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Unlocking BP's 2024 Q1 Performance
A Visual Dive into the Energy Giant's Financial Health
Connor Clark
May 23, 2024 • Estimated Reading Time: 7 minutes
Q1 2024 | Visual Financial Statement In this edition, we focus on BP's financial performance for the first quarter of 2024. Through a series of clear and concise graphs, we'll break down the key numbers and trends. Our aim is to provide you with a quick yet thorough understanding of BP's financial health and strategic direction. Join us as we explore the data and what it means for the energy giant's future.
Today in a snapshot:
📈Financial Performance: Achieved a 4.8% margin and a net profit of U$2.4 billion for Q1.
💪Cash Flow and Investment: U$1.75B shares bought back, with a further $1.75B announced next quarter.
⚖️Balance Sheet Stability: Stable with a marginal 2% reduction in the overall assets
Income Statement
Income Statement Q1 2024
Net profit took a considerable hit compared to 23Q1. This is attributed to several factors:
Lower realisations,
Lower industry refining margins,
an exception gas market this time last year,
outages of the Whiting refinery,
several accounting adjustments
a high effective tax rate (ETR) at 54% compared to 29% in 23Q1
Foreign Exchange (FX) rates
Despite these negative influences, BP produced a net profit for the quarter.
Let’s have a quick look at two of the reported sectors
Gas & Low Carbon Energy
Foreign Exchange (FX) rates and lower demand have had a significant negative impact on this sector.
Renewables
Renewables pipeline per type in GW
GW: GigaWatt
BP has a large renewables pipeline at 58.5GW of capacity in its pipeline. A majority of this capacity is solar. The pipeline grew by 0.2GW this quarter. In addition, they currently have 2.7GW of installed capacity (up from 2.2GW 23Q1) and a further 6.2GW at FID. This brings the total proposed capacity to 64.7GW (up from 44.7GW 23Q1) or ~23.4M to 58.5M homes of power for a year.
Production
Period | Production (mboe/d) | Average Price($/boe) | Total ($/d) |
|---|---|---|---|
24Q1 | 914 | U$36.64 | U$33.5M |
23Q4 | 899 | U$40.17 | U$36.1M |
23Q1 | 969 | U$46.95 | U$45.5M |
mboe = mega (1000) barrel of oil equivalent | boe= barrel of oil equivalent | d: day
Gas hydrocarbon prices have been slowly reducing from their peak. The average realisation for this quarter was 20% less than 23Q1. Coupled with a slightly lower production, this sector’s overall revenue reduction is observed.
Customer & Products
The Customers & Products sector contributed a staggering 80% of the revenue generated. However, this sector has a slim margin of 4.6%, resulting in a low conversion to net profit.
Customers & Products Sector Breakdown Q1 2024
Despite an increase in revenue, this sector has seen its underlying RC profit drop by 52%. This is attributed to poor FX rates and the refinery outages.
RC Profit/Loss - Reflects the replacement cost of inventories sold in the period and is arrived at by excluding inventory holding gains and losses from profit or loss. RC profit or loss is the measure of profit or loss that is required to be disclosed for each operating segment under IFRS.
Strategic Updates
Gelsenkirchen Refinery Plans: BP plans to simplify and improve the Gelsenkirchen refinery by reducing its total production capacity from 2025 and increasing the production of lower-emission fuels.
Archaea Energy RNG Plant: BP's Archaea Energy opened its largest renewable natural gas plant in Kansas City, converting landfill gas into lower-carbon RNG. They also bought and fully own a landfill-gas-to-electric facility in California with plans to develop an RNG plant there.
New Bioenergy Brand: BP launched a new bioenergy brand called "bp bioenergy HVO," starting in the UK and the Netherlands, expanding their biofuel offerings alongside their EV charging brand, bp pulse.
Truck Stop Acquisition and EV Charging Expansion: BP acquired a major truck stop in Kent to support UK and European truck operators transitioning to electric vehicles. They also opened their first bp pulse Gigahub in Houston, Texas, with 24 ultra-fast charge points.
Loyalty Program in New Zealand: BP New Zealand partnered with Woolworths' "Everyday Rewards" loyalty program, allowing customers to collect points and get rewards at BP retail sites.
Additional Retail Sites: BP opened up 50 new sites over the quarter, increasing BPs market presence.
Period | Number of retail sites |
|---|---|
24Q1 | 21,150 |
23Q4 | 21,100 |
23Q1 | 20,700 |
Cashflow Statement
Cashflow Statement Q1 2024
This quarter, BP dipped into its cash reserves, U$1.5B, to support its activities. However, with U$31.5B remaining in reserve, it is unlikely that this will cause an issue.
The net income per sector (below) shows this quarter’s cash flow reduction—notably, a considerable reduction in the Gas & LCE sector.
Period | Gas & Low Carbon Energy | Oil Production & Operations | Customers & Products | Corporate & Other |
|---|---|---|---|---|
24Q1 | U$1,036M | U$3,060M | U$998M | (U$300M) |
23Q4 | U$2,169M | U$1,879M | (U$554M) | (U$16M) |
23Q1 | U$7,347M | U$3,317M | U$2,680M | (U$90M) |
Balance Sheet
Balance Sheet Q1 2024
As expected for an organisation of this size, the balance sheet has not changed much over the reported quarter. The total assets decreased by ~U$5B primarily due to a reduction in current assets, such as cash and AR. Subsequently, the total liabilities were reduced by a similar amount. This resulted in a marginal change to the total equity (-U$0.5B).
Q2 Guidance
BP has provided some guidance on Q2:
Capitalising on the Whiting Refinery outage with increased turnaround activity,
Seasonally higher demand in Customers. However, it is still sensitive to supply costs,
Upstream production to be slightly lower than this quarter,
Products in North America have a narrower margin.
Cheers,
Connor
All data can be found at the BP Investors website