BP Strategy Presentation London 2 March 2010 Tony Hayward Group - - PowerPoint PPT Presentation

BP Strategy Presentation

London 2 March 2010

Tony Hayward

Group Chief Executive

3

Cautionary Statement

Forward Looking Statements - Cautionary Statement This 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;

• il 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; Rumaila resources 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

Mboed OECD Non-OECD 100 200 300 400 2000 2010 2020 2030

Renewables Hydro Nuclear Coal Gas Biofuels Oil

100 200 300 400 2000 2010 2020 2030 Mboed

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 environment

Brent $/bbl Natural Gas-Henry Hub $/mmbtu 20 40 60 80 100 120 140 160 2004 2005 2006 2007 2008 2009 2010 4 8 12 16 20 24 28

8

Downstream: refining margins and utilization

Global Indicator Margin $/bbl Global Utilization(1) % 2 4 6 8 10 12 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD 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

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)

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

mboed 2000 2500 3000 3500 4000 4500

1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 Note: Chevron includes Texaco, prior to the merger Barrels 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 9.5 Year on Year %

• 44%
• 56%
• 59%
• 58%

Cash from Operations $bn 27.7 28.4 21.0 Year on Year %

• 27%
• 52%
• 52%
• 35%

Reported Volumes mboed 3998 3932 3152 2704 Year on Year % 4% 0%

• 3%

7% Market Capitalisation $bn(2)

• vs. end 2008 %

Capital Expenditure $bn(3) 20.0 27.1 30.6 22.2 Year 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

• ther 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

181 323 185 154 24%

• 21%

13% 3% 150 15% 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

RDS CVX BP XOM COP TOT 1 2 3 4 5 5 10 15 Exploration spend $bn Discovered resource bnboe

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-Year Average Organic RRR ’04-’08 (excluding oil sands, using year-end pricing)

(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

mboed

Source: Oil & Gas Journal 2010

Average Refinery Size (kbd)

Alliance Mombasa Coryton Reichstett Grangemouth Salt Lake Lavera Singapore Mandan Yorktown BP Divestments ’00-’09

Divested 100 150 200 250 7 8 9 10 11 Nelson 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 Project Management 120% 5% 15% Sanction Estimate 100%

ROACE vs Peers Earnings vs Peers Projects efficiency Performance gap in US Fuels Value Chains Drilling efficiency

Underlying net income gap $bn (25) (20) (15) (10) (5) 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 2009 2003 2004 2005 2006 2007 2008 2009 Underlying ROACE BP Other Supermajors Drilling Capital $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 Solomon Availability % 70 75 80 85 90 95 100 R&M refining cost efficiency(1) 2012 2007 2009 140 120 100 130 110 2004 Refining performance

(1) Based on Solomon non-energy operating expense per Effective Distillation Capacity (indexed to top three R&M refineries) (100) (50) 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 Inglis

Chief Executive, Exploration & Production

20

Leadership positions in the world’s most prolific hydrocarbon basins

210mboed Angola 320mboed North Sea 440mboed Gulf of Mexico 680mboed North America Onshore 940mboed TNK-BP 570mboed

• N. Africa, Middle East

and Caspian 180mboed Asia Pacific 200mboed South America 460mboed Trinidad & Tobago

2009 production figures rounded to the nearest 10mboed at actual prices

21

2009 exploration and access

ANGOLA Leda, Oberon, Tebe Block 31 BP (27%) and operator Nineteen discoveries in block US GULF OF MEXICO Tiber BP (62%) and operator Giant oil discovery CANADA Ellice J-27 BP (25%) EGYPT Nile Delta 2,900km2 net in two blocks IRAQ Rumaila Redevelopment of supergiant PAKISTAN Onshore 5,000km2 in two blocks INDONESIA Kalimantan Net 640km2 of Coal Bed Methane INDONESIA West Papua 2620km2 net in two blocks US GULF OF MEXICO 61 leases from OCS 208, 210 US SHALE GAS Eagle Ford New ~5tcf position Exploration Access JORDAN Risha 7,000km2 block

22

Sustaining a leading track record

Majors' 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

1 2 3 4 2005 2006 2007 2008 2009 BP net resource additions bnboe Resource play* Extensions New discoveries RDS CVX BP XOM COP TOT 1 2 3 4 5 5 10 15 Exploration spend $bn Discovered resource bnboe

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 and heavy 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 East

and Caspian Trinidad & Tobago North Sea North America Onshore

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 Mexico Mars B Gulf of Mexico Atlantis Phase 2 Gulf of Mexico Galapagos Gulf of Mexico Na Kika Phase 3 Gulf of Mexico Horn Mountain Phase 2 Gulf of Mexico West Nile Delta Gas Egypt WoS Q204 North Sea Clair Ridge North Sea Devenick North Sea Kinnoull North Sea Chirag Oil Azerbaijan Sunrise Canada In Salah Southern Fields North Africa Verkhnechonskoye FFD* Phase 1 TNK-BP Uvat East Expansion TNK-BP Suzun TNK-BP Block 18 West Angola Block 31 SE Angola Shah Deniz FFD* Azerbaijan Mad Dog Phase 2 Gulf of Mexico Na Kika Phase 4 Gulf of Mexico Tangguh Expansion Asia Pacific Juniper Trinidad & Tobago 2010 Project FIDs 2011 Project FIDs

* Full field development

27

Project start-ups 2010–2015

Alaska Liberty * * BP Operated 2010 Start Ups 2011 Start Ups 2012-2015 Start Ups Canada Canada Noel * Sunrise Gulf of Mexico Great White Galapagos * 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 & Tobago Serrette * Trinidad Compression * Juniper * Angola B31 PSVM * Pazflor Clochas Mavacola Angola LNG Kizomba Satellites Phase 2 B18 West * CLOV Asia Pacific North Rankin 2 Tangguh Expansion * Sanga Sanga Coal Bed Methane Azerbaijan Chirag Oil * North Sea Skarv * Valhall Redevelopment * Devenick * Kinnoull * Clair Ridge * WoS Q204 * Egypt WND Gas * Algeria & Libya In Salah Gas Compression In Salah Southern Fields In Amenas Compression Middle East Oman FFD * Russia (TNK-BP) Russkoye Suzun Verkhnechonskoye 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 Occidental 2008 – accounting treatment related to our transactions with Husky and Chesapeake 2009 – BG asset swap and Eagle Ford 2010 – BP projections

Organic capital expenditure $bn

20 5 10 15 2005 2006 2007 2008 2009 2010

29

Growth beyond 2015

Giant Fields Deepwater Gas

(Unconventional)

30

Leading deepwater company

mboed

2009 net production. Source: Wood MacKenzie Deepwater refers to all fields in >500m water depth

100 200 300 400 500 600 700

31

Gulf of Mexico – further growth potential

Miocene Paleogene

New Orleans

100 Miles Miles

N

Houston Houston

Discoveries/ Developments Industry Pipelines BP Pipelines BP Blocks Existing Production Great White Great White

1,500’

Holstein Mad Dog Atlantis Atlantis Freedom Kodiak Tubular Bells Pompano Pompano Ram Powell Ram Powell Horn Mtn. Horn Mtn. King King Dorado Dorado Marlin Marlin Nile Nile Mars Ursa Ursa Thunder Horse Thunder Horse Isabela Isabela Santa Cruz Santa Cruz NaKika NaKika Diana Diana Hoover Hoover Tiber Kaskida

Gulf of Mexico Production to 2020

Thunder Horse and Thunder Horse and

Production mboed 500 2000 2005 2010 2015 2020 Base & Wedge Thunder Horse and Atlantis Subsea New Hubs Tiebacks

32

Global gas

Angola LNG WND Gas Bourarhat Alaska Gas

Core Gas Producing Areas Gas Growth Developments

Noel Oman Wamsutter Fayetteville San Juan Coal Bed Methane Woodford Eagle Ford Haynesville Skarv Devenick Harding Area Gas Culzean Sanga Sanga Coal Bed Methane

80 50

Total Gas Resource (tcf)

Unconventional Conventional

Jordan Libya

Gas Exploration and Appraisal

Tangguh Expansion Colombia PAE Satis North Rankin 2 Browse Rospan Shah Deniz FFD Serrette Juniper China

Resources at end-2009 on a combined basis of subsidiaries and equity-accounted entities

33

North America Gas

• S. Texas
• S. Louisiana
• E. Texas

Permian Anadarko Hugoton San 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

BP 1st 10 wells BP latest 10 wells

60% 20%

Pre-BP

BP 1st 10 wells BP

Increase in Well Productivity – Woodford Shale

60% 20%

Initial Production Rate

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 Rospan Russkoye 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 ISS

TM Method

Cableless trials Advanced sand control

Technology Flagships

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

• rganization

(creation of Centralized Developments Organization)

Deepening capability

40

Supply chain opportunity

Level of Maturity Value Contribution

O t h e r I O C s Sector Leader

Stage 1 Transactional Purchasing Stage 2 Leveraging Stage 3 Supplier Integration Stage 4 Best in Class

O t h e r I O C s

• 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.

BP Total Chevron ExxonMobil Shell ConocoPhillips

Production costs ($/boe) 2 4 6 8 10 12 2003 2004 2005 2006 2007 2008 2009

42

Projects efficiency opportunity

Project Cost Performance Inflation Project Management 120% 5% 15% Sanction Estimate 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

Drilling Capital $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 Conn

Chief 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

1 2 3 4 5 6 2003 2004 2005 2006 2007 2008 2009 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 2001–2004 Based on nameplate capacity as stated in F&OI = maximum sustainable rate for a 30 day period 2004 2009 2008 2007 2006 2005

1 2 3 4 5 6 7 8 9 2 4 6 8 10

Historical Performance Range

~ $5bn

BP’s Refining Global Indicator Margin (GIM) $/bbl Pre-tax underlying RC profit $/bbl

49

Performance momentum 2007–2009

Environment Performance Improvement

3.9

2007

3.3

2008 Pre-tax underlying RC profit $bn

2.7 (3.3) 2.1 (1.8) 3.6

2009

Performance Improvement

GIM $/bbl 9.9 6.5 4.0 BP’s Refining Global Indicator Margin (GIM)

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 operating capital 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 2009 2007

(1) Based on underlying pre-tax RC profit per annum, adjusted for refining margins, petrochemical margins, forex and energy costs

52

Refining margins 1990–2009

GIM adjusted to 2009 $ 2 4 6 8 10 12 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 $/bbl 1992–2003 range

53

Phase 2 – Winning performance in a challenging environment

Regression line established from rolling 4Q averages in period 2001–2004 Based on nameplate capacity as stated in F&OI = maximum sustainable rate for a 30 day period

Pre-tax underlying RC profit $/bbl

2004 2009 2008 2007 2006 2005

1 2 3 4 5 6 7 8 9 2 4 6 8 10 BP’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 efficiency Refining

• Planning and execution
• Turnarounds and projects
• Contractor management
• Sourcing
• Energy efficiency

Year BP portfolio average

Top 3 BP refineries Solomon Availability % 70 75 80 85 90 95 100 R&M refining cost efficiency(1)

2012 2007 2009

140 120 100 130 110

2004

(1) Based on Solomon non-energy operating expense per Effective Distillation Capacity (indexed to top three R&M refineries)

Refining performance

57

Improving efficiency Other 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

Crude Customer

59

Global refining quality

2008–2009 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 Mombasa Coryton Reichstett Grangemouth Salt Lake Lavera 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 Project Sources of value

Indexed Pre-tax underlying RC profit $/bbl Mid West Refining Indicator Margin $/bbl 100 200 300 400 500 600 2 4 6 8 10 12 Mid West historical performance range Mid West post project performance for a range

• f WTI – Lloydminster

differentials

Regression line established from rolling 4Q averages in period 2002–2006 Based 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) 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 Hayward

Group 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