BP

BP reported billions in profit in 2022, which they used to fund $10 billion in stock buybacks with more planned

BP reported profits of $10.8 billion in the fourth quarter of 2022 alone. “Murray Auchincloss – CFO & Director: Turning to results. In the fourth quarter, we reported a profit of $10.8 billion, allowing for post-tax adjusting items of $7.1 billion and an inventory holding loss of $1.1 billion. Our underlying replacement cost profit was $4.8 billion compared to $8.2 billion in the third quarter.” (BP Q4 2022 Earnings Call, 2/7/2023)

BP predicted a 4% annual increase in their dividend.“Murray Auchincloss – CFO & Director: We see the capacity for an annual increase in the dividend per ordinary share of around 4% per annum at $60 per barrel, subject to the Board’s discretion. Second, maintaining a strong investment-grade credit rating. For 2023, we intend to continue to allocate 40% of surplus cash flow to further strengthen the balance sheet and now target further progress within an A-grade credit rating.” (BP Q4 2022 Earnings Call, 2/7/2023)

BP’s CFO: “We are committed to allocating 60% of 2023 surplus cash flow to buybacks and expect a buyback of $4 billion per annum at around $60 per barrel”  “Murray Auchincloss – CFO & Director: Third and fourth, we plan to invest with discipline in our transition growth engines and in our oil, gas, and refining businesses. And finally, share buybacks. We are committed to allocating 60% of 2023 surplus cash flow to buybacks and expect a buyback of $4 billion per annum at around $60 per barrel at the lower end of our capital range and subject to maintaining a strong investment-grade credit rating.” (BP Q4 2022 Earnings Call, 2/7/2023)

BP’s CFO: “BP intends to execute a further $2.75 billion buyback prior to announcing first quarter 2023 results.” “Murray Auchincloss – CFO & Director: During the quarter, BP repurchased 3.2 billion shares. Reflecting strong cash generation, net debt fell for the 11th consecutive quarter to reach $21.4 billion. And with surplus cash flow, $5.1 billion in the quarter, BP intends to execute a further $2.75 billion buyback prior to announcing first quarter 2023 results.” (BP Q4 2022 Earnings Call, 2/7/2023)

BP reported spending nearly $10 billion on stock buybacks in 2022. (BP Fourth quarter and full year 2022 results, 2/7/2023) 

BP credited sanctions on Russia for high oil prices and refinery margins

BP’s CFO: “we expect prices to remain supported by recovering Chinese demand, ongoing uncertainty around the level of Russian exports, and low inventory levels.” “Murray Auchincloss – CFO & Director: Great. Thanks, Bernard, and good morning, everyone. It’s so nice to see you in the room and online. As usual, I’ll start with the macro environment. During the fourth quarter, Brent fell by 12% relative to the third quarter to average $89 per barrel. This reflected increased uncertainty over the economic outlook and relatively high production from Russia and OPEC. In the first quarter, we expect prices to remain supported by recovering Chinese demand, ongoing uncertainty around the level of Russian exports and low inventory levels.” (BP Q4 2022 Earnings Call, 2/7/2023)

BP’s CFO: “We expect industry refining margins to remain elevated in the first quarter due to sanctioning of Russian crude and product.” “Murray Auchincloss – CFO & Director: Moving to Refining. Consistent with trends in seasonal demand, global margins decreased modestly to an average of $32.20 per barrel during the quarter. We expect industry refining margins to remain elevated in the first quarter due to sanctioning of Russian crude and product.” (BP Q4 2022 Earnings Call, 2/7/2023)

BP CFO: “we’ve raised our international gas price assumptions through the middle of the decade.” “Murray Auchincloss – CFO & Director: In addition, reflecting current market conditions, we’ve raised our international gas price assumptions through the middle of the decade.” (BP Q4 2022 Earnings Call, 2/7/2023)

BP told analysts their oil and gas production remained below 2019 and would remain flat through 2030

BP’s CEO told analysts their oil and gas production remained 40% below 2019 and “our focus remains on maximizing returns and cash flow.” “Bernard Looney – CEO & Director: Turning now to our oil, gas, and refining portfolio. Let me start with where our oil and gas production is today. It is around 40% lower versus 2019, including the decision by BP’s Board to exit Russia. We remain actively engaged in marketing our Rosneft shareholding, and we will update the market as appropriate. But as you have heard me say before and Murray, our oil and gas strategy is about value, not only volume, and our focus remains on maximizing returns and cash flow, reducing emissions, and is underpinned by a deep and high-quality resource base that allows us to choose the best investments.” (BP Q4 2022 Earnings Call, 2/7/2023)

BP’s CEO: “our resource base has the potential to sustain underlying production broadly flat to 2030 relative to 2022.” “Bernard Looney – CEO & Director: Having grown production in 2022, we plan to grow underlying production to 2025, adding around 200,000 barrels per day of oil equivalent of high-margin production from 9 major project start-ups by continuing to manage base decline to between 3% and 5%, by increasing BPX production by 30% to 40% and retaining some assets for longer than previously planned. And our resource base has the potential to sustain underlying production broadly flat to 2030 relative to 2022.” (BP Q4 2022 Earnings Call, 2/7/2023)

BP’s CEO emphasized that lower carbon energy investments would be driven by returns

BP’s CEO: “Yes, we need lower carbon energy, but we also need secure energy, and we need affordable energy, and that’s what governments and society around the world are asking.” “Bernard Looney – CEO & Director: And then the external macro part isn’t about prices. It’s about what is needed. We must solve the energy trilemma. Yes, we need lower carbon energy, but we also need secure energy, and we need affordable energy, and that’s what governments and societies around the world are asking. And they’re asking it publicly. They’re asking the United States, to invest in today’s energy system. They’re very every country in Europe, but many countries in Europe going around the world searching for energy supplies. So we’re being asked by governments and society. We have improved our business. We have more confidence. And we think in doing this, we can help solve the energy trilemma for society, which feels like a worthwhile thing to do, and we feel we can create shareholder value. And that’s what we’re trying to do. That’s what we have to do. That’s our job. So that’s a little bit of the backdrop.” (BP Q4 2022 Earnings Call, 2/7/2023)

BP’s CEO stressed all investments, including renewable, were driven by returns: “if the returns aren’t there, the capital doesn’t get spent.” “Bernard Looney – CEO & Director: Great. And there is a big wrapper (indiscernible) around this whole presentation, which is everything we do here has to meet our returns, and our growth target has to meet. And that’s the wrapper, the underpinner, the foundation of everything that we talk about today. And if the returns aren’t there, the capital doesn’t get spent. If the returns and growth are there, it will get spent. Christian?” (BP Q4 2022 Earnings Call, 2/7/2023)