1Q Q 2012 R Results P Presenta ation: 1 May 20 012 Jes ssica - PDF document

BP 1Q12 Resu lts Presenta ation 1Q Q 2012 R Results P Presenta ation: 1 May 20 012 Jes ssica Mit chell, Dir ector of G Group Inv vestor Re elations Hell lo and welc come to BP’ ’s first-quar rter 2012 re sults webc ast and con nference ca ll. I’m Jessica Mit tchell, BP’s Head of In nvestor Rela ations and jo oining me to oday is Bria an Gilv vary, our Ch ief Financia al Officer. Befo ore we star rt, I’d like to o draw your r attention t o our cautio onary statem ment. 1

BP 1Q12 Resu lts Presenta ation Dur ing today’s presentatio on, we will make forwa ard-looking statements s that refer to our estimates, plans and e expectation ns. Actual re esults and o outcomes co ould differ mat terially due to factors t hat we note e on this sli de and in o ur UK and S SEC filings. Plea ase refer to our Annua l Report, St tock Exchan nge Announ ncement an d SEC filing gs for m more detail s. These do ocuments a are available e on our we bsite. Tha nk you, and d now over to Brian. 2

BP 1Q12 Resu lts Presenta ation Bria an Gilvary y, Chief F Financial Officer Tha nk you Jess s and welco ome to all o of you joinin ng us today on the call. 3

BP 1Q12 Resu lts Presenta ation I’d l ike to start with an ove erview of fi rst quarter f financial pe rformance.  Our first qu uarter under rlying replac cement cos st profit afte er interest a and tax was s $4.8 billion, , down 13% % on the sa me period a a year ago a and 4% low wer than the e fourth quar rter of 2011 ;  First quarte er operating g cash flow was $3.4 b billion, includ ding $1.2 bi illion of pos t-tax Gulf of Mex xico oil spill expenses;  1Q operatin ng cash flow w was impa acted by hig gher workin g capital inc cluding the effect of hi gher oil pric ces and inve entory build ds;  Group unde erlying repla acement co ost profit for r the quarte er was adve ersely impac cted by $540 mi illion in resp pect of the c consolidatio on adjustme ent for unre ealized profi t in inventory;  As a remind der, this ref flects unrea alized profit in our dow nstream inv ventories related to o our upstream m equity ba arrels which h will be rea lized in futu ure quarters s;  Accounting g rules requ ire this to b be eliminate ed from Gro up earnings s while this equity crud de is held in our refinery y inventorie es;  In this quar rter the com mbined effe cts of highe er crude oil prices and a higher lev vel of crude oil l held in inv entory has significantly y increased the charge e compared to the previou us quarter. The e effective ta ax rate for t the first qua arter was 33 3% compar red to 37% in the first qua rter of 2011 1. Turn ning to the highlights a at a segmen nt level. 4

BP 1Q12 Resu lts Presenta ation In U Upstream, th he underlyin ng first qua rter replace ement cost profit befor re interest a and tax was $6.3 b illion compa ared with $ 6.7 billion a a year ago a nd $5.9 bill ion in the four rth quarter. The e result vers sus a year a go reflects a stronger environmen nt, more tha an offset by y thre ee factors:  Firstly, high her costs – w which inclu ude the imp act of incre ased activit ty levels, se ector inflation an d higher de epreciation, depletion a and amortiza ation;  Secondly, l oss of reve nues assoc ciated with d disposals a nd;  Thirdly, low wer product ion in some e higher-ma rgin areas. Com mpared to th he fourth qu uarter of las st year the result impro oved, due to o the bette r env ironment, a a higher con ntribution fro om gas ma rketing and trading, an nd lower cos sts. Liqu uids realizat tions increa sed 15% ye ear-on-year in line with h marker gra ades, while gas real izations imp proved sligh htly over the e same per riod, with lo wer US gas s prices offs set by s stronger gas s realization ns in other r regions. Rep ported produ uction exclu uding TNK-B BP was 2.4 5 million ba arrels of oil e equivalent p per day, , 6% lower than 1Q 20 011 mainly d due to dive stments an nd productio on decline in n the Gulf of Me xico reflect ing lower d drilling activi ity in 2010 a and 2011. T This was pa artly offs set by resto ration of pr oduction at t Greater Plu utonio in An ngola. Und derlying volu umes - excl uding TNK- -BP and afte er adjusting for divestm ments and enti tlement eff fects in our production sharing ag reements - increased s slightly yea r on yea r. Loo oking ahead , we expect t second-qu uarter repor rted produc tion to be lo ower, and cost ts to be hig gher, as a re esult of norm mal seasona al turnaroun nd activity c concentrate d on h high-margin n production n in the Gulf f of Mexico o at Atlantis, , Mad Dog, and Holste ein. We continue to o expect ful ll year unde erlying prod uction in 20 012 to be br roadly flat w with 201 1, excludin g TNK-BP. 5

BP 1Q12 Results Presentation Reported production in 2012 is expected to be lower than 2011 due to divestments which we currently estimate at 120,000 barrels of oil equivalent per day. The actual outcome will depend on the exact timing of divestments, OPEC quotas and the impact of the oil price on production sharing agreements. Turning to TNK-BP. 6

BP 1Q12 Resu lts Presenta ation Our r share of TN NK-BP unde erlying net i income was s $1.2 billio n in the firs st quarter, whi ch was up 3 3% versus a year ago. Our r share of TN NK-BP prod duction in th he first quar rter at 1.02 million barr rels of oil equ ivalent per day was 4% % higher th an the sam me period las st year. And d we receive ed a cash d ividend of $ $690 million n in the first t quarter. Now w, turning to o Downstre eam. 7

BP 1Q12 Resu lts Presenta ation For the first qu arter, the d ownstream m segment r reported un nderlying rep placement cost prof fit before in terest and t tax of $900 0 million, co mpared wit th $2.2 billio on a year ag go and $750 millio on in the fou urth quarter r of 2011. A All three do wnstream b businesses deliv vered a hig her underly ying replace ment cost p profit than i n the fourth h quarter. In o our fuels bus siness, we have had a challenging g quarter de elivering und derlying repl acement co ost profit of f around $50 00 million c compared w with $1.3 bil lion in the sam me period la st year, in a a broadly sim milar refinin ng environm ment. We continued to capture t the benefit of accessin ng WTI-linke ed crudes in n the US Mid dwest throu gh good ref fining availa ability. This s benefit wa as however more than offs set by weak k performan nce in suppl y and tradin ng compare ed to the str rong first qua rter of 2011 1, unfavoura able local cr rude differe entials in Eu urope, and a a difficult fu els mar rketing envi ronment du ue to weake er demand. In addition , our Cherry y Point refin nery has been unde er repair follo owing the i ncident in F February. Loo oking ahead to the seco ond quarter r, we expec t refining m margins to co ontinue to imp prove in line with seaso onal trends and fuels v olumes to r remain subd dued. We exp ect that the e Cherry Po int refinery will resume e full opera tions during g May havin ng com mpleted bot h repairs an nd the sche duled seco nd quarter t turnaround. . In lu ubricants, u nderlying re eplacement t cost profit was aroun d $300 mill ion, reflecti ing robu ust perform mance despi te weak de emand in so ome OECD markets an nd continued d high h base oil pr rices. In p petrochemic cals, underly ying replace ement cost profit was around $10 00 million fo or the quarter, so me $400 m million below w the same period last year reflect ting a sign nificantly we eaker marg in environm ment than th he record le vels seen in n the previo ous yea r. Des spite this, vo olumes hav ve improved d compared d with the lo ow levels in the fourth qua rter as a res sult of stron nger deman nd and high er availabilit ty. We expe ect the petr rochemicals s margin en nvironment to remain c challenging. 8

BP 1Q12 Resu lts Presenta ation In O Other Busin esses and C Corporate, w we reported d a pre-tax underlying replacemen nt cost t charge be efore interes st and tax o of $(440) mi llion for the first quarte er, an increa ase of $ $(140) millio on versus th he charge a year ago, p primarily ref lecting high her corporat te and functional costs, and t the loss of income fro m the alum inium busin ness which was s sold in the e third quart ter of 2011. . Guid dance for 2 012 remain ns unchange ed from tha at given in F ebruary, wi ith underlyi ng qua rterly charg ges volatile a and averagi ing around $(500) millio on each qua arter. The e effective ta ax rate for t the first qua arter was 33 3%, compa ared to 37% % in the first t qua rter of 2011 1 which wa s impacted by a one-o ff deferred tax adjustm ment of som me $70 00 million ar ising from c changes to the UK taxa ation of Nor rth Sea prod duction. Guid dance for th he full year effective ta ax rate rema ains in the r range of 34 to 36%. 9