Business context and reporting period
BP p.l.c. filed an annual Form 20-F for the fiscal year ended 31 December 2023, prepared under IFRS. Although the request metadata says “2023 Q4,” this filing reports full-year results, not standalone fourth-quarter results. BP operates globally across oil and gas, refining, customer businesses and lower-carbon energy, and describes its strategy as transforming from an international oil company to an integrated energy company.
Financial and operating performance
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $210.1bn | $241.4bn |
| Profit attributable to BP shareholders | $15.2bn | Loss of $2.5bn |
| Underlying replacement-cost profit | $13.8bn | $27.7bn |
| Adjusted EBITDA | $43.7bn | $60.7bn |
| Operating cash flow | $32.0bn | $40.9bn |
| Capital expenditure | $16.3bn | $16.3bn |
| Cash and cash equivalents | $33.0bn | $29.2bn |
| Finance debt | $52.0bn | $46.9bn |
| Net debt | $20.9bn | $21.4bn |
| Gearing | 19.7% | 20.5% |
BP reported ROACE of 18.1% and an effective tax rate of 33%; its underlying effective tax rate was 39%. Total dividends paid were $4.8bn, and BP repurchased $7.9bn of shares. The 2023 dividend paid per ordinary share was 27.760 cents.
Underlying replacement-cost profit before interest and tax fell in gas & low carbon energy to $8.7bn from $16.1bn, in oil production & operations to $12.8bn from $20.2bn, and in customers & products to $6.4bn from $10.8bn. Global refining marker margin averaged $25.8/bbl, down from $33.1/bbl.
Group hydrocarbon production was 2.313 million barrels of oil equivalent per day, down 5.1% year over year, largely reflecting the absence of Rosneft production. Excluding Rosneft, BP said production increased 2.6%. Refining availability improved to 96.1% from 94.5%; operated upstream plant reliability was 95.0%, versus 96.0%.
Material changes versus the prior comparable period
- Reported shareholder profit moved from a $2.5bn loss to $15.2bn profit, while underlying replacement-cost profit fell by about half, reflecting lower realizations, lower refining margins, portfolio changes and weaker oil trading.
- Operating cash flow declined $8.9bn, primarily for those same operating factors; working capital reduced 2023 cash flow by $3.3bn.
- Finance debt rose $5.0bn, mainly due to net long-term debt issuance, while net debt declined $0.5bn. Net debt including leases increased to $31.9bn from $30.0bn.
- BP recorded $5.7bn of net impairment charges, including a $1.3bn impairment of the Gelsenkirchen refinery. Equity-accounted impairment charges included $1.1bn related to US offshore wind projects.
- BP completed its acquisition of TravelCenters of America in May 2023, adding about 290 sites. Employees increased to 87,800 from 67,600, reflecting acquisitions including TravelCenters of America.
Outlook, commentary, risks and unusual items
For 2024, BP expects upstream production to be slightly higher than in 2023, capital expenditure around $16bn, divestment and other proceeds of $2–3bn, and an underlying effective tax rate around 40%. BP expects lower industry refining margins and says fuel margins remain sensitive to supply costs. The filing also gives 2024 guidance for Gulf of Mexico oil-spill payments of about $1.2bn pre-tax and an other businesses and corporate underlying annual charge of about $1.0bn.
BP’s financial framework calls for $3.5bn of share buybacks for the first half of 2024 and at least $14bn through 2025, subject to market conditions and maintaining a strong investment-grade credit rating. The company expects annual capital expenditure of around $16bn in 2024–25 and a $14–18bn annual range through 2030. These are forward-looking plans, not guarantees.
Management emphasized disciplined investment, balance-sheet strength, shareholder distributions, efficiency, growth projects and safety. BP reported three workforce fatalities in 2023: one contractor fatality at bpx energy and two employee fatalities at TravelCenters of America. Tier 1 and 2 process safety events fell to 39 from 50, but recordable injury frequency increased 47%.
Key risks include volatile oil, gas and refining markets; geopolitical disruption; major-project delivery and operational safety; climate-transition policy, demand and litigation; cyber threats; and liquidity, credit and partner risks. BP disclosed ongoing climate-related lawsuits and other legal and regulatory matters, while stating it does not expect current proceedings to have a material impact. Gulf of Mexico oil-spill obligations remain significant; related payables were $8.7bn on the balance sheet at year-end, with scheduled future payments.
Unusual items include $9.4bn of favorable fair-value accounting effects, primarily related to LNG hedges, which BP says differ from management’s underlying performance measure. The former CEO resigned in September 2023; BP later determined serious misconduct had occurred, dismissed him without notice and applied clawback and forfeiture of awards. Deloitte gave an unqualified opinion on the financial statements and internal controls; the internal-control assessment excluded TravelCenters of America, acquired in May 2023. The filing cover indicates that the financial statements reflect an error correction; the details are not clear from the supplied text.
Important facts for investors to verify
- Reconcile reported profit with underlying replacement-cost profit and assess the effect of fair-value accounting, impairments and tax items.
- Review the assumptions and sensitivities underlying the $5.7bn impairment charges, especially commodity prices, discount rates and the Gelsenkirchen refinery and offshore-wind valuations.
- Assess whether lower operating cash flow, higher finance debt and planned buybacks remain consistent with the company’s balance-sheet and credit-rating priorities.
- Track delivery of 2024 guidance and the conditions attached to planned buybacks, capital spending and divestment proceeds.
- Review Gulf of Mexico oil-spill payment schedules, climate and other litigation, and the potential for contingent liabilities or decommissioning costs to change.
- Confirm the nature and impact of the error correction indicated on the filing cover, and monitor the integration of TravelCenters of America into BP’s controls and safety systems.