Reducing net debt, growing distributions, executing strategy
| $ million |
Third quarter 2021 | Second quarter 2021 | Third quarter 2020 |
Nine months 2021 | Nine months 2020 |
| Profit (loss) for the period attributable to bp shareholders |
(2,544) | 3,116 | (450) | 5,239 | (21,663) |
| Inventory holding (gains) losses*, net of tax | (390) | (736) | (194) | (2,468) | 2,734 |
| Replacement cost (RC) profit (loss)* |
(2,934) | 2,380 | (644) | 2,771 | (18,929) |
| Net (favourable) adverse impact of adjusting items*(a), net of tax | 6,256 | 418 | 730 | 5,979 | 13,124 |
| Underlying RC profit (loss)* |
3,322 | 2,798 | 86 | 8,750 | (5,805) |
| Operating cash flow* |
5,976 | 5,411 | 5,204 | 17,496 | 9,893 |
| Capital expenditure* |
(2,903) | (2,514) | (3,636) | (9,215) | (10,564) |
| Divestment and other proceeds(b) |
313 | 215 | 597 | 5,367 | 2,413 |
| Net issue (repurchase) of shares |
(926) | (500) | — | (1,426) | (776) |
| Net debt*(c) |
31,971 | 32,706 | 40,379 | 31,971 | 40,379 |
| Announced dividend per ordinary share (cents per share) | 5.46 | 5.46 | 5.25 | 16.17 | 21.00 |
| Underlying RC profit (loss) per ordinary share* (cents) | 16.48 | 13.80 | 0.42 | 43.22 | (28.72) |
| Underlying RC profit (loss) per ADS* (dollars) | 0.99 | 0.83 | 0.03 | 2.59 | (1.72) |
(a) Prior to 2021 adjusting items were reported under two different headings – non-operating items and fair value accounting effects*. See page 30 for more information.
(b) Divestment proceeds are disposal proceeds as per the condensed group cash flow statement. Other proceeds were $675 million from the sale of a 49% interest in a controlled affiliate holding certain refined product and crude logistics assets onshore US in the nine months 2021, $481 million in relation to the sale of an interest in bp's UK retail property portfolio in the third quarter and nine months 2020 and also $455 million in relation to TANAP pipeline refinancing in the nine months 2020. There are no other proceeds in the third quarter 2021.
(c) See Note 9 for more information.
RC profit (loss), underlying RC profit (loss) and net debt are non-GAAP measures. Inventory holding (gains) losses and adjusting items are non-GAAP adjustments.
* For items marked with an asterisk throughout this document, definitions are provided in the Glossary on page 35.
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 results 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’ or similar expressions.
In particular, the following, among other statements, are all forward looking in nature: expectations regarding the COVID-19 pandemic, including its risks, impacts, consequences, duration, continued restrictions, challenges, bp’s response, the impact on bp’s financial performance (including cash flows and net debt), operations and credit losses, and the impact on the trading environment, oil and gas prices, and global GDP; expectations regarding the shape of the COVID-19 recovery and the pace of transition to a lower- carbon economy and energy system; plans, expectations and assumptions regarding oil and gas demand, supply or prices, the timing of production of reserves, or decision making by OPEC+; expectations regarding refining margins, refinery utilization rates and product demand; expectations regarding bp’s future financial performance and cash flows; expectations regarding future upstream production and project ramp-up; expectations regarding supply shortages; expectations with respect to completion of transactions and the timing and amount of proceeds of agreed disposals; expectations with regards to bp’s transformation to an IEC; plans and expectations regarding bp’s financial framework; expectations regarding price assumptions used in accounting estimates; bp’s plans and expectations regarding the amount and timing of share buybacks; expectations regarding future quarterly dividends; plans and expectations regarding net debt; plans and expectations regarding bp’s credit rating, including in respect of maintaining a strong investment grade credit rating; plans and expectations regarding the allocation of surplus cash flow to share buybacks and strengthening the balance sheet; plans and expectations regarding bp’s 2025 target of 20GW renewables developed to FID and Lightsource bp’s increased development target for 2025; plans and expectations regarding the East Coast Cluster and the Northern Endurance Partnership; plans and expectations with respect to the total capital expenditure, depreciation, depletion and amortization, expected tax rate and business and corporate underlying annual charge for 2021; plans and expectations regarding net debt; plans and expectations regarding the divestment programme, including the amount and timing of proceeds in 2021, and plans and expectations in respect of reaching $25 billion of divestment and other proceeds by 2025 and expectations that divestment and other proceeds for 2021 will be $6-7 billion; plans and expectations regarding bp’s renewable energy and alternative energy businesses; expectations regarding reported and underlying production and related major project ramp-up, capital investments, divestment and maintenance activity; expectations regarding price assumptions used in accounting estimates; expectations regarding the underlying effective tax rate for 2021; expectations regarding the timing and amount of future payments relating to the Gulf of Mexico oil spill; plans and expectations that capital expenditure, including inorganic capital expenditure, will reach around $13 billion in 2021; expectations regarding Rosneft’s operational and financial results and expectations with respect to Rosneft dividends; plans and expectations regarding new joint ventures and other agreements, including partnerships and other collaborations with Prumo, Siemens, SPIC Brazil, Reliance Industries, Shenzhen Gas, Swiggy, ADNOC, Masdar, Eni, Equinor, National Grid, Shell, Total, EnBW, Albert Heijn, NYK Line, ExxonMobil, Daimler, BMW, Albert Heijn and our Jio-bp JV, as well as plans and expectations regarding the solar development projects acquired from 7X Energy, the Thunder Horse South Expansion Phase 2 project, the sale of bp’s participating interest in the Shallow Water Absheron Peninsula exploration project to LUKOIL, Yermak IJV’s access to new license blocks, the Thorntons business, bp’s investment in Digital Charging Solutions, bp’s planned investment in the Cherry Point refinery, the acquisition of Blueprint Power, and bp ventures’ investment in BluSmart.
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 extent and duration of the impact of current market conditions including the volatility of oil prices, the impact of COVID-19, overall global economic and business conditions impacting our business and demand for our 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; 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; 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 elsewhere in this report, as well those factors discussed under “Risk factors” in bp Annual Report and Form 20-F 2020 as filed with the US Securities and Exchange Commission.