SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the
period ended 26 February, 2025
BP p.l.c.
(Translation
of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file
annual
reports
under cover Form 20-F or Form 40-F.
Form
20-F |X| Form 40-F
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Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of
1934.
Yes No
|X|
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Exhibit
1.1
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Growing
shareholder value: a reset bp dated 26 February 2025
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Exhibit 1.1
26 February 2025
Growing shareholder value: a reset bp
●
Strategy
fundamentally reset: reducing
and reallocating capital expenditure, significantly reducing costs
and driving improved performance − to
grow cash flow and returns − supporting
a stronger balance sheet and resilient
distributions.
● Growing
upstream: increasing
oil & gas investment to ~$10bn p.a.; strengthening portfolio;
growing production to 2.3-2.5mmboed in 2030; additional ~$2bn
operating cash flow in 2027.
● Focusing
downstream: reshaping
portfolio to drive growth; high-grading and focusing on advantaged
and integrated positions; announced strategic review of Castrol;
driving improved performance; additional $3.5-4bn operating cash
flow in 2027.
● Disciplined
investment in the transition: selective
investment in biogas, biofuels and EV charging; capital-light
partnerships in renewables; focused investment in hydrogen/CCS;
investment in transition businesses of $1.5-2bn p.a., over $5bn
p.a. lower than previous guidance.
● Updated
financial frame: reducing
annual capex to $13-15bn to 2027; targeting significantly higher
structural cost reductions of $4-5bn by end 2027; $20bn divestments
by 2027, including potential proceeds from Lightsource bp and
strategic review of Castrol; reducing net debt, targeting $14-18bn
by end 2027; resilient shareholder distributions, guidance of
30-40% of operating cash flow.
● Growing
free cash flow and returns: targeting
>20% compound annual growth in adjusted free cash flow to 2027,
and returns on average capital employed of >16% by
2027.
bp today introduced a fundamentally reset strategy, with
significant capital reallocation, and plans to drive improved
performance, aimed at growing free cash flow, returns and long-term
shareholder value.
This strategy will see bp grow its upstream oil and gas business,
focus its downstream business, and
invest with increasing discipline into the transition. It builds on
bp's distinct strengths and competitive advantages as an integrated
energy company - with a world-class portfolio with top tier oil and
gas businesses in attractive basins and leading integrated
positions and brands across value chains, all underpinned by
trading, technology, and partnerships.
Chief executive Murray Auchincloss said: "Today
we have fundamentally reset bp's strategy. We are reducing and
reallocating capital expenditure to our highest-returning
businesses to drive growth, and relentlessly pursuing performance
improvements and cost efficiency. This is all in service of
sustainably growing cash flow and returns.
"We will grow upstream investment and production to allow us to
produce high margin energy for years to come. We will focus our
downstream on markets where we have leading integrated positions.
And we will be very selective in our investment in the transition,
including through innovative capital-light platforms. This is a
reset bp, with an unwavering focus on growing long-term shareholder
value."
Helge Lund, bp's chair, added: "The
board believes that this is an important strategic reset for bp and
is confident that it, together with rigorous performance
management, will deliver improved performance and sustainable value
for bp's shareholders. Over the past 12 months, we have worked
closely with Murray and his team as they have developed the new
direction, ensuring it reflects the significant changes we have
seen in energy markets and our purpose of delivering energy to the
world today and tomorrow. This new direction places free cash
flow growth, returns and value at its heart."
Financial highlights:
Together these are expected to strengthen bp's balance sheet,
increase efficiency and support higher returns.
●
Reducing
capital expenditure: total
capex of $13-15bn p.a. to 2027 - $1-3bn lower than in 2024;
expected to be ~$15bn in 2025.
●
Reallocating
capital expenditure to higher-growth: increasing oil & gas
investment to ~$10bn p.a.; transition investment1 $1.5-2bn
p.a., >$5bn p.a. lower than previous
guidance.
●
Reducing
costs: significantly
increasing target to $4-5bn of structural cost
reductions2 by
end 2027.
●
New
divestments: targeting
$20bn announced by end 2027; proceeds from strategic review of
Castrol and bringing partner into Lightsource bp to be dedicated to
strengthening balance sheet.
●
Reducing
net debt: over
time, targeting a range of $14-18bn by end
2027.
●
Distributions: guidance
of 30-40% of operating cash flow to
shareholders, over time, through share buybacks3 and
a resilient dividend - which
is expected to increase by at least 4% per ordinary share a year,
subject to board discretion4.
Share buybacks are expected to be announced at time of quarterly
results. Subject to board approval, bp expects the share buyback
for 1Q 2025 to be $0.75-1.0bn.
Primary targets:
bp is introducing four primary targets the delivery of which will
underpin growth in the value of bp:
●
Growing
free cash flow5,
with compound annual growth of greater than 20%,
2024-2027.6
●
Reducing
net debt,
targeting $14-18bn by end 2027.
●
Increasing
cost reduction target, with structural cost reductions
of $4-5bn by end-2027.
●
Generating
higher returns, with group return on average
capital employed above 16% in 2027.6
Subject to board approval, these targets will form part of the
basis for internal performance management and remuneration measures
through to 2027. All previous aims and targets have now been
retired.7
Reset strategy highlights:
Growing upstream:
●
Increasing
investment in
oil and gas: ~$10bn
p.a. through 2027, with expected returns
>15%.
●
Strengthening
portfolio: access
to discovered resources, reloading exploration
hopper.
●
10
new major projects to
start up by end 2027, and a further 8-10 by end
2030.
●
Growing
production8, expected
to grow to 2.3-2.5mmboed in 2030 with capacity to increase to
2035.
●
Reserves
replacement ratio10 of
~100% by end 2027.
●
Disciplined
expansion in biogas.
●
Structural
cost reductions of ~$1.5bn expected to be safely delivered by end
2027.
●
Growing
cash flow:
upstream cash flow8,9 expected
to increase by ~$2bn by 2027.
Focusing downstream:
●
Focusing
portfolio around bp's core integrated
positions.
−
Focusing
investment to ~$3bn by 2027.
−
Strategic
review of Castrol announced.
−
High-grading
mobility network, marketing Gelsenkirchen refinery, selective
investment in EV charging and biofuels growth markets.
●
Taking
clear actions to improve performance
−
Expect
to safely deliver ~$2.0bn structural cost reductions across
downstream portfolio.
−
Focused
customers growth from bp's most advantaged and integrated
businesses.
−
Expect
to consistently improve refining availability to
96%.
−
Realising
value and growth from acquisitions of bp bioenergy and
TravelCenters of America
●
Expected
returns of >15%.
●
Growing
cash flow:
downstream operating cash flow8,11 expected
to increase by $3.5-4bn by 2027
Disciplined investment in the transition:
●
Focused
on returns, fewer higher-returning opportunities,
accessing growth more efficiently,
●
Focused
investment in biogas, biofuels and EV
charging: driven
by returns − high
grading projects, leveraging existing infrastructure, focusing on
fewer key markets.
●
Capital-light
in low carbon energy: growing
top tier offshore wind and solar platforms in capital light way for
bp; limited further projects in hydrogen and
carbon capture; delivering trading upside and
optionality for future growth.
●
Reducing
costs: annual
structural cost reduction of >$0.5bn in low carbon energy by
2027.
●
Significantly
lower capex
into transition businesses: total capex in transition
businesses3 $1.5-2bn
p.a. − over
$5bn p.a. lower than previous guidance − with
average of less than $0.8bn p.a. in low carbon energy.
Focused sustainability aims:
●
bp
has reduced scope 1 and scope 2 emissions within its operational
control by ~38% against its 2019 baseline - beyond its target of
20% in 2025 - and
embedded sustainability into several key areas and management
processes.
●
bp's
2030 aim is now reduction of these operational emissions in a range
of 45-50% against the 2019 baseline.
●
bp
is now focusing its
sustainability aims on those most relevant to
the long-term success of its businesses and to its net zero
ambition.
●
Five
refreshed sustainability aims: net zero operations; net zero
sales; people; biodiversity; and water. Some previous aims are
embedded into existing management systems and
processes.
This announcement contains inside information. The person
responsible for arranging the release of this announcement on
behalf of BP p.l.c. is Ben Mathews, Company Secretary.
Further information:
bp press office, London: [email protected]
Footnotes:
1 excludes deferred
consideration for 2024 acquisition of bp bioenergy in
2025.
2 vs 2023 baseline, of which $0.8bn was
delivered in 2024.
3 includes
share buybacks for the purposes of offsetting any dilution from
employee share schemes over time.
4 quarterly
dividend and share buyback decisions are subject to board
discretion each quarter taking into account factors including
outlook for cash flow, share count reduction from buybacks and
maintaining 'A' range credit metrics.
5
adjusted
free cash flow = operating cash flow excluding working capital
(after adjusting for inventory holding gains/losses, fair value
accounting effects and other adjusting items) less cash capital
expenditure.
6 at $70/bbl Brent, $4/mmBtu Henry Hub,
and $17/bbl refining marker margin, all 2024
real.
7 this announcement sets out all of
bp's aims and targets relating to its new strategy. All prior
financial and strategic aims and targets relating to bp's previous
strategy are retired, including all aims, targets and other
disclosures first announced on 4 August 2020.
8
operating cash flow,
2024-2027 growth.
9
excludes divestments.
10 excludes in-year acquisitions and
divestments.
11 excludes any potential
transactions relating to announced Castrol strategic review and
Gelsenkirchen.
Cautionary statement:
In order to utilize the 'safe harbor' provisions of the United
States Private Securities Litigation Reform Act of 1995 (the
'PSLRA') and the general doctrine of cautionary statements, bp is
providing the following cautionary statement:
The discussion in this announcement contains certain forecasts,
projections and forward-looking statements - that is, statements
related to future, not past events and circumstances - with respect
to the financial condition, results of operations and businesses of
bp and certain of the plans and objectives of bp with respect to
these items. These statements may generally, but not always, be
identified by the use of words such as 'will', 'expects', 'is
expected to', 'aims', 'should', 'may', 'objective', 'is likely to',
'intends', 'believes', 'anticipates', 'plans', 'we see', 'focus on'
or similar expressions.
In particular, the following, among other statements, are all
forward-looking in nature: plans, expectations and assumptions
regarding bp's new strategy and its impact, including on bp's
balance sheet, cash flow, returns including return on average
capital employed, cost efficiency, performance improvement,
improvements to bp's refining businesses; plans and expectations
regarding bp's updated financial frame, reductions in and
reallocation of capital expenditures, structural costs, portfolio
management and major project start-ups; plans and expectations for
bp's oil and gas operations including production, reserves
replacement ratio and operating cash flow; plans and expectations
regarding bp's four primary targets of growing free cash flow,
reducing net debt, increasing cost reduction target and generating
higher returns; plans and expectations regarding the timing,
quantum, nature and impact of certain acquisitions and divestments;
plans and expectations related to increased investments in oil and
gas; plans and expectations regarding Castrol; plans and
expectations regarding the repositioning and decapitalisation of
bp's low carbon energy businesses, development of bp's bioenergy,
biofuels, EV charging, hydrogen, carbon capture and Lightsource bp
businesses; bp's plans and expectations related to its five
sustainability aims including bp's 2030 aim for a reduction in
Scope 1 and 2 emissions from within bp's operational control; and
plans and expectations on the timing and amount of dividends and
other shareholder distributions, including share
buybacks.
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 or outcomes may differ materially from those
expressed in such statements, depending on a variety of factors,
including: the extent and duration of the impact of current market
conditions including the volatility of oil prices, the effects of
bp's plan to exit its shareholding in Rosneft and other investments
in Russia, overall global economic and business conditions
impacting bp's business and demand for bp's products as well as the
specific factors identified in the discussions accompanying such
forward-looking statements; changes in consumer preferences and
societal expectations; the pace of development and adoption of
alternative energy solutions; developments in policy, law,
regulation, technology and markets, including societal and investor
sentiment related to the issue of climate change; the receipt of
relevant third party and/or regulatory approvals including ongoing
approvals required for the continued developments of approved
projects; 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 acquisitions and divestments; future levels of
industry product supply, demand and pricing, including supply
growth in North America and continued base oil and additive supply
shortages; OPEC+ quota restrictions; PSA and TSC 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 and policies, including related to climate
change; changes in social attitudes and customer preferences;
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 America 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; bp's access to future credit resources; business
disruption and crisis management; the impact on bp's reputation of
ethical misconduct and non-compliance with regulatory obligations;
trading losses; major uninsured losses; the possibility that
international sanctions or other steps taken by governmental or any
other relevant persons may impact bp's ability to sell its
interests in Rosneft, or the price for which bp could sell such
interests; 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 those factors discussed under
"Principal risks and uncertainties" in bp's Report on Form 6-K
regarding results for the six-month period ended 30 June 2024 as
filed with the US Securities and Exchange Commission (the "SEC") as
well as those factors discussed under "Risk factors" in bp's Annual
Report and Form 20-F for fiscal year 2023 as filed with the
SEC.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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BP
p.l.c.
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(Registrant)
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Dated: 26
February 2025
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/s/ Ben
J. S. Mathews
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Ben J.
S. Mathews
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Company
Secretary
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