BP Strategy PresentationLondon2 March 2010
Tony HaywardGroup Chief Executive
3
Cautionary StatementForward Looking Statements - Cautionary StatementThis presentation and the associated slides and discussion contain forward-looking statements, particularly those regarding expected future global consumption of energy; expected future energy mix; global economic recovery; expected increase in non-OECD oil consumption; growth in global oil demand; oil and gas prices; global refining capacity and utilization; refining margins; implementation of Operating Management System; expected further reduction in cash costs; production growth including anticipated average production growth of 1-2% p.a. out to 2015 and the potential to sustain growth to 2020; timing of project final investment decisions, start-ups and their anticipated contribution to total production; opportunity for growth through deepwater, gas and unconventional gas, management of some of the world’s giant oil fields; anticipated organic capital expenditure; anticipated access opportunities and exploration prospects; portfolio’s gas weighting and gas growth opportunities; profitability of our North American gas business at $4 Henry Hub price; Rumailaresources and production potential; TNK-BP capital investment, production growth, focus on cost efficiency to improve returns and development, timing, capital cost, resource opportunity, tax effect of projects; potential to further reduce unit production costs; potential savings through drilling efficiency improvements; expectation that the centralised development organisation will produce significant improvements in capital efficiency; R&M cost efficiency improvement potential and performance improvement through cost efficiency, improving efficiency, quality and integration of Fuels Value Chains and growth of margin share; timing of Whiting refinery modernisation project and its anticipated contribution to R&M profitability; timing of start-up of Nanjing Acetic Acid plant; R&M net investments levels relative to depreciation, expected future capital employed metrics and future post-tax returns; anticipated reduction of cash costs levels to below 2004 levels and improvement in refining portfolio breakeven levels; divestments; balance of cash inflows and cash outflows; strategy (including upstream – profit growth, cost and capital efficiency; downstream – turnaround, cost efficiency; alternative energy – focused and disciplined; corporate – efficiency); US wind business cash flow; and repositioning our solar business’ manufacturing to lower cost locations. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the timing of bringing new fields on stream; future levels of industry product supply; demand and pricing; OPEC quota restrictions; PSA effects; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; regulatory or legal actions; exchange rate fluctuations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors; natural disasters and adverse weather conditions; wars and acts of terrorism or sabotage; and other factors discussed elsewhere in this presentation. For more information you should refer to our Annual Report and Accounts 2009 and our 2009 Annual Report on Form 20-F filed with the US Securities and Exchange Commission.
Reconciliations to GAAP - This presentation also contains financial information which is not presented in accordance with generally accepted accounting principles (GAAP). A quantitative reconciliation of this information to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found on our website at www.bp.com
Cautionary Note to US Investors - We use certain terms in this presentation, such as “resources” that the SEC’s rules prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosures in our Form 20-F, SEC File No. 1-06262. This form is available on our website at www.bp.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or by logging on to their website at www.sec.gov.
March 2010
4
Today’s agenda
Introduction Tony Hayward
• Environment
• Progress so far
• What’s next?
Exploration & Production Andy Inglis
Refining & Marketing Iain Conn
Conclusions Tony Hayward
Q&A
5
Long-term energy outlook
Demand
• Growth resumes post recession
• Driven by non-OECD
• Evolution to lower-carbon economy
Supply
• Diverse energy mix required
• Leveraging technology
• Carbon pricing
Energy consumption to 2030
Source: BP estimates
Mb
oed
OECD
Non-OECD
0
100
200
300
400
2000 2010 2020 2030
Renewables
Hydro
Nuclear
Coal
Gas
Biofuels
Oil0
100
200
300
400
2000 2010 2020 2030
Mb
oed
6
BP’s approach to a lower-carbon future
• Energy efficiency within BP operations
• Including the price of carbon in investment decisions
• Promoting lowest-cost energy pathways e.g. gas for power generation
• Continued investment in Alternative Energy
− biofuels
− wind
− solar
− carbon capture and sequestration
• Investing in research and technology
7
Upstream: uncertain price environmentB
ren
t $/
bb
l
Natu
ral Gas-H
enry H
ub
$/mm
btu
0
20
40
60
80
100
120
140
160
2004 2005 2006 2007 2008 2009 20100
4
8
12
16
20
24
28
8
Downstream: refining margins and utilizationG
lob
al In
dic
ato
r M
arg
in $
/bb
lG
lob
al Utilizatio
n(1)%
0
2
4
6
8
10
12
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010YTD
80
81
82
83
84
85
86
87
$4.1
$6.4
$8.6 $8.5
$2.2
$4.5 $4.4
$9.9
$6.5
$4.0
$2.2
(1) Global refinery throughput / Global refinery capacity. Source: BP Statistical Review of World Energy June 2009. BP estimates for 2009/2010.
9
Forward Agenda
Safe and reliable operations
• Continue journey in personal safety
• Implement Operating Management System
• Compliance
People
• Building capability
• Leadership and behaviours
Performance
• Restore revenues
• Reduce complexity and cost
10
Safe, reliable and efficient operations
Loss of Primary Containment Incidents
0
50
100
150
200
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
(1) Data for 2008 and 2009 is aligned to incident impact severity rather than volume released
Integrity Management Major Incidents(1)
0
5
10
15
20
25
30
35
2004 2005 2006 2007 2008 2009
Recordable Injury Frequency
0.0
0.5
1.0
1.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Industry range - six majors
11
People and organization
• Leadership and culture
• Restructuring and delayering
• Skills and capability
• Diversity and inclusion
• Reward for performance
Changing the culture
12
2004 2005 2006 2007 2008 2009
Restoring revenues
Refining availability(1)Production Rolling 4-quarters to 4Q09
Shell
Total
Chevron
ExxonMobil
BP
mb
oed
2000
2500
3000
3500
4000
4500
1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09
Note: Chevron includes Texaco, prior to the mergerBarrels of oil equivalent as reported in company disclosures (1) Solomon availability
70%
75%
80%
85%
90%
95%
100%
13
Controlling cash costs
Cash costs - indexed(Total BP Group)
A definition of cash costs can be found on our website at www.bp.com
80
90
100
110
120
130
140
150
2004 2005 2006 2007 2008 2009
14
2009 momentum versus peers
Underlying Net Income $bn(1) 14.6 19.2 11.6 9.5Year on Year % -44% -56% -59% -58%
Cash from Operations $bn 27.7 28.4 21.0Year on Year % -27% -52% -52% -35%
Reported Volumes mboed 3998 3932 3152 2704Year on Year % 4% 0% -3% 7%
Market Capitalisation $bn(2)
vs. end 2008 %
Capital Expenditure $bn(3) 20.0 27.1 30.6 22.2Year on Year % -8% 4% 2% -2%
10.9-47%
17.2-37%
2281-3%
18.6-7%
(1) For BP underlying net income is replacement cost for the year adjusted for non-operating items and fair value accounting effects. For other companies, underlying includes adjustments for all identified non-recurring items.
(2) as at 31/12/2009(3) BP organic; ExxonMobil, Royal Dutch Shell, Chevron and Total as disclosed
181 323 185 15424% -21% 13% 3%
15015%
19.4
15
Strategic progress in 2009
E&P• New access: Iraq, Indonesia, Jordan, new acreage in US Gulf of Mexico and Egypt • Exploration and appraisal success: Tiber, Mad Dog South, Angola Block 31• Major projects: 7 start-ups and 2 sanctioned developments• Resource replacement: over 250%• Reserves replacement: 129%• Production growth: 4%
R&M• Revenues restored: US refining portfolio fully operational• Simplification: US convenience retail, reduced marketing footprint• Cost efficiency: cash costs down by more than 15% on 2008
Alternative Energy• Focused and disciplined: $4bn invested since 2006
Corporate Simplification• Headcount: reduced by ~ 7500 to date• Cash costs: down by more than $4bn in 2009
Reserve replacement as reported on a combined basis of subsidiaries and equity accounting entities, excluding acquisitions and divestments
16
Total oil and gas
initially in place
Portfolio quality
Efficient and successful explorer
High quality refining
RDSCVX
BP
XOM
COP
TOT
0
1
2
3
4
5
5 10 15Exploration spend $bn
Dis
cove
red
reso
urce
bnb
oe
Majors' relative performance 2004 - 2008
Leverage to improved recovery
Strong reserve replacement track record (1)
+1% = 2 bnboe
18
45
41
bn boe
Currently unrecoverable hydrocarbon
Produced
Proved
Non-proved
World class international businesses
0%
20%
40%
60%
80%
100%
120%
5-Y
ear
Ave
rage
Org
anic
RR
R ’0
4-’0
8(e
xclu
ding
oil
sand
s, u
sing
yea
r-en
d pr
icin
g)(1) BP estimates using company disclosure
Robust medium-term growth
2010-2015 BP projections at $60/bbl
1,000
2,000
3,000
4,000
5,000
2008
2009
2010
2011
2012
2013
2014
2015
TNK-BP
Angola
Gulf of Mexico
Asia Pacific
South America
N Africa, Middle East and Caspian
Trinidad
North Sea
North America Onshore
mbo
ed
0
Source: Oil & Gas Journal 2010
Ave
rage
Ref
iner
y S
ize
(kbd
)
Alliance MombasaCoryton ReichstettGrangemouth Salt LakeLavera Singapore Mandan Yorktown
BP Divestments ’00-’09
Divested
100
150
200
250
7 8 9 10 11Nelson Complexity
• Material market shares
• 40% of capital employed in growth markets
• Leading technologies
• Strong customer relationships
• Premium brands
• Margin share growth
17
The opportunity
Project Cost Performance
Inflation ProjectManagement
120% 5%15%
SanctionEstimate
100%
ROACE vs PeersEarnings vs Peers
Projects efficiencyPerformance gap in US Fuels Value Chains
Drilling efficiency
Underlying net income gap $bn
(25)
(20)
(15)
(10)
(5)
0
5
BP gap to Shell BP gap to ExxonMobil(absolute)
2001 2002 2003 2004 2005 2006 2007 2008 2009 0%
5%
10%
15%
20%
25%
30%
35%
40%
2003 2004 2005 2006 2007 2008 20092003 2004 2005 2006 2007 2008 2009
Underlying ROACE
BP
Other Supermajors
Dril
ling
Cap
ital $
m
Industry Average
Best in
Basin
$500m Opportunity
2009 BP Actual
Performance
Pre-tax RCOP per barrel, rolling 4Q indexed
US Peers
BP
Refining efficiency
Year BP portfolio average Top 3 R&M refinery sites
So
lom
on
Ava
ilab
ility
%
70
75
80
85
90
95
100
R&M refining cost efficiency(1)
2012
2007
2009
140 120 100130 110
2004
Refining performance
(1) Based on Solomon non-energy operating expense per Effective Distillation Capacity (indexed to top three R&M refineries)
(100)
(50)
0
50
100
150
200
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
Source: Benchmarking data based on BP internal and industry
Data based on BP Operated Major Projects portfolio in 2004-2008
18
Realising the opportunity
• Capital efficiency
• Cost efficiency
• Technology
• Culture
Andy InglisChief Executive, Exploration & Production
20
Leadership positions in the world’s most prolific hydrocarbon basins
210mboedAngola
320mboedNorth Sea
440mboedGulf of Mexico
680mboedNorth America Onshore
940mboedTNK-BP
570mboedN. Africa, Middle East
and Caspian
180mboedAsia Pacific
200mboedSouth America
460mboed Trinidad &
Tobago
2009 production figures rounded to the nearest 10mboed at actual prices
21
2009 exploration and access
ANGOLALeda, Oberon, TebeBlock 31BP (27%) and operatorNineteen discoveries in block
US GULF OF MEXICOTiberBP (62%) and operatorGiant oil discovery
CANADAEllice J-27BP (25%)
EGYPTNile Delta2,900km2 net in two blocks
IRAQRumailaRedevelopment of supergiant
PAKISTANOnshore5,000km2 in two blocks
INDONESIAKalimantanNet 640km2 of Coal Bed Methane
INDONESIAWest Papua2620km2 net in two blocks
US GULF OF MEXICO61 leases from OCS 208, 210
US SHALE GASEagle FordNew ~5tcf position
Exploration
Access
JORDANRisha7,000km2 block
22
Sustaining a leading track recordMajors' relative performance 2004–2008
BP net resource additions as discovered / accessed
Source: BP internal Discoveries, extensions and additions for subsidiaries and associates, resources accessed directly* Resource play reflects direct access to resources
Sources:(1) Resources: IHS on comparable basis except BP - internal data(2) Costs: Wood MacKenzie
0
1
2
3
4
2005 2006 2007 2008 2009
BP
net
res
ou
rce
add
itio
ns
bn
bo
e
Resource play*ExtensionsNew discoveries
RDSCVX
BP
XOM
COP
TOT
0
1
2
3
4
5
0 5 10 15
Exploration spend $bn
Dis
cove
red
res
ou
rce
bn
bo
e
23
Resources to reserves to production
45.3 bn boe
End 2009
18.3 bn boe
1.5 bn boe
Total resources : production 43 years
Start 2005
18.3 bn boe
1.5 bn boe
Total resources : production 39 years
Non-proved Resources
Proved Reserves
PRODUCTION
Discovered Resource Access
Field Extensions and Improved Recovery
38.9 bn boe
Prospect Inventory
Exploration Discoveries
Exploration and Access
Resources and reserves on a combined basis of subsidiaries and equity-accounted entities
24
Diverse resource base and reserves additions
Conventional oil
Deepwater oil
Water-flood viscous andheavy oil
Conventional gas
LNG gas
Unconventional gas Non-proved: 45.3 bn boe
Proved: 18.3 bn boe
31 years
12 years
TNK-BP
Asia Pacific
Gulf of Mexico
South America
Trinidad & Tobago
North America Onshore
Angola
N. Africa, Middle East and Caspian
North Sea
2009 Resource Base 2009 Reserves Additions %
Resources at end-2009 on a combined basis of subsidiaries and equity-accounted entities. 2009 reserves additions are price adjusted
25
Growth to 2015
2010-2015 BP projections at $60/bbl
TNK-BP
Angola
Gulf of Mexico
Asia Pacific
South America
N. Africa, Middle Eastand Caspian
Trinidad & Tobago
North Sea
North America Onshore0
1,000
2,000
3,000
4,000
5,000
2008 2009 2010 2011 2012 2013 2014 2015
mboed
26
Planned Final Investment Decisions 2010–11
Tubular Bells Gulf of MexicoMars B Gulf of MexicoAtlantis Phase 2 Gulf of MexicoGalapagos Gulf of MexicoNa Kika Phase 3 Gulf of MexicoHorn Mountain Phase 2 Gulf of MexicoWest Nile Delta Gas EgyptWoS Q204 North SeaClair Ridge North SeaDevenick North SeaKinnoull North SeaChirag Oil AzerbaijanSunrise CanadaIn Salah Southern Fields North AfricaVerkhnechonskoye FFD* Phase 1 TNK-BPUvat East Expansion TNK-BPSuzun TNK-BP
Block 18 West AngolaBlock 31 SE AngolaShah Deniz FFD* AzerbaijanMad Dog Phase 2 Gulf of MexicoNa Kika Phase 4 Gulf of MexicoTangguh Expansion Asia PacificJuniper Trinidad & Tobago
2010 Project FIDs 2011 Project FIDs
* Full field development
27
Project start-ups 2010–2015
AlaskaLiberty *
* BP Operated
2010 Start Ups
2011 Start Ups
2012-2015 Start Ups
CanadaCanada Noel *Sunrise
Gulf of MexicoGreat WhiteGalapagos *Na Kika Phase 3 *Mad Dog Phase 2 *Na Kika Phase 4 *Tubular Bells *Freedom Kaskida *Mars B Horn Mountain Phase 2 *Atlantis Phase 3 *
Trinidad & TobagoSerrette *Trinidad Compression *Juniper * Angola
B31 PSVM *PazflorClochas MavacolaAngola LNGKizomba Satellites Phase 2B18 West *CLOV
Asia PacificNorth Rankin 2Tangguh Expansion *Sanga Sanga Coal Bed Methane
AzerbaijanChirag Oil *
North SeaSkarv *Valhall Redevelopment *Devenick *Kinnoull *Clair Ridge *WoS Q204 *
EgyptWND Gas *
Algeria & LibyaIn Salah Gas CompressionIn Salah Southern FieldsIn Amenas Compression
Middle EastOman FFD *
Russia (TNK-BP)RusskoyeSuzunVerkhnechonskoye FFD
2012 and 2015 BP projections at $60/bbl
2012 2015
400
1000
28
Capital investment 2005–2010
BP
TNK-BP
Pan American Energy
Organic Capital Expenditure above excludes: 2006 – Rosneft; 2007 – asset exchanges with Occidental2008 – accounting treatment related to our transactions with Husky and Chesapeake2009 – BG asset swap and Eagle Ford2010 – BP projections
Organic capital expenditure $bn20
5
0
10
15
2005 2006 2007 2008 2009 2010
29
Growth beyond 2015
Giant FieldsDeepwater Gas(Unconventional)
30
Leading deepwater companym
bo
ed
2009 net production. Source: Wood MacKenzieDeepwater refers to all fields in >500m water depth
0
100
200
300
400
500
600
700
31
Gulf of Mexico – further growth potential
Miocene Paleogene
New Orleans
0 100
MilesMiles
N
HoustonHouston
Discoveries/Developments
Industry Pipelines
BP Pipelines
BP Blocks
Existing Production
Great WhiteGreat White
1,500’
Holstein
Mad DogAtlantisAtlantis
Freedom
Kodiak
Tubular Bells
PompanoPompano
RamPowellRam
PowellHorn Mtn.Horn Mtn.
KingKingDoradoDorado
MarlinMarlinNileNile
MarsUrsaUrsa
Thunder HorseThunder HorseIsabelaIsabela
Santa CruzSanta CruzNaKikaNaKika
DianaDiana
HooverHooverTiber
Kaskida
Gulf of Mexico Production to 2020
Thunder Horse and Thunder Horse and
Pro
du
ctio
n m
bo
ed
0
500
2000 2005 2010 2015 2020
Base & Wedge
Thunder Horse and Atlantis
Subsea
New Hubs
Tiebacks
32
Global gas
Angola LNG
WNDGas
Bourarhat
Alaska Gas
Core Gas Producing Areas
Gas Growth Developments
Noel
Oman
WamsutterFayettevilleSan Juan
Coal Bed Methane WoodfordEagle Ford Haynesville
SkarvDevenick
Harding Area GasCulzean
Sanga SangaCoal Bed Methane
80
50
Total Gas Resource (tcf)
Unconventional
Conventional
JordanLibya
Gas Exploration and Appraisal
Tangguh Expansion
Colombia
PAE
Satis
North Rankin 2Browse
Rospan
Shah Deniz FFD
SerretteJuniper
China
Resources at end-2009 on a combined basis of subsidiaries and equity-accounted entities
33
North America Gas
S. Texas
S. Louisiana
E. TexasPermian
Anadarko HugotonSan Juan
Arkoma
Greater Green River
Wamsutter Tight Gas
Woodford Shale
San Juan Coal Bed Methane
Haynesville Shale
Fayetteville Shale
Eagle Ford Shale
Noel Tight Gas
Pre-BP BP1st 10 wells
BPlatest 10 wells
60%
20%
Pre-BP BP1st 10 wells
BP
Increase in Well Productivity –Woodford Shale
60%
20%
Init
ial P
rod
uct
ion
Rat
e
34
Managing the world’s giant oilfields
• Track record in giant oilfield development− Prudhoe Bay− ACG− Samotlor− Thunder Horse
• Rumaila*− 66bn bbls oil in place− 12bn bbls produced− 17bn+ bbls further potential
* Resource in place, produced and potential figures represent BP estimates
35
TNK-BP update
2009: continued success story
• Governance and shareholder alignment
• Safer operations
• Volume growth
• Solid financial performance
2010: expected performance
• Investment $4bn
• Production growth 1-2%
• Continued focus on cost efficiency
• Focus on development of Greenfield projects
2010 BP projections
36
TNK-BP: future growth
Uvat*
Core production areas
Yamal Projects
Project areas
* 2009 start-ups
Verkhnechonskoye
Nyagan
Samotlor
Orenburg
RospanRusskoye
Suzun
Novosibirsk
Tagul
Kamennoye*
Moscow
37
Technology: at the heart of our portfolio
Deepwater
Gas
Imaging – resource access
Drilling – well productivity
Recovery – displacement
Intelligent targeting
Designer water
Conventional ISSTM Method Cableless trials
Advanced sand control
TechnologyFlagships
Modified water
Minimizing footprint
Available water
• Advanced Seismic Imaging
• Beyond Sand Control
• Efficient Reservoir Access
• Unconventional Gas
• Unconventional Oil
• Subsea Well Intervention/
Deepwater Facilities
Giant oilfields
• Field of the Future
• Gulf of Mexico Paleogene
• Inherently Reliable Facilities
• Pushing Reservoir
Limits
38
Growth to 2020
• Average 1-2% p.a. volume growth to 2015
• Increasing potential to sustain growth to 2020
• Underpinned by growing resource base and quality through choice
• Key sources of growth beyond 2015 will come from:
− Expanding deepwater
− Leveraging expertise in gas
− Managing world’s giant oilfields
• Enabled by application of technology
39
Enhancing capital
discipline
Efficiency growth: key sources
Developing organization
(creation of Centralized Developments Organization)
Deepening capability
40
Supply chain opportunity
Level of Maturity
ValueContribution
Other
IOCs
Sector
Leader
Stage 1Transactional
Purchasing
Stage 2Leveraging
Stage 3Supplier
Integration
Stage 4Best in Class
Other
IOCs
• Success in capturing deflation in 2009
• Category management enables sustainable improvement
• Centralized Developments Organization accelerates implementation
41
Momentum on production costs
Production costs and production from reserves per annual Supplemental Oil and Gas disclosure in 10-K / 20-F. Consolidated subsidiaries only.Data prior to 2009 excludes mined oil sands.Total’s 2009 production costs estimated based on disclosure from 4Q09 results presentation.
BPTotal
ChevronExxonMobil
Shell
ConocoPhillips
Pro
du
ctio
n c
ost
s ($
/bo
e)
0
2
4
6
8
10
12
2003 2004 2005 2006 2007 2008 2009
42
Projects efficiency opportunity
Project Cost Performance
Inflation ProjectManagement
120% 5%15%
SanctionEstimate
100%
Data based on BP Operated Major Projects portfolio in 2004-2008
• Project spend 20% above sanction estimate over last 5 years
• Close the gap by:
− Supply chain management to better mitigate inflation and deliver higher quality
− Centralized Developments Organization to improve project execution
43
Drilling efficiency opportunity
• Drilling performance improved 15% over 2 years
• Global benchmarks 1st / 2nd quartile in most SPUs
• Efficiency gains resulted in $0.5bn savings in 2009
Dri
llin
g C
apit
al $
m
Industry Average
Best in Basin
Opportunity
2009 BP Actual
Performance
Source: Benchmarking data based on BP internal and industry (e.g. Rushmore Reviews) databases
44
Profit growth, cost and capital efficiency
• Diverse portfolio, underpinned by a growing resource base
• Strong strategic, operational and cost momentum in 2009
• Average 1-2% p.a. volume growth to 2015
• Increasing potential to sustain growth to 2020
• Changes in process to sustainably drive capital and cost efficiency
Iain ConnChief Executive, Refining & Marketing
46
The Downstream turnaround
• Safe operations and OMS(1)
• Behaviours and core processes
• Restoring missing revenues and earnings momentum
• Business simplification
• Repositioning cost efficiency
(1) OMS – Operating Management System
47
Phase 1 - Competitive gap is closed
Competitor range(2)Competitor average(2) BP R&M
Underlying Net Income $/bbl (3)Underlying ROACE(1) % (post tax)
(1) BP and competitor return on average capital employed data adjusted to comparable basis(2) Competitor set comprises R&M segments of Super Majors(3) Capacity as stated in F&OI / Company Disclosures
0
1
2
3
4
5
6
2003 2004 2005 2006 2007 2008 20090
5
10
15
20
25
30
2003 2004 2005 2006 2007 2008 2009
48
Performance recovery 2007–2009
Regression line established from rolling 4Q averages in period 2001–2004Based on nameplate capacity as stated in F&OI = maximum sustainable rate for a 30 day period
2004
20092008
2007
2006
2005
0
1
2
3
4
5
6
7
8
9
0 2 4 6 8 10
Historica
l Perfo
rmance
Range
~ $5bn
BP’s Refining Global Indicator Margin (GIM) $/bbl
Pre
-tax
un
der
lyin
g R
C p
rofi
t $/
bb
l
49
Performance momentum 2007–2009
Environment PerformanceImprovement
3.9
2007
3.3
2008
Pre
-tax
un
der
lyin
g R
C p
rofi
t $b
n
2.7(3.3)
2.1(1.8)
3.6
2009PerformanceImprovement
GIM$/bbl
9.9 6.5 4.0
BP
’s Refin
ing
Glo
bal In
dicato
r Marg
in (G
IM)
Environment
Environment adjusted for refining margins, petrochemical margins, forex and energy costs
50
International Businesses
Our portfolio and performance 2007–2009
Fuels Value Chains
2009 average pre-tax operatingcapital employed $bn
21
9
14
Total Refining & Marketing
Refining
Lubricants
Global Fuels
Petrochemicals
Fuels Marketing and Supply
Convenience
Pre-tax underlying RC profit $bn
2009
(1.6)
2.1
3.1
3.6
2008
2.0
(0.7)
2.0
3.3
2007
1.2
1.2
1.5
3.9
Relative areas in pie charts based on average operating capital employed (pre tax)
51
Sources of gap closure 2007–2009
Repositioning cost efficiency
Simplification
Restoring revenues & earnings momentum
$0.6bn
$1.4bn
$2.8bn
$4.8bn(1)
2008 20092007
(1) Based on underlying pre-tax RC profit per annum, adjusted for refining margins, petrochemical margins, forex and energy costs
52
Refining margins 1990–2009GIM adjusted to 2009 $
0
2
4
6
8
10
1219
90
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
$/b
bl
1992–2003 range
53
Phase 2 – Winning performance in a challenging environment
Regression line established from rolling 4Q averages in period 2001–2004Based on nameplate capacity as stated in F&OI = maximum sustainable rate for a 30 day period
Pre
-tax
un
der
lyin
g R
C p
rofi
t $/
bb
l
2004
20092008
2007
2006
2005
0
1
2
3
4
5
6
7
8
9
0 2 4 6 8 10BP’s Refining Global Indicator Margin (GIM) $/bbl
10
54
Performance opportunity: efficiency, quality and integration
Simplification
Restoring revenues & earnings momentum
2008 2009 2010 2011 2012
Portfolio quality & integration
Growing margin share
2007
Repositioning cost efficiency >$1.5bn
>$0.5bn
Up to $0.5bn
Repositioning cost efficiency
Values based on underlying pre-tax RCP per annum at 2009 conditions
55
Repositioning cost efficiency
50
60
70
80
90
100
110
120
130
140
2004 2005 2006 2007 2008 2009
Cash cost index Cash cost index at constant forex and energy
BP R&M cash cost index
2004 Baseline
Adjusted to exclude major historic divestments
56
Improving efficiencyRefining
• Planning and execution
• Turnarounds and projects
• Contractor management
• Sourcing
• Energy efficiency
Year BP portfolio average Top 3 BP refineries
So
lom
on
Ava
ilab
ility
%
70
75
80
85
90
95
100
R&M refining cost efficiency(1)
2012
2007
2009
140 120 100130 110
2004
(1) Based on Solomon non-energy operating expense per Effective Distillation Capacity (indexed to top three R&M refineries)
Refining performance
57
Improving efficiencyOther sources
• Manufacturing efficiency
• Procurement & Supply Chain Management
• Business service centres
• Business process efficiency
• Overheads and functions
• Logistics and marketing channels
• Focused footprint
58
Fuels Value Chains: quality & integration
• Right markets, right locations
• Advantaged refineries and logistics
• Quality products and brands
• Marketing and channel management
• Supply optimisation and trading
• Common processes and back office
Cru
de
Cu
stom
er
59
Global refining quality2008–2009 Utilization %
(10)% (5)% 5% 10%
Source: Oil & Gas Journal 2010
(1)
Source: Company disclosures, F&OI, ARA (1) Light shaded area represents utilization
improvement from restoring Texas City
Nelson Complexity
Divested
100
150
200
250
7 8 9 10 11
Alliance MombasaCoryton ReichstettGrangemouth Salt LakeLavera Singapore Mandan Yorktown
BP Divestments ’00–‘09
Average Refinery Size (kbd)
Size represents absolute scale of Refining portfolio
60
Whiting Refinery Modernization Project
• Major rebuild of CDU to process heavy crude
• New world scale 100kbd state of the art 6 drum coker
• New world scale sulphur removal and gas oil hydrotreating units
• Refinery infrastructure upgrade
• Leveraging location advantage
• Commissioning 2012
61
Whiting Refinery Modernization ProjectSources of value
Ind
exed
Pre
-tax
un
der
lyin
g R
C p
rofi
t $/
bb
l
Mid West Refining Indicator Margin $/bbl
0
100
200
300
400
500
600
0 2 4 6 8 10 12
Mid West historical performance range
Mid West post project performance for a range of WTI – Lloydminster differentials
Regression line established from rolling 4Q averages in period 2002–2006Based off nameplate capacity as stated in F&OI = maximum sustainable rate for a 30 day period
62
International Businesses: quality and growth
• Material market shares
• 40% of capital employed in growth markets
• Leading technologies
• Strong customer relationships
• Premium brands
• Margin share growth
63
Net investment
Depreciation
Total net investment
Organic capex
2005* 2006 2007 2008 2009 2010
$bn
(7)
(6)
(1)
0
1
2
3
4
5
2010 BP projections* Includes $8.3bn proceeds for Innovene sale
64
Safety, efficiency, quality and integration
• Safe and reliable operations remains #1
• Over $2bn p.a. of pre-tax performance opportunity in 2–3 years
• Costs: return to below 2004 levels
• Refining: targeting break-even in similar environment to 2009
• Whiting Refinery Modernization Project on-stream during 2012
• Portfolio: focus on quality and integration
• Margin share growth
• Sustainable contribution to group cash flow and dividend
Tony HaywardGroup Chief Executive
66
Realising the opportunity
Exploration and Production
• Production
− Average 1-2% p.a. volume growth to 2015
− Increasing potential to sustain growth to 2020
• Efficiency
− Projects: improve capital efficiency
− Drilling: close gap to best well in each basin
− Production costs: maintain momentum
Refining and Marketing
• Costs: return to below 2004 levels
• Refining: targeting break-even in similar environment to 2009
67
Capex and divestments 2008–2010
2-3
~ 20
< 1
< 4
~ 15
2010
0.9
21.7
1.4
4.7
15.6
2008
2.7
20.0
1.2
4.1
14.7
2009
Organic capital expenditure
Divestments
Other (including Alternative Energy)
Exploration & Production
Refining & Marketing
$bn
2010: BP estimates
68
Strategy
• Upstream profit growth, cost and capital efficiency
• Downstream turnaround, cost efficiency
• Alternative Energy focused and disciplined
• Corporate efficiency
69
Q&A
Tony Hayward
Group Chief Executive
Andy Inglis
Chief Executive Exploration & Production
Byron Grote
Chief Financial Officer
Iain Conn
Chief Executive Refining & Marketing