Lifted by higher energy prices, BP underlying cost profit surges to $4.1 billion

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By Jaime Llinares Taboada


BP PLC on Tuesday reported improved earnings for the fourth quarter of 2021, reflecting higher oil and gas production and prices. Here’s what the British energy company had to say:


On 4Q performance:


“Underlying replacement cost profit for the quarter was $4.1 billion, compared with $3.3 billion for the previous quarter. This result was driven by higher oil and gas realizations, higher upstream production volumes and stronger refining commercial optimization, partly offset by a significantly lower oil trading result and an average contribution from gas marketing and trading and the impact of higher energy costs.”


On gas & low-carbon energy:


“After excluding adjusting items, the underlying replacement cost profit before interest and tax for the fourth quarter and full year was $2,211 million and $7,528 million respectively, compared with $154 million and $689 million for the same periods in 2020.”


“The underlying replacement cost profit for the fourth quarter, compared with the same period in 2020, reflects higher realizations, higher production and a higher gas marketing and trading result, offset by a higher depreciation, depletion and amortization charge. For the full year, compared with the same period in 2020, the underlying replacement cost profit mainly reflects higher realizations, higher production and an exceptional gas marketing and trading result, offset by a higher depreciation, depletion and amortization charge.”


“Reported production for the quarter and full year were 974mboe/d and 912mboe/d respectively, higher than the same periods in 2020 mainly due to major project start-ups, partially offset by base decline and the partial divestment in Oman.”


“Renewables pipeline at the end of the quarter was 23.1GW (bp net). The renewables pipeline decreased by 0.2GW during the quarter as a result of new projects more than offset by promotions to FID. For the full year the pipeline grew by 12.2GW (bp net), due to growth in Lightsource bp (LSbp) and the acquisition of a 9GW development pipeline from 7X Energy.”


On oil production & operations:


“After excluding adjusting items, the underlying replacement cost profit before interest and tax for the fourth quarter and full year was $4,024 million and $10,292 million respectively, compared with a profit of $563 million and a loss of $5,888 million for the same periods in 2020.”


“The underlying replacement cost profit for the fourth quarter, compared with the same period in 2020, primarily reflects higher liquids and gas realizations. For the full year, compared with the same period in 2020, the underlying replacement cost profit mainly reflects higher liquids and gas realizations and significantly lower exploration write-offs, partially offset by lower volumes.”


“Reported production for the quarter was 1,358mboe/d, which is flat with the fourth quarter of 2020. Underlying production for the quarter was 4.0% higher reflecting lower weather impacts from hurricanes in the Gulf of Mexico and the ramp-up and start-up of major projects.”


“Reported production for the full year was 1,307mboe/d, 14.2% lower than the same period in 2020.”


On customers & products:


“After excluding adjusting items, the underlying replacement cost profit before interest and tax for the fourth quarter and full year was $611 million and $3,252 million respectively, compared with $126 million and $3,088 million for the same periods in 2020.”


“The customers & products results for the fourth quarter and full year, reflect a stronger performance compared to the same periods in 2020, despite the absence of earnings from our divested petrochemicals business and ongoing Covid impacts.”


“Utilization for the quarter and full year was around 8 and 5 percentage points higher than the same periods in 2020 mainly due to lower Covid related demand impacts. bp-operated refining availability for the fourth quarter and full year was 95.4% and 94.8% respectively, lower compared with 96.1% and 96.0% for the same periods in 2020, due to a higher level of maintenance activity.”


On Rosneft:


“After excluding adjusting items, the underlying RC profit before interest and tax for the fourth quarter and full year was $745 million and $2,720 million respectively, compared with a profit of $311 million and $56 million for the same periods in 2020.”


“Compared with the same periods in 2020, the higher result for the fourth quarter primarily reflects higher oil prices partially offset by adverse foreign exchange effects, the higher result for the full year primarily reflects higher oil prices and favourable foreign exchange effects.”


On 1Q guidance:


“Looking ahead, we expect first-quarter 2022 reported upstream production to be lower than fourth-quarter 2021 reflecting base decline and higher maintenance. Within this, we expect production from both oil production & operations and gas & low carbon to be lower.”


“In our customer businesses we expect product demand to remain impacted by ongoing uncertainty around Covid-19 restrictions and continued additive supply shortages in Castrol. In products we expect energy costs to remain under pressure.”


On 2022 guidance:


“For full year 2022 we expect both reported and underlying upstream production to be broadly flat compared with 2021. Within this, we expect production from oil production & operations to be slightly higher and production from gas & low carbon to be slightly lower. We expect the start-up of Mad Dog Phase 2 in the second half of the year and first gas from the Tangguh expansion project in 2023.”


On macro outlook:


“We expect oil supply and demand to move back into balance through 2022; however with lower levels of spare capacity price volatility is likely. OPEC+ decision making on production levels continues to be a key factor in oil prices and market rebalancing.”


“In gas markets, with ongoing geopolitical uncertainty, and low storage levels, we see the potential for continued price volatility.”


“In the first quarter of 2022, we expect industry refining margins to remain broadly flat compared to the fourth quarter of 2021.”


Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT


This article was originally published by Marketwatch.com. Read the original article here.

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