BP: Third quarter and nine months 2022
Underlying profit at replacement cost* $8.2 billion
- Underlying replacement cost profit was $8.2 billion, compared to $8.5 billion in the prior quarter. Compared to the second quarter, the result was impacted by lower refining margins, lower average oil trading result and lower liquids realizations, partially offset by exceptional gas marketing and trading result and lower liquids realizations. higher gases.
- The reported loss for the quarter was $2.2 billion, compared to a profit of $9.3 billion for the second quarter of 2022. The reported third quarter result includes inventory holding losses net of of $2.2 billion and an adjustment charge for net-of-tax items* of $8.1 billion. This charge includes unfavorable fair value* accounting effects of $10.1 billion, primarily due to further increases in gas futures prices compared to the end of the second quarter, partially offset by a gain of 2.0 billion on the formation-related sale of Azule Energy.
Operating cash flow* $8.3 billion; net debt* reduced to $22.0 billion
- Cash flow from operations in the quarter was $8.3 billion, including a build of working capital (adjusting for inventory holding losses* and fair value accounting effects) of $6.2 billion, mainly due to the increase in the LNG futures price.
- Looking ahead, working capital prospects remain subject to a number of factors, including price. However, following the build-up of working capital following rising gas prices since 2021, we now expect the working capital movement to include a release of approximately $7 billion, weighted down. second half of 2023 and 2024, mainly because LNG cargoes are delivered.
- Capital expenditures* during the quarter were $3.2 billion. Bp now expects capital expenditure of around $15.5 billion in 2022, if the acquisition of Archaea Energy is completed before the end of the year.
- During the third quarter, bp completed share buybacks for $2.9 billion. The $3.5 billion share buyback program announced with the second quarter results ended on October 27, 2022.
- Net debt fell for the tenth consecutive quarter to $22.0 billion at the end of the third quarter.
New $2.5 billion share buyback in a disciplined financial framework
- During the third quarter, bp generated excess cash flow* of $3.5 billion and intends to complete a share buyback of $2.5 billion before the announcement of its results for the fourth quarter, bringing total announced 2022 Excess Cash Flow share buybacks to $8.5 billion, or 60% of 2022 Excess Cash Flow to date.
- For 2022 and subject to maintaining a strong investment grade credit rating, bp remains committed to using 60% of excess cash flow for share buybacks and intends to allocate the remaining 40% to further strengthen the balance sheet.
- In setting the buyback quarterly, the board will continue to consider factors such as the cumulative level and prospects of excess cash flow.
- Against the authorization granted at bp’s 2022 annual general meeting to repurchase up to 1.95 billion shares, bp had repurchased 677 million shares as of October 31.
Progressing the transformation to an integrated energy company
- In resilient hydrocarbons, bp is accelerating its biogas strategy – part of its bioenergy transition growth engine – by agreeing to acquire Archaea Energy, a leading US biogas company. Bp also continued to make progress in the valuation of its portfolio: completing the creation of Azule Energy, a 50/50 joint venture combining its Angolan assets with those of Eni; take the final investment decision on the Cypre project off Trinidad; and announcing a deal to sell its upstream business in Algeria to Eni.
- In convenience and mobility, bp continued to advance its growth strategy in electric vehicle charging and convenience: announcing its intention to collaborate with Hertz in North America to install a national network of electric vehicle charging solutions for Hertz and its customers powered by bp pulse; and expanding its partnership with leading retailer REWE in Germany, to install fast, reliable and convenient charging for customers while they shop.
- In low carbon energies, bp continued to advance its strategy in terms of renewable energies and hydrogen. In Australia, bp finalized the acquisition of a 40.5% stake in AREH, one of the world’s largest renewable energy and green hydrogen hubs*. And in the UK, two bp-led projects – H2Teesside and Net Zero Teesside Power – have been shortlisted in Phase 2 of the UK Government’s Cluster Sequencing process to support Carbon Capture, Use and Storage (CCUS ).
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