BP 2013 Annual Report Download - page 10

The measures taken to secure
and reshape the group are
taking hold. BP is stronger and
safer as a result.
Carl-Henric Svanberg
Chairman’s letter
10-year dividend history
UK (pence per ordinary share)
20
10
30
40
04 05 06 07 08 09 10 11 12 13
15.25
19.15 21.10 21.00
29.39
36.42
8.68
17.40
20.85 23.40
US (cents per ADS)
One ADS represents six 25 cent ordinary shares.
100
200
300
400
04 05 06 07 08 09 10 11 12
13
166
209 230 254
330 336
84
168
219
198
Dear fellow shareholder,
In 2013 BP continued the programme of renewal we began following the crisis of 2010.
The measures taken to secure and reshape the group are taking hold. As this report
shows, BP is stronger and safer as a result.
Change within the group has taken place against the backdrop of a rapidly evolving world.
The energy landscape is developing at pace, for example, the growth of shale gas in the
US. But the long-term supply challenge has not gone away. More energy is required to
meet the needs and aspirations of a rising global population. The BP Energy Outlook
projects an average increase in energy demand of 1.5% per year through to 2035. That’s
like adding the needs of a country twice the size of the US over the next twenty years.
We are also seeing that society has ever higher expectations of business. This is reflected
in the increasing scrutiny placed on the commercial sector, particularly by politicians and
the media. Companies must work hard to maintain people’s trust and respect.
Shareholders’ expectations are shifting too, particularly in the extractive industries sector.
Some investors feel that international oil companies have spent too much for too little
return. A decade of mergers and acquisitions in our industry has generated little production
growth. Capital expenditure has increased but profit margins have been squeezed. Rightly,
shareholders expect better returns.
The board recognizes this changing world and the importance of our response. Throughout
2013 we gave close attention to strategy, project appraisal and capital discipline, working
with Bob Dudley and his team to ensure the group spends its money wisely. BP’s strategy
is rooted in three imperatives: clear priorities, a quality portfolio and distinctive capabilities.
Our first clear priority is to run safe and reliable operations. We must also make disciplined
financial choices, selecting the smart options that can help meet demand and generate
value. Furthermore, we must be competitive in how we execute our projects.
Our quality portfolio, which is at the core of our strategy, is the result of the choices we
make. It contains assets that enable us to play to our areas of greatest strength, from
exploration to high-value upstream projects – particularly deepwater operations, giant
fields and gas value chains – and high-quality downstream businesses.
To these assets and activities we apply our distinctive capabilities – the expertise of our
people, advanced technology and the ability to build the strong relationships required to
access resources and deliver complex projects.
In all of this, we are focused on value before volume. In other words we don’t simply chase
production for the sake of it, rather we choose projects where we can generate the most
value through our production.
We know we must be disciplined, sticking to clear limits on capital expenditure, and
balancing rewards for shareholders today with the long-term capital investment required
for tomorrow. Safety and strong governance must underpin everything we do.
2013 was a busy and successful year for BP, with progress in our underlying operations.
Our growing confidence was reflected in the dividend increase announced in October
BP Annual Report and Form 20-F 20136