BP 3Q23 Results | Climate Transition Analysis
BP had a tougher quarter with 3Q23 underlying profit of $3.3bn post-tax, down -60% on historic 3Q22 highs, driven by gas trading.
Despite taking an impairment of its offshore wind assets, it continues to focus on Transition Growth Engines, distilling the focus on renewables to integration of generation with downstream, and increased attention on higher returns business such as biofuels, convenience and electrification (EVs).
Key findings
FY23 capex guidance is now ~$16bn, the bottom of BP’s previous range of $16-18bn, partly driven by lower acquisitions.
3Q23 group capex was nearly all organic at $3.6bn, up 13% from 3Q22, with renewables contributing $222m, 6% of group.
BP took a $540m pre-tax impairment on the US offshore wind project it held with Equinor ($300m impairment).
In discussing opportunities to drive renewable returns BP stated that historical Lightsource BP solar projects with a ‘develop-and-flip’ model have averaged ~16% returns and indicated it would sell down future renewables projects to 25%-35% ownership.
Given greater focus on EV charging and biofuels, enhanced quarterly disclosure of earnings and capex is required to better assess BP’s transition performance.
