Editing BP p.l.c.
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== '''<u>Operations</u>''' == | == '''<u>Operations</u>''' == | ||
=== | === Business Overview & Industry Chain ([https://www.youtube.com/watch?v=o_m0a1JZdco&ab_channel=bp youtube]) === | ||
* Exploration: one of BP's distinctive strengths | * Exploration: one of BP's distinctive strengths | ||
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*** operating a <u>wind business</u> in the United States | *** operating a <u>wind business</u> in the United States | ||
=== | === Strategy === | ||
[[File:Bp-strategy-graphic.png|center|thumb|639x639px|BP Company Strategy Graphics: Sustainability]] | |||
=== Productions & Operations ([https://www.bp.com/en/global/corporate/what-we-do/production-and-operations.html site]) === | |||
[[File:Production- -operations.png|none|thumb|2400x2400px|BP global production asset distribution]] | |||
=== | |||
[[File:Production- -operations.png|thumb|2400x2400px|BP global production asset distribution | |||
Mission: find and develop hydrocarbon resources, operate oil and gas production assets, as well as refineries, pipelines and terminals around the world. | Mission: find and develop hydrocarbon resources, operate oil and gas production assets, as well as refineries, pipelines and terminals around the world. | ||
=== | === Products & Offerings === | ||
==== Global Consumer Project ==== | ==== Global Consumer Project ==== | ||
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* Air BP | * Air BP | ||
** | ** leading supplier of aviation fuel products and services, fuelling more than 6,000 flights per day at 700+ locations in 50 countries . Alongside others in the industry, we’re working hard to increase the supply and demand of sustainable aviation fuel – a key route to reducing carbon emissions in aviation. | ||
* Castrol | * Castrol | ||
** | ** one of the world’s <u>leading lubricant brands</u>, serves customers/consumers in <u>automotive, marine, industrial and energy sectors</u>. | ||
** Recognised for innovation and high performance, Castrol branded products and services keep things moving, whether an electric vehicle, a Formula One car, a wind turbine, a production line or the Mars rover. Castrol also operates a network of <u>auto service workshops</u>. | ** Recognised for innovation and high performance, Castrol branded products and services keep things moving, whether an electric vehicle, a Formula One car, a wind turbine, a production line or the Mars rover. Castrol also operates a network of <u>auto service workshops</u>. | ||
* | * mobililty & convenience | ||
** 20,500 branded retail sites worldwide are a familiar sight at the roadside. | ** 20,500 branded retail sites worldwide are a familiar sight at the roadside. | ||
** Offer high-quality <u>fuels at the pump</u> and in some countries, <u>fast electric vehicle chargers</u> on our forecourts. | ** Offer high-quality <u>fuels at the pump</u> and in some countries, <u>fast electric vehicle chargers</u> on our forecourts. | ||
** Inside our <u>convenience stores</u>, we offer hot drinks and snacks in our wild bean cafés, while also providing food for later, with retail partners such as M&S in the UK or REWE-to-go in Germany. | ** Inside our <u>convenience stores</u>, we offer hot drinks and snacks in our wild bean cafés, while also providing food for later, with retail partners such as M&S in the UK or REWE-to-go in Germany. | ||
* BP Pulse | * BP Pulse | ||
** | ** provides <u>electric vehicle (EV) charging solutions</u> on-the-go and for fleets. We’re rolling out fast and convenient charge points at bp retail sites, dedicated charging hubs and at key destinations. Our main markets are the UK, Germany, China and the US, with more to come including Spain and Australia. The bp pulse fleet team is delivering software-based solutions to our global partners, supporting fleets’ transition to EVs. | ||
* | * fuel supply & midstream | ||
** | ** moving the products that keep our customers moving – by pipeline or truck, rail or ship. We <u>safely deliver energy</u> to where it is needed, while developing low carbon biofuels for the future. | ||
=== | === Recent Projects === | ||
* <u>2021</u> [https://www.bp.com/en_gb/united-kingdom/home/where-we-operate/reimagining-teesside/hygreenteesside.html Green hydrogen project in Teesside, UK]: This project will produce green hydrogen from renewable energy sources, such as wind and solar. The hydrogen will be used to power buses, trucks, and other vehicles. | * <u>2021</u> [https://www.bp.com/en_gb/united-kingdom/home/where-we-operate/reimagining-teesside/hygreenteesside.html Green hydrogen project in Teesside, UK]: This project will produce green hydrogen from renewable energy sources, such as wind and solar. The hydrogen will be used to power buses, trucks, and other vehicles. | ||
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[https://www.bp.com/en/global/corporate/who-we-are/our-transformation.html other projects] | [https://www.bp.com/en/global/corporate/who-we-are/our-transformation.html other projects] | ||
== '''<u>Leadership Team</u>''' | == '''<u>Leadership Team</u>''' == | ||
[[File:Bernard Looney.png|thumb|alt=|'''Bernard Looney''' - Chief executive officer]] | |||
=== Chief executive officer - Bernard Looney === | |||
Bernard is leading bp’s transformation to an integrated energy company – one that creates long-term shareholder value by delivering solutions to the trilemma of secure, affordable and lower carbon energy. Bernard has spent his entire career at bp, joining as an engineer in 1991, and has held a number of operational and managerial positions, including in Alaska, the Gulf of Mexico, Vietnam and the UK North Sea. He is an advocate for inclusion, mental health and the role that greening companies like bp can play in helping the world get to net zero. He is also an ambassador for 25 x 25, an initiative to improve the gender balance among the leadership of FTSE companies. Bernard is on the boards of FCLTGlobal and the Sustainable Markets Initiative (SMI). He is also a steering committee member for the Council for Inclusive Capitalism. Bernard is a fellow of the Royal Academy of Engineering, the Irish Academy of Engineering and the Energy Institute.He has an honorary doctorate and a bachelor’s degree in electrical engineering from University College Dublin, and a master’s in management from Stanford Graduate School of Business. | |||
[[File:Murray Auchincloss .png|thumb|'''Murray Auchincloss''' - Chief financial officer]] | |||
=== Chief financial officer - Murray Auchincloss === | |||
Murray Auchincloss qualified as a chartered financial analyst in the US, leading on to a wide range of tax and financial roles, first for Amoco and then for bp after the two organizations merged in 1998. Murray has worked in both the US and the UK, in a range of roles including chief financial officer, Upstream, and chief financial officer, North Sea. He was the chief financial officer of the company’s North American Gas business and, as head of the chief executive’s office for three years, managed all aspects of that office and the executive process. As chief financial officer, Murray heads up finance, tax, treasury, planning and performance management, mergers and acquisitions, investor relations, audit, global business services and procurement. Murray is currently a member of the board of directors for Aker BP ASA, Norway, and a member of the 100 Group Main Committee. | |||
[[File:Gordon Birrell.png|thumb|'''Gordon Birrell''' - EVP, production & operations]] | |||
=== EVP, production & operations - Gordon Birrell === | |||
Before being appointed to his new role, Gordon was chief operating officer for production, transformation and carbon. In a long bp career, Gordon has spent time in various technical, safety and operational risk (S&OR) and leadership roles including four years as bp president Azerbaijan, Georgia and Turkey. | |||
[[File:Giulia Chierchia.png|thumb|'''Giulia Chierchia -''' EVP, strategy, sustainability & ventures]] | |||
=== EVP, strategy, sustainability & ventures - Giulia Chierchia === | |||
Giulia joined bp in April 2020 as Executive Vice President, Strategy & Sustainability. In her role, Giulia drives bp’s strategy, sustainability & ventures agenda. She has also oversight for the group’s ethics and compliance organisation. Prior to bp, Giulia worked for McKinsey, where she was a senior partner. She led the global downstream oil and gas practice and was a key member of the chemicals and electricity, power and natural gas practices. She has more than 10 years’ experience in the energy sector, including helping companies shape their strategies for the energy transition. Giulia graduated from Bocconi University in Milan and holds an MBA from INSEAD. She is half Belgian, half Italian and grew up in London. She is also a mother of 2 children. | |||
[[File:Emma Delaney.png|thumb|'''Emma Delaney''' - EVP, customers & products]] | |||
=== EVP, customers & products - Emma Delaney === | |||
Emma has spent 25 years working in bp, both in the Upstream and the Downstream, most recently as regional president for West Africa. Prior to this role she held a variety of senior roles including Upstream CFO for Asia Pacific and head of business development for gas value chains. In Downstream she held roles in retail and commercial fuels and planning. | |||
[[File:Anja-Isabel Dotzenrath.png|thumb|'''Anja-Isabel Dotzenrath''' - EVP, gas & low carbon energy]] | |||
=== EVP, gas & low carbon energy - Anja-Isabel Dotzenrath === | |||
Anja-Isabel is helping lead bp’s transformation to integrated energy company by building a world-leading business in low carbon by integrating gas, renewables, hydrogen and biofuels at scale. Previously, Anja-Isabel ran a renewables business portfolio of nearly 13 gigawatts as CEO, RWE Renewables. Before joining RWE, she led E.ON's Climate & Renewables business as chief executive and previously as chief operating officer. She is a long-time advocate of the need to decarbonise energy, believing it key to economic development and to human and social well‐being. | |||
[[File:Kerry Dryburgh.png|thumb|'''Kerry Dryburgh''' - EVP, people & culture ]] | |||
=== EVP, people & culture - Kerry Dryburgh === | |||
Kerry was previously head of HR for the Upstream and has held a series of senior HR positions. She was a key driver behind the Upstream people transformation during 2015-2017. Kerry previously ran HR in bp’s Shipping, IST and corporate functions teams. She brings experience from other sectors in Europe and Asia, having worked at both BT and Honeywell before joining bp. She currently sits as a non-executive director for the United Kingdom Strategic Command. | |||
[[File:Carol Howle.png|thumb|314x314px|'''Carol Howle''' - EVP, trading & shipping]] | |||
=== EVP, trading & shipping - Carol Howle === | |||
Before taking on her current role, Carol ran bp Shipping and was the chief operating officer for IST oil. She has more than 20 years in the energy industry, many in integrated supply and trading. Previous roles, include chief operating officer for natural gas liquids, regional leader of global oil Europe and finance. Carol also served as the head of the group chief executive’s office. | |||
[[File:William Lin.png|thumb|'''William Lin''' - EVP, regions, corporates & solutions ]] | |||
=== EVP, regions, corporates & solutions - William Lin === | |||
William served as chief operating officer, Upstream regions before joining the leadership team. He has worked in bp for 25 years having spent most of his career working abroad in different countries. Previous senior roles include vice president - gas development and operations for Egypt, regional president for Asia Pacific and head of the group chief executive’s office. William managed the successful completion, start-up and operation of the Tangguh LNG facility during his time in Indonesia. He is a non-executive director for Pan American Energy Group, a leading private integrated energy producer in Argentina, and a member of the supervisory board for Corbion, a Dutch-listed global food ingredients and biochemicals company. | |||
[[File:Leigh-Ann Russell.png|thumb|'''Leigh-Ann Russell''' - EVP, innovation & engineering ]] | |||
=== EVP, innovation & engineering - Leigh-Ann Russell === | |||
Leigh-Ann is a member of bp’s executive committee, reporting to the CEO. As Executive Vice President, Innovation & Engineering, her role covers that of Chief Scientist, Chief Technology Officer, and Chief Digital Officer. In this capacity, she leads an organisation of 5000 scientists, engineers, safety professionals, and digital experts to deliver bp’s purpose to reimagine energy for people and the planet. Prior to this role, Leigh-Ann held as the role of bp’s Chief Procurement Officer, where she was accountable for a safe, ethical, and competitive supply chain of circa $30B of global spend. Leigh-Ann’s career has anchored in engineering and operations. Previous roles include Engineering Manager and Operations Manager for bp’s North Sea region, and globally as Vice President of Technical Functions, which saw her lead the process safety, engineering, and operations disciplines for bp’s Wells function. Leigh-Ann holds a BSc Mechanical Engineering from the University of Aberdeen, is a Chartered Engineer, and has been recognised with Fellowships of the Royal Academy of Engineering, the Royal Society of Edinburgh, and the Energy Institute. Leigh-Ann was also conferred the honorary title of Professor of Practice of Queen’s University Belfast in 2022. Leigh-Ann is a Non-Executive Director on the board at Hill & Smith Holdings plc., a FTSE250 company which aims to create sustainable infrastructure and safe transport through innovation. | |||
[[File:Eric Nitcher.png|thumb|'''Eric Nitcher''' - EVP, legal ]] | |||
=== EVP, legal - Eric Nitcher === | |||
Eric sat on the executive team as group general counsel from 2017. He played a key role in forming the Russian joint venture TNK-BP and settling Deepwater Horizon claims. He began his career as a litigation and regulatory lawyer in Wichita, Kansas. He joined Amoco in 1990 and over the years has held a wide variety of roles, both in the US and elsewhere. Eric is a non-executive director for Pan American Energy Group, a leading private integrated energy producer in Argentina. | |||
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The table below shows revenue, EBIT and other financials for the previous 5 years. Revenue has shown an overall decline over the previous five years. The steep decline in 2020 was due to the global coronavirus pandemic. The jump in earnings from 2020 to 2021 and 2022 is due to the global volatility in oil prices as a result of the conflict in Ukraine. NCWC is non-cash working capital, and is calculated to be used in the DCF valuation below. | The table below shows revenue, EBIT and other financials for the previous 5 years. Revenue has shown an overall decline over the previous five years. The steep decline in 2020 was due to the global coronavirus pandemic. The jump in earnings from 2020 to 2021 and 2022 is due to the global volatility in oil prices as a result of the conflict in Ukraine. NCWC is non-cash working capital, and is calculated to be used in the DCF valuation below. | ||
{| class="wikitable" | {| class="wikitable" | ||
|+Historical Financials | |+Historical Financials | ||
| '''Units ($m)''' | | '''Units ($m)''' | ||
|'''2018''' | |'''2018''' | ||
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Notes - P&M = Production and Manufacturing, D&A = Distribution and Administration. | Notes - P&M = Production and Manufacturing, D&A = Distribution and Administration. | ||
[[File:Historical Revenue bp.png|center|thumb|735x735px]] | [[File:Historical Revenue bp.png|center|thumb|735x735px]] | ||
=== Forecasts === | === Forecasts === | ||
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|+WACC Calculation | |+WACC Calculation | ||
| '''Risk Free Rate of Return''' | | '''Risk Free Rate of Return''' | ||
|4.5% | |4.5% | ||
|- | |- | ||
| '''Beta''' | | '''Beta''' | ||
|1.17 | |1.17 | ||
|- | |- | ||
| '''Market Rate of Return''' | | '''Market Rate of Return''' | ||
|7.4% | |7.4% | ||
|- | |- | ||
| '''Cost of Equity''' | | '''Cost of Equity''' | ||
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|- | |- | ||
| '''Credit Spread''' | | '''Credit Spread''' | ||
|1.42% | |1.42% | ||
|- | |- | ||
| '''Cost of Debt''' | | '''Cost of Debt''' | ||
| Line 806: | Line 730: | ||
|- | |- | ||
|'''Shares Outstanding''' | |'''Shares Outstanding''' | ||
|17,270.00 | |17,270.00 | ||
|- | |- | ||
|'''Share Price''' | |'''Share Price''' | ||
|$ 6.13 | |$ 6.13 | ||
|- | |- | ||
| '''Equity''' | | '''Equity''' | ||
| Line 818: | Line 742: | ||
|- | |- | ||
|'''Weighted Average Maturity''' | |'''Weighted Average Maturity''' | ||
|14.00 | |14.00 | ||
|- | |- | ||
|'''Interest Expense''' | |'''Interest Expense''' | ||
|1,632.00 | |1,632.00 | ||
|- | |- | ||
| '''Debt''' | | '''Debt''' | ||
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|'''5.8%''' | |'''5.8%''' | ||
|} | |} | ||
The WACC for bp used in the DCF valuation was 5.8%, note the share price is of bp on it's primary listing, the London stock exchange | The WACC for bp used in the DCF valuation was 5.8%, note the share price is of bp on it's primary listing, the London stock exchange. The price has been converted from GBP to USD for ease of calculation. | ||
=== DCF === | === DCF === | ||
Units are in $ millions. | Units are in $ millions. | ||
{| class="wikitable" | {| class="wikitable" | ||
| '''FCF''' | | '''FCF''' | ||
|'''25,351.15''' | |'''25,351.15''' | ||
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The following table compares bp to it's major competitors in the oil and gas industry globally. | The following table compares bp to it's major competitors in the oil and gas industry globally. | ||
{| class="wikitable" | {| class="wikitable" | ||
|'''Company''' | |'''Company''' | ||
|'''P/E''' | |'''P/E''' | ||
| Line 1,171: | Line 1,082: | ||
=='''<u>ESG Factors</u>'''== | =='''<u>ESG Factors</u>'''== | ||
=== Environmental | === Environmental === | ||
This aspect focuses on BP's impact on the environment, including its carbon emissions, energy efficiency, and efforts to transition to cleaner energy sources. BP has announced ambitious plans to become a net-zero emissions company by 2050 or sooner. This involves reducing its carbon footprint across its operations, investing in renewable energy sources like wind and solar, and developing technologies for carbon capture and storage. | This aspect focuses on BP's impact on the environment, including its carbon emissions, energy efficiency, and efforts to transition to cleaner energy sources. BP has announced ambitious plans to become a net-zero emissions company by 2050 or sooner. This involves reducing its carbon footprint across its operations, investing in renewable energy sources like wind and solar, and developing technologies for carbon capture and storage. | ||
BP is resolutely committed to achieving net-zero carbon emissions by 2050, or even earlier, encompassing Scope 1, 2, and 3 emissions, supported by ambitious targets for 2025 and further aspirations for 2030. Guided by five primary objectives aimed at facilitating global net-zero aspirations, BP has undertaken a stance of refraining from exploration in new nations. The company's capital expenditure dedicated to transition efforts is projected to exceed 40% of total spending by 2025, progressively increasing to approximately 50% by 2030. | BP is resolutely committed to achieving net-zero carbon emissions by 2050, or even earlier, encompassing Scope 1, 2, and 3 emissions, supported by ambitious targets for 2025 and further aspirations for 2030. Guided by five primary objectives aimed at facilitating global net-zero aspirations, BP has undertaken a stance of refraining from exploration in new nations. The company's capital expenditure dedicated to transition efforts is projected to exceed 40% of total spending by 2025, progressively increasing to approximately 50% by 2030. | ||
=== Social | === Social === | ||
BP's social initiatives involve its interactions with local communities, employees, and other stakeholders. This can include measures to ensure workplace safety, diversity and inclusion in the workforce, and contributing positively to the communities where they operate. Social responsibility also extends to issues like human rights, labor practices, and community development. | BP's social initiatives involve its interactions with local communities, employees, and other stakeholders. This can include measures to ensure workplace safety, diversity and inclusion in the workforce, and contributing positively to the communities where they operate. Social responsibility also extends to issues like human rights, labor practices, and community development. | ||
In 2022, BP achieved a reduction in combined tier 1 and tier 2 process safety incidents compared to the previous year. The company is dedicated to attaining a net positive impact on biodiversity within its new projects. Annual bonuses for the year were tied to safety (15%) and emissions reduction (15%) metrics, reinforcing these key priorities. Notably, BP's leadership team consists of six women out of eleven members, with a significant rise in female representation within the extended leadership team (41%). The company is actively spearheading efforts to drive the advancement and expansion of natural climate solutions, while also asserting its commitment to a just transition, encompassing the development of skills pertinent to the future energy landscape. Transparent practices are upheld through various disclosures, including TCFD, SASB, tax transparency, and updates on trade associations. BP places a strong emphasis on mental health and well-being within its workforce agenda. The company's overarching objectives include five initiatives to enhance people's lives and an additional five goals aimed at fostering a caring ethos. | In 2022, BP achieved a reduction in combined tier 1 and tier 2 process safety incidents compared to the previous year. The company is dedicated to attaining a net positive impact on biodiversity within its new projects. Annual bonuses for the year were tied to safety (15%) and emissions reduction (15%) metrics, reinforcing these key priorities. Notably, BP's leadership team consists of six women out of eleven members, with a significant rise in female representation within the extended leadership team (41%). The company is actively spearheading efforts to drive the advancement and expansion of natural climate solutions, while also asserting its commitment to a just transition, encompassing the development of skills pertinent to the future energy landscape. Transparent practices are upheld through various disclosures, including TCFD, SASB, tax transparency, and updates on trade associations. BP places a strong emphasis on mental health and well-being within its workforce agenda. The company's overarching objectives include five initiatives to enhance people's lives and an additional five goals aimed at fostering a caring ethos. | ||
=== Governance | === Governance === | ||
BP's framework for investment governance aims to ensure that the company's investments are in alignment with its strategic objectives, feasible within its existing financial framework, and capable of generating value for shareholders. The framework establishes a systematic approach to evaluating investments based on a variety of criteria that are pertinent to the company's strategy, including considerations related to environmental sustainability and other relevant factors. | BP's framework for investment governance aims to ensure that the company's investments are in alignment with its strategic objectives, feasible within its existing financial framework, and capable of generating value for shareholders. The framework establishes a systematic approach to evaluating investments based on a variety of criteria that are pertinent to the company's strategy, including considerations related to environmental sustainability and other relevant factors. | ||
Under this framework, investments undergo a structured stage-gate process that is integrated throughout the company's operations. This process empowers BP's various business units to select and cultivate the most promising investment propositions. The criteria for evaluating investments are comprehensive and balanced. This approach enables BP to effectively compare and prioritize investments across an expanding array of business models that the company engages with. | Under this framework, investments undergo a structured stage-gate process that is integrated throughout the company's operations. This process empowers BP's various business units to select and cultivate the most promising investment propositions. The criteria for evaluating investments are comprehensive and balanced, as detailed on page 30. This approach enables BP to effectively compare and prioritize investments across an expanding array of business models that the company engages with. | ||
Integral to the governance framework is the requirement that proposed investments undergo evaluation based on pertinent assumptions. This evaluation encompasses factors such as projected operational emissions and the impact of carbon prices, when applicable. Additionally, the framework mandates that independent functions within the organization conduct thorough assessments to provide assurance before making a final investment decision (FID). This ensures a robust and well-informed decision-making process for BP's investments, bolstering the company's commitment to both financial success and sustainable practices. | Integral to the governance framework is the requirement that proposed investments undergo evaluation based on pertinent assumptions. This evaluation encompasses factors such as projected operational emissions and the impact of carbon prices, when applicable. Additionally, the framework mandates that independent functions within the organization conduct thorough assessments to provide assurance before making a final investment decision (FID). This ensures a robust and well-informed decision-making process for BP's investments, bolstering the company's commitment to both financial success and sustainable practices. | ||