Yahoo Finance BP p.l.c. (NYSE:BP) Q4 2023 Earnings Call Transcript
BP p.l.c. (NYSE:BP) Q4 2023 Earnings Call Transcript February 6, 2024
BP p.l.c. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Craig Marshall: Good morning, everyone, and welcome to BP's Fourth Quarter and Full Year 2023 Results Presentation. I'm delighted to be here today with our newly appointed Chief Executive Officer and Chief Financial Officer; Murray Auchincloss; and Kate Thomson. Before we begin today, let me draw your attention to our cautionary statement. During today's presentation, we will make forward-looking statements that refer to our estimates, plans and expectations. Actual results and outcomes could differ materially due to factors we note on this slide and in our U.K. and SEC filings. Please refer to our annual report, stock exchange announcement and SEC filings for more details. These documents, along with this presentation, are available on our website. Let me now hand over to Murray.
Murray Auchincloss: Good morning, everybody. Thanks for joining us today here at St. James. We've done this before, haven't we? But it's the first set of results where I have the privilege to talk to you as CEO of BP. It's a great company. It has great people, and it's an honor to lead. Our destination is unchanged, IOC to IEC, international oil company to integrated energy company. We're confident in our strategy to deliver this, but are going to do so is a simpler, more focused and higher value company, providing energy solutions for our customers who are asking us to help, contributing to the energy transition, all the while remaining pragmatic and adapting in line with demand, as you saw with the update to our strategy this time 12 months ago.
So what does it practically mean to transition from IOC to IEC. Over 100 years ago, we started to create our first value chain, oilfields attached to refineries, with products sold in service stations and airports. We're now introducing biofuels, sustainable aviation fuel and biodiesel to the customer. At the same time, we're lowering the carbon footprint of our plants by using lower carbon hydrogen and electricity for power. Why? Because we can deliver higher margins with lower emissions. Over 60 years ago, we started to create the second value chain, natural gas fields linked to domestic pipeline systems and eventually liquefaction plants. We're now introducing biogas, carbon sequestration and lower carbon electricity to the customer. Why?
Because we can deliver higher margins with lower emissions. And over the past 4 years, we've been accelerating our efforts to create a third value chain, lower carbon power and hydrogen. For example, using solar-wind to create lower carbon hydrogen to provide to our plants and customers and using those electrons to service the growing electricity demand through our EV charging business. Why? Because we can deliver higher margins with lower emissions. All of these chains are then optimized by our fantastic trading organization, driving superior returns to what a pure play can deliver. And the more we can interlink them, the more we can expand the returns. Over the past 4 years, we've delivered, on average, around a 4% uplift to group return on average capital employed across these chains through these efforts.
We think this is a sector leading. Now across all these chains, we've always have choice about how much we produce ourselves in the upstream or purchase from other producers. That equally applies to oil, natural gas and renewables. The magic is getting that mix right inside our business lines to optimize returns and trading optionality. The most important part is to ensure absolute discipline in investing [indiscernible] capital, ensuring we hit our return thresholds across these value chains. That's what an IEC is to me, investing in today's energy system while building out tomorrow's, lower carbon, higher margin. Now it's 4 years in. We've learned a lot and adapted along the way. It's made us stronger, more confident in the growth we have coming and more convinced about the value we can create.
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