Q1 2025 BP PLC Earnings Call
Speaker Change: Our capital markets update on the 26th of February marked the start of a new chapter for BP, we laid out a fundamental reset of our strategy.
Our new direction.
And describe the actions we are taking to grow long term shareholder value we are reallocating capital.
Investing to grow value in our upstream business, we are driving improved performance in our downstream business as we high grade around our core integrated markets and we're investing with discipline in the energy transition.
And we laid out for our primary targets to grow cash flow and returns and reduce net debt and costs. We have strong conviction in this plan and our objective is clear <unk>.
We remain safe as we execute at pace and the nine weeks that have passed since the market update we've made great progress.
And I'll highlight some examples across our oil and gas business shortly.
And as we move through the year, we will provide an update on downstream performance as we look to build on our strong first quarter for operations.
Before I move on I do want to acknowledge the volatile and changing outlook that we've seen recently.
Following the introduction of global tariffs and related government responses. There has been increased market volatility driven by rising concerns around the potential impact of a weaker economic outlook.
Commodity prices have softened as the market anticipates, a potential reduction in demand for oil and gas driven by economic uncertainty.
Volatility in lower price cycles are not new to the sector or to BP.
We're continuing to monitor developments closely.
We have extensive experience in managing through many price cycles and know how to navigate a weaker environment should we see a sustained period of lower prices.
We are focused on things within our control delivering our plan and doing so at pace, we delivered strong operational performance in the quarter with above 96% refining availability the.
The highest first quarter figure in 24 years.
Upstream operating efficiency is at an all time record supported by plant reliability above 95%.
We're moving at pace on our three year divestment program, while remaining focused on transacting for value.
Year to date proceeds from completed or signed agreements already exceeds $1 5 billion.
We announced the partnership with Apollo for the Tennessee gas pipeline.
And are progressing intended divestments of the Gelson, Kirk and refinery and our mobility and convenience businesses in Austria and the Netherlands.
The strategic review of Castrol is now underway with the business continuing to perform strongly.
We also benefit from our portfolio that is resilient and balanced across production mix geography and operating models.
Our integrated business model across upstream and downstream enables us to capture margin up and down the value chain as the market evolves underpinned by our distinctive supply trading and shipping business.
In upstream around a quarter of production is on a production sharing agreement or equivalent basis, which.
Which is less impacted by price changes.
And our resources to be developed or competitive.
With an average point for a development cost of around $10 per barrel of oil equivalent.
On a unit production cost of around $6 per barrel to 2027.
And we are investing with discipline with capex balanced across near term and longer term growth opportunities in our portfolio.
And investments evaluated against a set of balanced criteria.
Including lower price and margin scenarios.
As we continue to optimize our investment plans and in light of market volatility. We now expect full year 2025, capex to be around $14 5 billion.
Around $500 million lower than previously guided within this organic capex is expected to be below $14 billion, excluding the BP Bungay acquisition payment.
We continue to see this is the optimal level of spending that enables us to maintain and grow the scale and value of the company.
However, in the event a sustainably lower prices, we would expect deflation to become evident across our capital plans and we see around $2 5 billion of further capital flexibility should we require it this is equivalent to around $10 per barrel of oil price sensitivity.
Finally safely driving costs lower because a key area of focus across the organization.
We continue to make good progress towards our four to 5 billion structural cost reduction target.
In summary, we have strong conviction in our plan and we are delivering at pace.
Turning now to first quarter results, where we delivered resilient financial performance.
Underlying pre tax earnings were higher quarter on quarter at $4 $5 billion, while underlying net income increased to $1 4 billion.
Today, we are announcing a dividend per ordinary share of eight cents and a share buyback of $750 million.
Speaker Change: Before I hand over to Kate for more on results and the financial frame I'd like to focus on some recent milestones in our upstream business, which provides me with confidence in our ability to execute and in our growth outlook.
Speaker Change: As part of our plan to grow the upstream we expect to start up 10 major projects between 2025 and 2027.
Speaker Change: I'm pleased to say that 2025 is off to a great start.