BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE STRONGER FUTURE IN A CHANGING WORLD 6 FEBRUARY 2018

Transcription

1 6 FEBRUARY 2018 BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE STRONGER FUTURE IN A CHANGING WORLD BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 1

2 BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE Bob Dudley Group Chief Executive BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 2

3 Cautionary statement Forward-looking statements - cautionary statement In order to utilize the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995 (the PSLRA ), BP is providing the following cautionary statement. This presentation and the associated slides and discussion contain forward-looking statements that is, statements related to future, not past events with respect to the financial condition, results of operations and business of BP and certain of the expectations, intentions, plans and objectives of BP with respect to these items, in particular statements regarding expectations related to future oil prices and supply and demand; expectations related to global energy supply and demand including with respect to natural gas and renewables; expectations regarding industry refining margins, turnaround activity and discounts for North American heavy crude oil in the first quarter of 2018; expectations regarding Upstream underlying production in 2018 and Upstream reported production in the first quarter of 2018; expectations regarding the timing and amount of future payments relating to the Gulf of Mexico oil spill; plans and expectations regarding the strategic partnership with Lightsource; plans and expectations with respect to Upstream projects, production, investments and activities in the Africa Transform Margin, the Atlantic Margin, Argentina, Azerbaijan, Brazil, Egypt, the Gulf of Mexico, India, Indonesia, the Lower 48, the North Sea, Norway, Nova Scotia, Oman, and Trinidad; plans and expectations regarding joint ventures with Rosneft; plans and expectations regarding major projects production including with respect to margins and production of 900 thousand barrels per day by 2021; expectations regarding organic capital expenditure, organic free cash flow, the organic breakeven point, inorganic cash flow, average operating cash flow, the DD&A charge, the Other Businesses and Corporate average underlying quarterly charge and the 2018 adjusted effective tax rate; plans and expectations regarding sustainable free cash flow and distributions to shareholders over the long term; expectations that ROACE will exceed 10% by 2021; plans and expectations regarding Downstream underlying earnings growth, free cash flow and pre-tax returns by 2021; plans and expectations regarding retail markets in Mexico, India, Indonesia and China; expectations with respect to base decline, margins per barrel and development costs per barrel; plans to set operational emissions reduction targets and expectations regarding operational emissions; plans and expectations regarding spending on and development of renewables including through new technologies, new business models, venturing and research, OGCI collaboration and the $1 billion investment fund; plans and expectations regarding the BP-Beyond Limits partnership; plans to maintain focus on safety and discipline; plans and expectations to offset scrip dilution and balance disciplined investment and regarding deleveraging of the balance sheet and distributions growth; expectations regarding the amount and timing of divestment proceeds; plans and expectations to target gearing within a 20-30% band; [and plans and expectations with respect to dividends]. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will or may occur in the future and are outside the control of BP. Actual results may differ materially from those expressed in such statements, depending on a variety of factors, including: the specific factors identified in the discussions accompanying such forward-looking statements; the receipt of relevant third party and/or regulatory approvals; the timing and level of maintenance and/or turnaround activity; the timing and volume of refinery additions and outages; the timing of bringing new fields onstream; the timing, quantum and nature of certain divestments; future levels of industry product supply, demand and pricing, including supply growth in North America; OPEC quota restrictions; PSA effects; operational and safety problems; potential lapses in product quality; economic and financial market conditions generally or in various countries and regions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; regulatory or legal actions including the types of enforcement action pursued and the nature of remedies sought or imposed; the actions of prosecutors, regulatory authorities and courts; delays in the processes for resolving claims; amounts ultimately payable and timing of payments relating to the Gulf of Mexico oil spill; exchange rate fluctuations; development and use of new technology; recruitment and retention of a skilled workforce; the success or otherwise of partnering; the actions of competitors, trading partners, contractors, subcontractors, creditors, rating agencies and others; our access to future credit resources; business disruption and crisis management; the impact on our reputation of ethical misconduct and non-compliance with regulatory obligations; trading losses; major uninsured losses; decisions by Rosneft s management and board of directors; the actions of contractors; natural disasters and adverse weather conditions; changes in public expectations and other changes to business conditions; wars and acts of terrorism; cyber-attacks or sabotage; and other factors discussed under Principal risks and uncertainties in the results announcement for the period ended 30 June 2017 and Risk factors in BP Annual Report and Form 20-F 2016 as filed with the US Securities and Exchange Commission. This document contains references to non-proved resources and production outlooks based on non-proved resources that the SEC's rules prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosures in our Form 20-F, SEC File No This form is available on our website at You can also obtain this form from the SEC by calling SEC-0330 or by logging on to their website at Reconciliations to GAAP - This presentation also contains financial information which is not presented in accordance with generally accepted accounting principles (GAAP). A quantitative reconciliation of this information to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found on our website at Tables and projections in this presentation are BP projections unless otherwise stated. February 2018 BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 3

4 Agenda 1 Group strategic review Bob Dudley Group chief executive 2 4Q results & financial frame Brian Gilvary Chief financial officer 3 Advancing the energy transition Lamar McKay Deputy group chief executive 4 Upstream 5 Downstream 6 Summary & Q&A Bernard Looney Chief executive, Upstream Tufan Erginbilgic Chief executive, Downstream BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 4

5 2017 a year of strong delivery Financial highlights Underlying replacement cost profit $6.2bn Underlying operating cash flow 1 $24.3bn Organic capital expenditure $16.5bn Divestment proceeds 2 $4.3bn Gulf of Mexico oil spill payments 3 $5.3bn Gearing 27.4% 7 major projects in 2017 Share buyback programme Fuels marketing >10% earnings growth Strong refining availability >95% 143% reserves replacement 4 (1) Underlying operating cash flow is net cash provided by/(used in) operating activities excluding pre-tax Gulf of Mexico oil spill payments (2) Total proceeds, includes net proceeds received from the initial public offering of BP Midstream Partners LP (3) Gulf of Mexico pre-tax oil spill payments (4) Combined basis of subsidiaries and equity accounted entities, excluding acquisitions and divestments 6 discoveries Biggest year of exploration since 2004 Back in solar BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 5

6 Changing dynamics of supply and demand Primary energy consumption by fuel 1 bn tonnes of oil equivalent Shares of primary energy 1 % Oil Gas Coal Nuclear Hydro Renewables Oil Gas Coal Nuclear Hydro Renewables 20 Forecast 50 Forecast (1) Source: BP Energy Outlook 2017 BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 6

7 The dual energy challenge Society s need for More energy More energy Lower greenhouse gas emissions Lower carbon BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 7

8 The BP proposition Safer Fit for the future Focused on returns Safe, reliable and efficient execution A distinctive portfolio fit for a changing world Value based, disciplined investment and cost focus Growing sustainable free cash flow and distributions to shareholders over the long-term BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 8

9 Safe, reliable and efficient execution 95% Upstream plant reliability 1 in Process Safety Events (PSE) number of instances PSE Tier 1 PSE Tier % Downstream availability 2 in (1) Operated portfolio (2) Refining availability and petrochemicals reliability BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 9

10 A distinctive portfolio Upstream Downstream Alternative Energy 18.4 Deep reserves base Proved reserves 1 bn boe Liquids Gas Strong brands Price leverage % operating cash flow 2 Oil linked Gas linked Fixed + other Balanced refining throughput bbl/day US Europe Rest of World Renewable FUELS Renewable PRODUCTS Renewable POWER (1) Estimated net proved reserves on an oil equivalent basis as at 31 December Includes BP s estimated share of Rosneft and other equity-accounted entities (2) Average operating cash flow BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 10

11 Distinctive partnership Russia Strategic investment in Rosneft 19.75% 2 shareholding board members 1.1 mmboed 2017 production 1 $836 million 2017 earnings 1, 2 $314 million 2017 dividends paid Growing a material business 20% Taas JV with Rosneft and 3 others 49% Yermak JV with Rosneft 49% Kharampur JV 3 with Rosneft 10% Zohr gas field Egypt with Rosneft (30%) and ENI (60%) Technical co-operation Health safety and environment Co-operation in gas Mature fields optimisation Upstream and Downstream capabilities and processes (1) BP share, preliminary (2) Replacement cost profit before interest and tax (RCPBIT), adjusted for non-operating items and fair value accounting effects (3) Transaction to be closed in 2018, subject to regulatory approvals BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 11

12 Focused on returns Making the right choices to deliver competitive returns Capital and cost discipline ROACE 1 % >10 Actively managed portfolio 5.8 ROACE 1 >10% by Delivering competitive returns Environment Underlying improvement (1) ROACE reflects underlying replacement cost profit, after adding back minority shareholders interests and finance interest net of BP tax assumption, divided by average capital employed excluding cash & cash equivalents and goodwill (2) Incremental impact of environment in 2021, assuming Brent $55/bbl 2017 real and an RMM of $14/bbl BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE

13 Clear priorities for a changing world Growing gas and advantaged oil in the Upstream Market led growth in the Downstream Venturing and low carbon across multiple fronts Modernising the whole Group BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 13

14 4Q & FULL YEAR 2017 RESULTS & BP STRATEGY 4Q & FULL UPDATE YEAR 2017 RESULTS & STRATEGY UPDATE Bob Brian Dudley Gilvary Group Chief Executive Chief Financial Officer

15 Environment 75 Brent oil price 1 $/bbl 3.9 Henry Hub gas price $/mmbtu 24 Refining Marker Margin 2 $/bbl Q16 1Q17 2Q17 3Q17 4Q17 1Q18 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 (1) Source: Factset (2) Refining Marker Margin (RMM) based on BP s portfolio All data 1 October 2016 to 2 February 2018 BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 15

16 4Q 2017 summary $bn 4Q16 3Q17 4Q17 % Y-o-Y % Q-o-Q Upstream Downstream Other businesses & corporate (0.4) (0.4) (0.4) Underlying business RCPBIT % (6%) Rosneft Consolidation adjustment - unrealised profit in inventory (0.1) (0.1) (0.1) Underlying RCPBIT % (1%) Finance costs 3 (0.4) (0.4) (0.6) Tax (0.1) (1.2) (0.8) Minority interest (0.0) 0.0 (0.0) Underlying replacement cost profit % 13% Underlying operating cash flow % (4%) Underlying earnings per share (cents) % 13% Dividend paid per share (cents) % 0% (1) Replacement cost profit before interest and tax (RCPBIT), adjusted for non-operating items and fair value accounting effects (2) BP estimate of Rosneft earnings after interest, tax and minority interest (3) Finance costs and net finance income or expense relating to pensions and other post-retirement benefits (4) Underlying operating cash flow is net cash provided by/(used in) operating activities excluding pre-tax Gulf of Mexico oil spill payments BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 16

17 Upstream Realisations 1 Volume mboe/d Underlying RCPBIT 3 $bn 2 Group production Liquids ($/bbl) Gas ($/mcf) Upstream production excluding Rosneft Non-US US Total RCPBIT Q16 1Q17 2Q17 3Q17 4Q Q16 1Q17 2Q17 3Q17 4Q17 (0.5) 4Q16 1Q17 2Q17 3Q17 4Q17 (1) Realisations based on sales of consolidated subsidiaries only, excluding equity-accounted entities (2) Group reported oil and gas production including Rosneft estimate (3) Replacement cost profit (loss) before interest and tax (RCPBIT), adjusted for non-operating items and fair value accounting effects BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 17

18 Downstream Refining environment $/bbl Refining availability % Underlying RCPBIT 2 $bn Fuels Lubricants 24 RMM WTI CMA-WCS spread Petrochemicals Total RCPBIT Q16 1Q17 2Q17 3Q17 4Q Q16 1Q17 2Q17 3Q17 4Q Q16 1Q17 2Q17 3Q17 4Q17 (1) Source: Platts (CMA: Calendar Month Average); lagged by one month (2) Replacement cost profit before interest and tax (RCPBIT), adjusted for non-operating items and fair value accounting effects BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 18

19 Rosneft Average Urals price $/bbl BP share of underlying net income 1 $bn BP share of Rosneft dividend $bn Half yearly dividend Annual dividend for previous year Q16 1Q17 2Q17 3Q17 4Q Q16 1Q17 2Q17 3Q17 4Q (1) On a replacement cost basis and adjusted for non-operating items; 4Q17 represents BP estimate (2) Half yearly dividend declared representing 50% of Rosneft s IFRS net income for 1H 2017, paid in the fourth quarter (3) Annual dividends paid in the third quarter, in respect of the previous year BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 19

20 Other items OB&C underlying RCPBIT 1 $bn Adjusted effective tax rate 2 % 0.0 4Q16 1Q17 2Q17 3Q17 4Q17 70 (0.1) (0.2) (0.3) (0.4) (0.5) 0 4Q16 1Q17 2Q17 3Q17 4Q17 (1) Other businesses and corporate replacement cost profit before interest and tax (RCPBIT), adjusted for non-operating items (2) Effective tax rate on replacement cost profit adjusted to remove the effects of non-operating items and fair value accounting effects BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 20

21 Sources and uses of cash organic cash inflows/outflows $bn organic cash inflows/outflows $bn Share buybacks 20 Dividends 2 20 Dividends Underlying cash flow 1 Organic capex 12 8 Underlying cash flow 1 Organic capex Other inflows/outflows $bn Disposals 3 Inorganic capex Gulf of Mexico oil spill BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE Other inflows/outflows $bn Disposals 3 Inorganic capex Gulf of Mexico oil spill (1) Underlying operating cash flow is net cash provided by/(used in) operating activities excluding pre-tax Gulf of Mexico oil spill payments (2) Cash dividends paid (3) 2016 includes proceeds for sale of partial shareholding in Castrol India, 2017 includes net proceeds received from the initial public offering of BP Midstream Partners LP

22 2018 guidance Upstream production excluding Rosneft including Rosneft Organic capital expenditure Full year 2017 actual 2.5mboed 3.6mboed $16.5bn Full year 2018 guidance higher than $15-16bn DD&A 2 $15.6bn higher than 2017 Other businesses and corporate average underlying quarterly charge $400m $350m Effective tax rate 3 38% >40% Gearing 27.4% 20-30% (1) Underlying production. The actual reported number will depend on divestments, OPEC quotas, and entitlement impacts in production-sharing agreements (2) DD&A: depreciation, depletion and amortisation (3) Effective tax rate on underlying replacement cost profit; guidance based on current portfolio of assets BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 22

23 Growing free cash flow Rebalanced organic sources and uses of cash Share buybacks offset impact of dilution from scrip over time Organic free cash flow per share 1 Brent price $54/bbl $50-55/bbl real Growth in operating cash flow delivered across our businesses Cost and capital discipline $35-40/bbl Current cash DPS 2 Current full DPS 2 Oil price breakeven by (1) Organic free cash flow: operating cash flow excluding pre-tax Gulf of Mexico oil spill payments less organic capital expenditure. In USD cents per ordinary share, based on BP planning assumptions (2) DPS: dividend per ordinary share. Cash DPS assumes 20% scrip uptake BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 23

24 Financial frame Organic free cash flow 1 Organic capital expenditure Divestments Gulf of Mexico oil spill payments 2018 Balancing at ~$50/bbl $15-16bn ~$2-3bn Just over $3bn 2019 to 2021 Material growth, balance point falls steadily $15-17bn ~$2-3bn ~$2bn in 2019 Stepping down to ~$1bn Gearing 20-30% 20-30% Group ROACE at $55/bbl 2 >10% by 2021 (1) Including full dividend, excluding pre-tax Gulf of Mexico oil spill payments (2) Brent oil prices 2017 real BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 24

25 BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE Lamar McKay Deputy Group Chief Executive BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 25

26 The right priorities for an evolving energy landscape Growing gas and advantaged oil in the Upstream Market led growth in the Downstream Venturing and low carbon across multiple fronts Modernising the whole Group BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 26

27 Advancing the energy transition Reducing emissions in our operations Improving our products Creating low carbon businesses BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 27

28 Building low carbon businesses Commercially driven investments Five focus areas Established low carbon business Alternative Energy Building resilience within existing core and adjacent businesses BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 28

29 Established low carbon business Alternative Energy Renewable FUELS Renewable POWER Fastest-growing energy sector Bio-power 10Mtpa 224MW Focus on safety, reliability, optimisation and efficiency biofuels industrial capacity Wind energy capacity Lightsource strategic partnership Renewable PRODUCTS 2.2GW gross capacity Integrated value chains Commercialising bio-isobutanol technology Solar energy 6 GW ambition BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 29

30 New low carbon businesses Advanced mobility Bio and low carbon Carbon management Power and storage Digital Electric, connected and autonomous vehicles New fuels, gas, lubricants and plastics Lowering carbon footprint for customers and BP Low carbon power, storage and trading Transforming productivity and customer experience BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 30

31 Advancing the energy transition A clear approach 1. Reduce Creating low carbon and digital businesses 5 focus areas 2. Improve 3. Create ~$500m annual spend within a strict investment framework BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 31

32 4Q & FULL YEAR 2017 RESULTS & BP STRATEGY 4Q & FULL UPDATE YEAR 2017 RESULTS & STRATEGY UPDATE Bob Dudley Bernard Looney Group Chief Executive Chief Executive, Upstream BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE 32

33 Upstream strategy SAFETY STRATEGY #1 core value QUALITY EXECUTION GROWING GAS AND ADVANTAGED OIL RETURNS LED GROWTH KEY METRICS 5% production CAGR 1 $13-14bn capital expenditure p.a. to 2021 $13-14bn free cash flow 2 in 2021 (1) compound annual growth rate (2) Free cash flow proxy = Underlying RCPBIT+DD&A+EWO-Organic capital expenditure, at $55/bbl Brent 2017 real BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE 33

34 Continued track record of delivery FEBRUARY 2017 GUIDANCE 800mboed major project production 1 in DELIVERY 7 start-ups on schedule and under budget >500mboed production capacity 1 5% production CAGR % production growth 2 $13-14bn p.a. organic capital expenditure $13.8bn organic capital expenditure $13-14bn free cash flow in $6.9bn free cash flow 3 Stronger long term growth 3 FIDs exploration success and new access (1) From 2015 base (2) Reported Upstream production. CAGR = compound annual growth rate (3) Free cash flow proxy = Underlying RCPBIT+DD&A+EWO-Organic capital expenditure, at $55/bbl Brent 2017 real at actual prices BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE 34

35 Quality execution 15 Unit production costs $/bbl 8 New well D-cost 1 $/bbl Projects cost benchmarking IPA 2 ratio 46% 34% IPA Benchmark % 5 year average base decline % base production improvement in 2017 (1) BP estimates of operated, excluding Iraq, gross well capital expenditure per barrel of gross estimated recoverable volumes (2) Independent Project Analysis, a lower ratio indicates lower costs vs. IPA industry models (3) compound annual decline rate BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE 35

36 High quality growth extended BP net production from major projects mboed 1000 Appraise /Design Construction In Salah Southern Fields Thunder Horse Water Injection Point Thomson Angola LNG In Amenas Compression Thunder Horse South Expansion West Nile Delta Taurus/Libra Trinidad Onshore Compression Quad 204 Persephone Juniper Khazzan Phase 1 Zohr Atoll Phase 1 Clair Ridge Constellation Shah Deniz 2 West Nile Delta Giza/Fayoum Taas Expansion Operating Angelin KG D6 R-Series Mad Dog Phase mboed by % greater cash margins than 2015 base 1 Culzean Thunder Horse North West Expansion Western Flank B Tangguh Expansion Alligin Atlantis Phase 3 Vorlich Zinia 2 Cassia Compression KG D6 D55 KG D6 Satellites Khazzan Phase 2 Tortue Phase 1 (1) average pre-tax operating cash flow per barrel at flat $52/bbl BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE 36

37 Confidence in free cash flow growth Free cash flow pre-tax 3 $bn underlying growth Production 5-7% 5% CAGR 1 Capital expenditure $12-13bn $13-14bn Major projects 6 start-ups 900mboed 2 FIDs 6 potential Stronger long term growth (1) compound annual growth rate (2) From 2015 base (3) Free cash flow proxy = Underlying RCPBIT+DD&A+EWO-Organic capital expenditure, 2021 at $55/bbl Brent 2017 real BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE 37

38 Accretive to cash margins 2015 average operating cash / bbl High quality growth options Pre-FID hopper - projects and new wells IRR (%) Pre-FID major projects hopper >40% 40 4bn boe 20 0 Resources (bn boe) Average unit DD&A Development cost below DD&A Bubble size = net resources Average pre-tax operating cash per barrel at equivalent price to 2015 actuals BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE 38

39 Growth options to 2025 ALASKA Liberty CANADA Pike GULF OF MEXICO Atlantis Ph.3 Thunder Horse South Expansion 2 Mad Dog Southwest Extension Tigris L48 Haynesville San Juan LATIN AMERICA PAEG MidCon Greater Green River TRINIDAD Cassia Compression Savannah NORTH SEA Clair South Seagull SEQB - Macadamia Alligin Vorlich MAURITANIA & SENEGAL Tortue Phase 1 Tortue FFD NORWAY AkerBP ANGOLA Zinia 2 B31 PAJ RUSSIA Turonian AZERBAIJAN Azeri Central East EGYPT West Nile Delta Phase 2 OMAN Khazzan Phase 2 INDIA KG D6 D55 KG D6 Satellites AUSTRALIA Browse Lambert Deep South Goodwyn Oil Gas BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE 39

40 Value from modernisation and transformation 9,000 trillion calculations per second Supercomputing power doubled in 2017 Finding a field in a field in the Gulf of Mexico 200mmboe new barrels identified in Atlantis using BP proprietary imaging algorithms Reliability monitoring Applying big data analytics in Lower 48 Optimising production 40 million 30mboed calculations per day on 400 pieces of Atlantis equipment using Plant Operations Advisor Acoustic sensing 30 wells in Azerbaijan with fibre optic sensing capability to detect sand 74% reduction in venting 20% increase in production 22% reduced costs Machine intelligence informing business decisions 40 years of data helping predict corrosion to drive more effective inspection programmes Global operations continuous improvement 2,700 $330m 55mboed from APEX production system digital twin Rapid field development in Oman 12X productivity gains using Siraaj optimisation tool individual projects value created production BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE 40

41 Upstream key messages SAFETY STRATEGY #1 core value QUALITY EXECUTION GROWING GAS AND ADVANTAGED OIL RETURNS LED GROWTH 2017 DELIVERY 12% production growth 7 project start-ups 46% unit production cost reduction vs 2013 $6.9bn free cash flow KEY METRICS 5% production CAGR 1 $13-14bn capital expenditure p.a. to 2021 $13-14bn free cash flow 2 in 2021 (1) compound annual growth rate (2) Free cash flow proxy = Underlying RCPBIT+DD&A+EWO-organic capital expenditure, at $55/bbl Brent 2017 real at actual prices BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 41

42 BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE Tufan Erginbilgic Chief Executive, Downstream BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 42

43 Downstream strategy SAFETY STRATEGIC PRIORITIES #1 core value PROFITABLE MARKETING GROWTH ADVANTAGED MANUFACTURING EFFICIENCY AND SIMPLIFICATION LOWER CARBON AND DIGITALLY ENABLED FUTURE KEY METRICS >$3bn underlying earnings 1 growth by free cash flow 2 in $9-10bn 2021 ~20% pre-tax returns 2 in 2021 (1) Incremental underlying RCPBIT , adjusted for refining and petrochemicals environment, forex, turnaround and portfolio impacts (2) Free cash flow proxy (FCF) = underlying RCPBIT+DD&A organic capital expenditure FCF and returns at $14/bbl RMM, $15/bbl WTI-WCS crude differential and Brent $55/bbl 2017 real BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 43

44 Execution of strategy continues to deliver results 8 Pre-tax earnings 1 $bn 6 Continued underlying earnings 3 growth $bn delivered > delivered Environment WTI-WCS Underlying growth 2017 (1) Underlying RCPBIT (2) Includes refining marker margin, other local margin drivers (excluding WTI-WCS differential), petrochemicals environment, forex, turnaround and portfolio impacts (3) Adjusting for refining and petrochemicals environment, foreign exchange, turnaround and portfolio impacts Manufacturing Marketing Supply & trading and other BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 44

45 Marketing material and growing Pre-tax earnings 1 $bn 3.9 $2.4bn fuels marketing earnings >10% growth vs % premium fuel volumes growth since Active fuels launch 1,100 BP retail sites with convenience partnerships > 130 sites opened in Mexico Fuels Marketing Lubricants $1.5bn lubricants earnings Continued growth in lubricants premium volumes and key growth countries earnings (1) Underlying RCPBIT at 2017 foreign exchange environment BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 45

46 Manufacturing strong underlying earnings growth Underlying earnings growth 1 $bn >1.0 Strong operations Strong operations > 95% refining availability and petrochemicals reliability ~0.8 Petrochemicals Manufacturing 43% vs 37% in 2016 record levels of advantaged feedstock 2 > 15% improvement in refining net cash margin 3 vs Refining > 40% reduction in petrochemicals cash breakeven Industry leading technology now deployed at key PTA sites (1) Underlying RCPBIT at constant refining & petrochemicals environment, normalised turnaround and portfolio impacts (2) Advantaged feedstocks processed as a percentage of throughput. BP operated refineries portfolio basis (3) Net cash margin per barrel = Gross product value less raw material costs and operating expenditure. At 2016 price set, 2017 portfolio basis and constant $15/bbl WTI-WCS crude differential (4) Breakeven cash contribution margin based on BP estimates ($/tonne) BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 46

47 Cash flow growth, attractive returns, improving resilience 10 Growing free cash flow 1 $bn Attractive pre-tax returns % Adjusted returns 2 ~ Improved resilience refining marker margin $/bbl RMM to generate 15% pre-tax returns RMM range Reported returns (1) Free cash flow proxy (FCF) = underlying RCPBIT + DD&A organic capex; 2021 FCF at $14/bbl RMM, $15/bbl WTI-WCS crude differential and Brent $55/bbl 2017 real (2) Adjusted returns at $14/bbl RMM, $15/bbl WTI-WCS crude differential and Brent crude price of $55/bbl 2017 real (3) Excludes global financial crisis (2009 & 2010) (4) 2021 projection based on $15/bbl WTI-WCS crude differential and Brent $55/bbl 2017 real BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 47

48 Building on our strengths to create our future Advanced mobility Bio and low carbon Digital Electric, connected and autonomous vehicles New fuels, gas, lubricants and plastics Lead in digital innovation and consumer differentiation Electric vehicles New forecourt chargers Fulcrum Bioenergy Biojet from municipal solid waste New business models and ecosystems Freewire Mobile EV charging investment Castrol Optigear Carbon-neutral lubricants for wind turbines Data-enabled Business BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 48

49 Downstream key messages SAFETY STRATEGIC PRIORITIES #1 core value PROFITABLE MARKETING GROWTH ADVANTAGED MANUFACTURING EFFICIENCY AND SIMPLIFICATION LOWER CARBON AND DIGITALLY ENABLED FUTURE 2017 DELIVERY $1bn underlying 1 growth in marketing & manufacturing free cash $1.1bn flow 2 growth >18% pre-tax returns KEY METRICS >$3bn underlying earnings 1 growth by free cash flow 2 in $9-10bn 2021 ~20% pre-tax returns 2 in 2021 (1) Underlying RCPBIT adjusted for refining and petrochemicals environment, forex, turnaround and portfolio impacts (2) Free cash flow proxy (FCF) = underlying RCPBIT+DD&A organic capital expenditure FCF and returns at $14/bbl RMM,$15/bbl WTI-WCS crude differential and Brent $55/bbl 2017 real BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 49

50 BP 4Q & FULL YEAR 2017 RESULTS & STRATEGY UPDATE Bob Dudley Group Chief Executive BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 50

51 The BP proposition Safer Fit for the future Focused on returns Safe, reliable and efficient execution A distinctive portfolio fit for a changing world Value based, disciplined investment and cost focus Growing sustainable free cash flow and distributions to shareholders over the long-term BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 51

52 Q&A Bob Dudley Brian Gilvary Lamar McKay Group chief executive Chief financial officer Deputy group chief executive Bernard Looney Tufan Erginbilgic Chief executive, Upstream Chief executive, Downstream BP 4Q 2017 & FULL RESULTS YEAR 2017 RESULTS & STRATEGY UPDATE 52