    1,065  1,996 
Other(a)    503  (42)  (31)    402  454 
Cash inflow    9,400  6,360  8,878    24,129  29,811 
               
Uses:               
Lease liability payments    (663)  (620)  (478)    (1,838)  (1,448) 
Payments on perpetual hybrid bonds    (258)  (250)  (180)    (744)  (489) 
Dividends paid - BP shareholders    (1,249)  (1,153)  (1,140)    (3,585)  (3,270) 
- non-controlling interests    (191)  (67)  (66)    (326)  (194) 
Total capital expenditure*    (3,603)  (4,314)  (3,194)    (11,542)  (8,961) 
Net repurchase of shares relating to employee share schemes    (225)  (225)    (675)  (500) 
Payments relating to transactions involving non-controlling interests    (2)    (180)  (8) 
Currency translation differences relating to cash and cash equivalents    (104)  (322)    (118)  (861) 
Cash outflow    (6,293)  (6,629)  (5,382)    (19,008)  (15,731) 
               
Surplus cash flow    3,107  (269)  3,496    5,121  14,080 
               

Adjusted earnings before interest, taxation, depreciation and amortization (adjusted EBITDA)*

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
Profit (loss) for the period    5,069  1,953  (1,984)    15,444  (12,518) 
Finance costs    1,039  920  649    2,802  1,869 
Net finance (income) expense relating to pensions and other post-retirement benefits    (61)  (61)  (16)    (180)  (53) 
Taxation    2,240  1,541  3,964    7,206  11,021 
Profit before interest and tax    8,287  4,353  2,613    25,272  319 
Inventory holding (gains) losses*, before tax    (1,593)  732  2,868    (261)  (2,779) 
RC profit (loss) before interest and tax    6,694  5,085  5,481    25,011  (2,460) 
Net (favourable) adverse impact of adjusting items*, before interest and tax    (607)  521  8,269    (4,102)  39,185 
Underlying RC profit before interest and tax    6,087  5,606  13,750    20,909  36,725 
Add back:               
Depreciation, depletion and amortization    4,145  3,923  3,467    11,868  10,604 
Exploration expenditure written off    74  241  190    365  318 
Adjusted EBITDA    10,306  9,770  17,407    33,142  47,647 

Reconciliation of customers & products RC profit before interest and tax to underlying RC profit before interest and tax* to adjusted EBITDA* by business

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
$ million    2023  2023  2022    2023  2022 
RC profit before interest and tax for customers & products    1,549  555  2,586    4,784  8,098 
Less: Adjusting items* gains (charges)    (506)  (241)  (139)    (826)  (789) 
Underlying RC profit before interest and tax for customers & products    2,055  796  2,725    5,610  8,887 
By business:               
customers - convenience & mobility    670  701  1,137    1,762  2,338 
Castrol - included in customers    185  171  151    517  630 
products - refining & trading    1,385  95  1,588    3,848  6,549 
               
Add back: Depreciation, depletion and amortization    915  894  697    2,606  2,129 
By business:               
customers - convenience & mobility    481  448  311    1,270  952 
Castrol - included in customers    43  42  36    124  113 
products - refining & trading    434  446  386    1,336  1,177 
               
Adjusted EBITDA for customers & products    2,970  1,690  3,422    8,216  11,016 
By business:               
customers - convenience & mobility    1,151  1,149  1,448    3,032  3,290 
Castrol - included in customers    228  213  187    641  743 
products - refining & trading    1,819  541  1,974    5,184  7,726 

Realizations* and marker prices

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2023  2023  2022    2023  2022 
Average realizations(a)               
Liquids* ($/bbl)               
US    63.95  60.53  82.23    62.44  81.05 
Europe    90.76  75.14  94.21    80.59  104.12 
Rest of World    78.34  79.35  101.82    80.05  98.93 
BP Average    71.85  69.76  92.44    71.40  92.42 
Natural gas ($/mcf)               
US    2.24  1.58  7.25    2.09  5.88 
Europe(b)    11.22  12.46  36.72    17.20  32.73 
Rest of World    5.38  5.53  9.85    6.11  8.74 
BP Average(b)    4.88  4.91  10.41    5.66  9.18 
Total hydrocarbons* ($/boe)               
US    45.39  40.84  66.82    43.77  63.19 
Europe(b)    80.61  74.20  137.66    87.43  134.42 
Rest of World    45.61  45.97  71.19    48.73  68.34 
BP Average(b)    47.28  46.27  74.08    49.47  71.17 
Average oil marker prices ($/bbl)               
Brent    86.75  78.05  100.84    82.07  105.51 
West Texas Intermediate    82.54  73.56  91.63    77.36  98.46 
Western Canadian Select    65.42  60.07  69.02    60.72  79.72 
Alaska North Slope    87.95  78.26  98.84    81.74  102.34 
Mars    82.99  73.17  89.54    76.80  96.01 
Urals (NWE - cif)    73.62  54.56  71.24    58.20  78.58 
Average natural gas marker prices               
Henry Hub gas price(c) ($/mmBtu)    2.54  2.09  8.20    2.69  6.78 
UK Gas - National Balancing Point (p/therm)    82.04  83.18  281.01    99.01  216.37 

(a)      Based on sales of consolidated subsidiaries only - this excludes equity-accounted entities.

(b)     Realizations calculation methodology has been changed to reflect gas price fluctuations within the North Sea region. Third quarter 2022 and nine months 2022 were restated. There is no impact on financial results.

(c)      Henry Hub First of Month Index.

Exchange rates

    Third  Second  Third    Nine  Nine 
    quarter  quarter  quarter    months  months 
    2023  2023  2022    2023  2022 
$/£ average rate for the period    1.27  1.25  1.18    1.24  1.25 
$/£ period-end rate    1.22  1.26  1.12    1.22  1.12 
               
$/€ average rate for the period    1.09  1.09  1.01    1.08  1.06 
$/€ period-end rate    1.06  1.09  0.98    1.06  0.98 
               
$/AUD average rate for the period    0.65  0.67  0.68    0.67  0.71 
$/AUD period-end rate    0.64  0.66  0.65    0.64  0.65 
               
Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd