BP 2014 Annual Report Download - page 25

Group performance
10-point plan performance
In 2014 we completed our three-year 10-point plan, established in 2011, to help stabilize BP and restore trust and value in response to the tragic
Deepwater Horizon accident in 2010. Here we report on our performance in delivering the plan over the period.
1
Relentless focus on safety
We reduced tier 1 process safety events★ and loss of primary
containment (LOPC) by 62% and 21% respectively over the plan
period. However, in 2014 there were eight more tier 1 events and
25 more LOPC incidents than 2013. Safety remains our primary
focus and we continue to focus our efforts on it.
2Play to our strengths
We accessed almost 158,000 km2 exploration acres, made 13 new
discoveries and drilled a total of 44 exploration wells (2014 18).
3
Stronger and more focused
We have reshaped our portfolio to have a set of high-value
deepwater assets, gas value chains, giant fields, and
a high-quality downstream business. We sold around half of
our upstream installations and pipelines, and one third of
our wells – while retaining roughly 90% of our proved reserves
and production.
4
Simpler and more standardized
We implemented standardized global systems and
processes and established global functional organizations to
conduct all BP-operated drilling and wells activity and
manage the development of our major projects★.
5
More visibility and transparency to value
We provide downstream results by fuels, petrochemicals and
lubricants, and report earnings from Rosneft as a separate
operating segment.
6
Active portfolio management
We completed our $38-billion divestment programme ahead of
schedule and plan for a further $10 billion of divestments before
the end of 2015, with $4.7 billion of sales already agreed.
7
New upstream projects onstream with unit cash margins★
double the 2011 average
We started up 15 major upstream projects, of which 13 are in the
four higher-margin areas (Angola, Azerbaijan, Gulf of Mexico and
North Sea). Average forecast unit cash margins (2014-23) for the 15
projects at $100/bbl oil price were more than double the 2011
upstream segment average.
8
Generate around 50% more in operating cash flow★ by 2014
versus 2011a
We reported $32.8 billion of operating cash flow in 2014 (averaged
oil price of $98.95/bbl, averaged Henry Hub gas price of
$4.43/mmBtu) – exceeding our target of around 50% increase on
2011.
9
Half of incremental operating cash for reinvestment – half
for other purposes including distributions
The dividend paid in 2014 increased by 39% since 2011, and we
carried out $10.3 billion of share buybacks since March 2013,
when a share repurchase programme was announced.
10
Strong balance sheet
Our gearing★ stayed within our target range of 10-20%,
decreasing from 20.4% in 2011 to 16.7% at the end of 2014.
Increasing value
Delivering our goal of value over volume means tough decisions can be
necessary to make the best financial choices for BP.
An important part of our portfolio in the Gulf of Mexico is the
deepwater Atlantis field which is early in its life cycle. To increase
recovery from the field, we had planned to install new subsea
infrastructure, requiring a long and expensive construction period.
When reassessing our field development plan we concluded that our
approach would not generate the most value from the field, so we
decided to look for an alternative solution.
By using our existing subsea facilities to safely drill future wells, rather
than building new infrastructure, we aim to deliver just as much value
to BP as originally planned, while requiring millions less in capital
expenditure and reducing corresponding risk and demand for
resources. The change in plan could significantly increase the Atlantis
field’s capital efficiency and cash flow over the next five years.
This focus on capital allocation discipline is being rigorously applied on
all of our fields around the world.
We only select the best options that maximize value.
a Assumed an oil price of $100/bbl and a Henry Hub gas price of $5/mmBtu in 2014. 2011 excluded BP’s share of TNK-BP dividends; 2014 included BP’s share of Rosneft dividends. The projection
included the impact of payments in respect of federal criminal and securities claims with the US government and SEC where settlements have already been reached, but does not reflect any cash
flows relating to other liabilities, contingent liabilities, settlements or contingent assets arising from the Gulf of Mexico oil spill.
★ Defined on page 252.
A summary of our group financial and operating performance.
BP Annual Report and Form 20-F 2014
Strategic report
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