BP is performing well, with safe and reliable operations, continued strategic progress and strong cash delivery.
This all supports our commitment to growing distributions to shareholders over the long term and the dividend rise we announced today. After almost ten years, this is now my last quarter as CEO. In that time, we have achieved a huge amount together and I am proud to be handing over a safer and stronger BP to Bernard and his team. I am confident that under their leadership, BP will continue to successfully navigate the rapidly-changing energy landscape.
RC profit (loss), underlying RC profit, operating cash flow excluding Gulf of Mexico oil spill payments, working capital, organic capital expenditure, net debt and gearing are non-GAAP measures. These measures and underlying production, refining availability, inventory holding gains and losses, non-operating items and fair value accounting effects are defined in the Glossary on page 32.
Cash flow strong, increased disposal plans
Underlying replacement cost profit for the fourth quarter and full year 2019 was $2.6 billion and $10.0 billion respectively, compared to $3.5 billion and $12.7 billion for the same periods a year earlier, largely reflecting the impact of the weaker environment. Reported profit was $19 million for the fourth quarter and $4.0 billion for the full year.
Non-operating items in the quarter included a $1.9 billion after-tax impairment charge, mainly for the disposal of US gas assets, and a $0.9 billion charge arising from the reclassification of past foreign exchange losses on the formation of BP's new biofuels joint venture.
Full-year operating cash flow, excluding Gulf of Mexico oil spill payments, was $28.2 billion, including a $0.3 billion working capital release (after adjusting for net inventory holding gains).
Gulf of Mexico oil spill payments for the year totalled $2.4 billion on a post-tax basis, and are expected to be less than $1 billion in 2020.
Maintaining capital discipline, full-year organic capital expenditure of $15.2 billion was at the bottom of the guided range. Divestments and other disposals announced since the start of 2019 now total $9.4 billion, keeping BP ahead of schedule to meet its target of $10 billion proceeds by end-2020. BP expects to announce a further $5 billion of agreed disposals by mid-2021.
In January 2020 BP completed its announced share buyback programme.
Net debt reduced by $1.1 billion in the quarter with gearing at 31.1%, down from 31.7% at the end of the previous quarter.
A dividend of 10.5 cents per share was announced for the quarter, an increase of 2.4% on a year earlier.
Continued reliable operations
Downstream delivered full-year refining availability of 95% and record refining throughput for the second consecutive year. Upstream operated plant reliability was 94.4% for the year.
Reported oil and gas production averaged 3.8 million barrels of oil equivalent a day in 2019, 2.7% higher than in 2018. Underlying full year Upstream production, which excludes both Rosneft and portfolio changes, was broadly flat with 2018.
Low-carbon expansions, new projects, retail growth
BP expanded its low-carbon businesses in 2019, increasing ownership in its solar joint venture Lightsource BP to 50%, and completed formation of its new Brazilian biofuels and biopower joint venture, BP Bunge Bioenergia.
Five Upstream major projects began production in 2019, and final investment decisions were taken for a further five.
BP continued its expansion into fast-growing fuels markets during the year and agreed a major fuels joint venture with Reliance Industries Limited in India.
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Cautionary statement
In order to utilize the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995 (the 'PSLRA') and the general doctrine of cautionary statements, BP is providing the following cautionary statement: The discussion in this results announcement contains certain forecasts, projections and forward-looking statements - that is, statements related to future, not past events and circumstances - with respect to the financial condition, results of operations and businesses of BP and certain of the plans and objectives of BP with respect to these items. These statements may generally, but not always, be identified by the use of words such as 'will', 'expects', 'is expected to', 'aims', 'should', 'may', 'objective', 'is likely to', 'intends', 'believes', 'anticipates', 'plans', 'we see' or similar expressions. In particular, the following, among other statements, are all forward looking in nature: expectations regarding the expected quarterly dividend payment and timing of such payment; expectations regarding the underlying effective tax rate in 2020; expectations regarding 2020 organic capital expenditure and depreciation, depletion and amortization charges; expectations for gearing to move towards the middle of the 20-30% range through 2020; plans and expectations to meet cash flow and returns objectives and to increase distributions to shareholders over the long term; plans and expectations relating to divestments and disposals, including expectations that BP will meet its target of $10 billion of divestment proceeds by the end of 2020 and announce a further $5 billion of agreed disposals by mid-2021, for a total of $15 billion of announced disposals by mid-2021 and expectations with respect to completion and the timing of receipt of proceeds of agreed divestments and disposals; plans and expectations regarding Upstream projects, including for Raven to come onstream around the end of 2020 and for TANAP to begin transporting gas to Turkish and European markets in late 2020; expectations regarding Upstream full year and first-quarter 2020 reported production, seasonal maintenance and turnaround activities; plans and expectations with respect to the joint venture in India with Reliance Industries Limited; expectations regarding Downstream turnaround activity and first-quarter 2020 industry refining margins and North American heavy crude oil discounts; plans and expectations regarding Lightsource BP, including plans to have 10GW of developed assets by the end of 2023; plans and expectations regarding the joint venture in China with DiDi, including the roll out of 150kW ultra-fast chargers across BP's UK retail network; plans and expectations with respect to BP's AI venture, including the venture's impact on energy use and carbon emissions of buildings, and plans and expectations with respect to BP Infinia, including to accelerate Infinia's commercialisation; expectations regarding the Other businesses and corporate average quarterly charges excluding non-operating items and expectations with respect to the amount of future payments relating to the Gulf of Mexico oil spill. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will or may occur in the future and are outside the control of BP. Actual results may differ materially from those expressed in such statements, depending on a variety of factors, including: the specific factors identified in the discussions accompanying such forward-looking statements; the receipt of relevant third party and/or regulatory approvals; the timing and level of maintenance and/or turnaround activity; the timing and volume of refinery additions and outages; the timing of bringing new fields onstream; the timing, quantum and nature of certain acquisitions and divestments; future levels of industry product supply, demand and pricing, including supply growth in North America; OPEC quota restrictions; PSA effects; operational and safety problems; potential lapses in product quality; economic and financial market conditions generally or in various countries and regions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; regulatory or legal actions including the types of enforcement action pursued and the nature of remedies sought or imposed; the actions of prosecutors, regulatory authorities and courts; delays in the processes for resolving claims; amounts ultimately payable and timing of payments relating to the Gulf of Mexico oil spill; exchange rate fluctuations; development and use of new technology; recruitment and retention of a skilled workforce; the success or otherwise of partnering; the actions of competitors, trading partners, contractors, subcontractors, creditors, rating agencies and others; our access to future credit resources; business disruption and crisis management; the impact on our reputation of ethical misconduct and non-compliance with regulatory obligations; trading losses; major uninsured losses; decisions by Rosneft's management and board of directors; the actions of contractors; natural disasters and adverse weather conditions; changes in public expectations and other changes to business conditions; wars and acts of terrorism; cyber-attacks or sabotage and other factors discussed elsewhere in this report, and under 'Risk factors' in BP Annual Report and Form 20-F 2018 as filed with the US Securities and Exchange Commission.
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