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    BP PLC (BP)

    Q1 2024 Earnings Summary

    Reported on Mar 22, 2025 (Before Market Open)
    Pre-Earnings Price$39.04Last close (May 6, 2024)
    Post-Earnings Price$38.14Open (May 7, 2024)
    Price Change
    $-0.90(-2.31%)

    What went well

    • BP is confident in achieving 3–4% underlying cash flow growth per annum through 2025 and the rest of the decade, underpinned by strong growth projects and performance improvements.
    • BP has a resilient oil portfolio with capacity to grow production by 2–3% through 2027, supported by sanctions on high-margin projects in the Gulf of Mexico, Middle East, Canada, Brazil, and the North Sea.
    • BP is implementing at least $2 billion of cost savings by the end of 2026, through portfolio focus, digital transformation, supplier alliances, and global capability hubs, which may enhance EBITDA growth beyond existing targets.

    What went wrong

    • Concerns about BP's ability to meet its 2025 EBITDA targets in the Transition Growth Engines (TGEs): Analysts express skepticism, noting that consensus forecasts are below BP's targets. Specifically, the bioenergy business has started slower than expected due to factors like ongoing diesel recession in the U.S. and challenging bio margins in Europe. BP acknowledges these macro headwinds could impact their ability to achieve the $3 billion to $4 billion EBITDA target for TGEs by 2025. [[5]](Index 5)
    • Potential negative impact of cost inflation on future project returns: There are worries that rising costs, especially in deepwater and LNG projects, could erode returns and affect the viability of future investments like the Paleogene project and LNG expansion phases. BP admits that while they are working to mitigate inflation through competitive bidding and partnerships, tight capacity and high utilization rates in the industry may persist for another 3 to 5 years, posing a risk to project economics. [[13]](Index 13)
    • Adverse effects of the Egyptian currency devaluation on financial results: The significant devaluation of the Egyptian currency—from 30 to 48—has led to a negative foreign exchange impact of approximately $0.2 billion on BP's earnings in the quarter. This devaluation also contributed to an increase in the tax rate and negatively affected the gas and low carbon energy performance, highlighting BP's vulnerability to geopolitical and currency risks in its operating regions. [[2]](Index 2)

    Q&A Summary

    1. 2025 EBITDA Targets
      Q: Where are the risks in achieving 2025 EBITDA targets?
      A: Murray Auchincloss acknowledged that achieving the $3–$4 billion EBITDA from transition growth engines by 2025 faces macroeconomic challenges, but he expressed confidence due to strong operational momentum and growth from acquisitions like TA and Archaea.

    2. Cost Savings Impact on EBITDA
      Q: Will $2 billion cost savings raise EBITDA targets?
      A: Murray noted that while cost savings will help, they focus on delivering 3–4% underlying cashflow growth through 2025, and cost savings may mainly impact by 2026.

    3. Production Targets Adjustment
      Q: Will BP adjust its 2030 production reduction aim?
      A: Murray stated that the 2 million barrels per day production aim for 2030 could be higher or lower, depending on return-driven investments, emphasizing focus on cash flow and returns over volume.

    4. Dividend Growth Potential
      Q: Can buybacks and growth lead to higher dividends?
      A: Katherine Thomson explained that reductions in share count and underlying growth could support dividend increases, but the Board considers many factors when deciding.

    5. Countercyclical Investments in Low Carbon
      Q: Are you considering countercyclical acquisitions in low carbon?
      A: Murray indicated interest in countercyclical opportunities in low carbon energy, focusing on areas like biogas, biofuel, convenience, and electrification, while staying within the $16 billion capital frame.

    6. CapEx Guidance and Timing
      Q: Has project slippage affected CapEx spending?
      A: Katherine mentioned that the $16 billion CapEx guidance remains, but some payments shifted from Q2 to Q3, making spending more evenly spread over the year.

    7. BPX Production Growth
      Q: What's the outlook for BPX liquids production?
      A: Murray stated that BPX aims for 100–120 thousand barrels per day of liquids by 2025, with growth from the Permian and focusing on high-margin basins.

    8. Egypt Devaluation Impact
      Q: What is the financial impact of Egypt's devaluation?
      A: Katherine reported a $0.2 billion foreign exchange impact from Egypt's devaluation, affecting the tax rate and Q1 earnings.

    9. Diesel Recession Effects
      Q: How is the diesel recession impacting business?
      A: Katherine explained that lower spot freight rates are reducing diesel demand, especially among smaller truckers, but recovery is expected towards year-end, with full recovery next year.

    10. Relisting Not Planned
      Q: Is BP considering relisting in the U.S.?
      A: Murray stated that relisting is not on BP's agenda; they are focused on performance and delivering growth and returns.

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