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    BP.   GB0007980591

BP PLC

(BP.)
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PRESS RELEASE: bp Annual Report and Form 20-F -4-

03/22/2021 | 12:27pm EDT

In addition to the transactions shown in the table above, in 2018 bp acquired a 49% stake in LLC Kharampurneftegaz, a Rosneft subsidiary, which develops resources within the Kharampurskoe and Festivalnoye licence areas in Yamalo-Nenets in northern Russia. bp's interest in LLC Kharampurneftegaz is accounted for as an associate.

The terms of the outstanding balances receivable from associates are typically 30 to 45 days. The balances are unsecured and will be settled in cash. There are no significant provisions for doubtful debts relating to these balances and no significant expense recognized in the income statement in respect of bad or doubtful debts. Dividends receivable are not included in the table above.

The majority of purchases from associates relate to crude oil and oil products transactions with Rosneft. Sales to associates are related to various entities.

bp has commitments amounting to USD10,777 million (2019 USD11,198 million), primarily in relation to contracts with its associates for the purchase of transportation capacity. For information on capital commitments in relation to associates see Note 13.

Extract from bp Annual Report and Form 20-F 2020, page 326:

Related-party transactions

Transactions between the group and its significant joint ventures and associates are summarized in Financial statements - Note 16 and Note 17. In the ordinary course of its business, the group enters into transactions with various organizations with which some of its directors or executive officers are associated. Except as described in this report, the group did not have any material transactions or transactions of an unusual nature with, and did not make loans to, related parties in the period commencing 1 January 2020 to 22 March 2021.

APPENDIX E - IMPORTANT EVENTS DURING THE YEAR

For a full glossary of terms, see bp Annual Report and Form 20-F 2020, pages 341-347.

1. Extracted in full and unedited text from the Chairman's letter, bp Annual Report and Form 20-F 2020, pages 4-5:

Dear fellow shareholders,

2020: the year of the pandemic In every sense, 2020 was an extraordinary year. The worst pandemic in a century has cost well over 2 million lives and caused worldwide economic and social disruption. While vaccination programmes are now building momentum, the path to recovery remains uncertain.

Because demand for energy is closely linked to human activity, our sector was deeply affected. The combination of a steep fall in share values for almost all oil and gas companies and a new bp distribution policy significantly affected your shareholder returns.

As chairman of your board, I am conscious of my responsibilities to bp's shareholders. When the board decided to reset our distribution policy, it did so with a view to your long-term interests. Our priorities were, and remain, weathering the immediate challenge of the pandemic; paying a resilient dividend; strengthening our balance sheet; investing into the energy transition; investing in our resilient hydrocarbons business and, after that, returning surplus cash to shareholders through buybacks.

The board was unanimous in its support for this course of action, which will help establish bp as an integrated energy company. I hope that bp's new investor proposition and financial frame give reasons for optimism about bp's long-term prospects. As we turn to 2021, the board's focus is on supporting bp's leadership team to deliver our new strategy, and on building renewed shareholder confidence through strategic progress and operational and financial performance.

2020 was also tough for our people. My board colleagues and I are proud of them. Their commitment - on rigs, in refineries, across retail stations and everywhere else in bp - helped keep the world's lights on and allowed us to provide many emergency services with free or heavily discounted fuel. Despite new COVID-19-related practical challenges, our people maintained the safety of bp's operations. That is a testament to their careful work.

bp's new purpose 2020 was a remarkable year for bp for other reasons too. With the backing of the board, our new CEO, Bernard Looney, introduced a new company purpose: reimagining energy for people and our planet. That purpose - together with our strong culture and values - underpins the net zero ambition that we set out last year, together with our new strategy, financial frame and investor proposition. It also informed bp's reinvention - the selection of a new leadership team, and the replacement of bp's upstream/downstream model with a new, integrated group structure.

Change of this scale necessitated a reorganization of how we work. That reorganization will ultimately see close to 10,000 colleagues leaving bp. Saying goodbye has been difficult, but the result is a leaner, flatter, nimbler company - better able to realize the opportunities of the energy transition.

Macro-economic developments have only strengthened the board's belief that the direction in which we are taking bp is the right one - including China's new net zero target, the EU's Green Deal, the UK's plan for a green industrial revolution, and the US's recommitment to the Paris Agreement. Today, global energy markets are even further down the path of fundamental change - and bp is well-positioned to help to speed the world's journey to net zero.

A year of engagement While this is a journey that will require patience, our goal is that bp over time will become a more valuable company for its shareholders and bring wider benefits for society. Of course, the journey to net zero is, in part, one of discovery. For that reason, the board and bp's leadership team know that we must be fully open to advice, learning and challenge.

2020 was therefore a year of engagement with our stakeholders, and I am grateful for the inputs we received - which helped us shape our new strategy, financial frame and investor proposition, sustainability frame and position on biodiversity. We will keep listening, and we count on you to share your feedback with us as we travel the road to net zero together.

Evolution of the board As the company evolves, the board's composition will evolve too - reflecting the need for new experiences and skills aligned with bp's new direction. During the year, the board said goodbye to our former CEO, Bob Dudley, and to Brian Gilvary, our former CFO. Sir Ian Davis, Nils Andersen and Dame Alison Carnwath have also stepped down from the board, and we shall shortly say farewell to Brendan Nelson. Collectively and individually they served with distinction - bp is very fortunate to have had their wise advice and strong leadership. We are just as fortunate to welcome Tushar Morzaria, Karen Richardson and Johannes Teyssen to bp's board for the first time.

Closing thanks I would like to thank Bernard Looney, his leadership team and everyone in bp for their work during 2020. Throughout this challenging year, they showed characteristic determination.

Finally, I thank you, our shareholders. I am grateful both for the continued support we received during 2020, and also for the support of our new shareholders. During 2020, we received investment and other endorsement from those who told us they would not have considered supporting bp were it not for the transformation we have begun. We look forward to repaying the faith you have placed in bp.

Helge Lund

Chairman

22 March 2021 2. Extracted in full and unedited text from the Chief executive officer's letter, bp Annual Report and Form 20-F 2020, page 6:

Dear shareholders,

The year 2020 will be remembered above all for the pain, sadness and loss of life caused by COVID-19. At bp, our thoughts are with the families and loved ones of the colleagues we have lost. Thousands more on our teams have had the virus, and life under lockdown has meant additional challenges, and anxiety for everyone. I want to pay particular tribute to those on the frontline of our business who have kept our plants and platforms running, our shops and forecourts open, and energy flowing to the world. They have sacrificed so much and earned our deepest respect and appreciation.

Responding to brutal conditions

We began our transformation from an international oil company to an integrated energy company against this backdrop, along with lower oil and gas prices, lower refining margins and unprecedented falls in demand for our retail and aviation fuels. Our response included lowering costs, strengthening the balance sheet with an innovative hybrid bond issue, and advancing our strategy to become a more diversified, resilient and lower carbon company. As part of our strategy planning process, we reviewed our portfolio and development plans. This work - informed by bp's views of the long-term price environment - led to significant impairment charges and non-cash exploration write-offs in the second quarter.

For shareholders, all this was reflected in a reset dividend and a diminished share price. I recognize the financial impact this must have had on you. However, I wholeheartedly believe we will not just restore, but will enhance the long-term sustainable value of your company through the actions we are taking to reinvent bp. And despite the most brutal operating conditions I can remember in almost 30 years in this industry, we have made considerable operational and strategic progress.

Performing while transforming

The loss of USD20.3 billion we reported for the year is clearly disappointing. However, it in no way reflects the heroic efforts of the bp team in extremely difficult circumstances, or their deep commitment to performing while transforming:

* Most importantly - our safety performance continued to improve.

* Reliability of 94% for bp's operated plants and refining availability of 96% represents remarkably strong performance, especially given the challenges faced by our frontline staff.

* Capital was reset and we delivered at the lower end of the range.

(MORE TO FOLLOW) Dow Jones Newswires

March 22, 2021 13:26 ET (17:26 GMT)

Stocks mentioned in the article
ChangeLast1st jan.
BARCLAYS PLC 5.10% 177.7 Delayed Quote.15.48%
BP PLC -0.27% 290.35 Delayed Quote.14.36%
E.ON SE 0.29% 10.398 Delayed Quote.14.43%
LONDON BRENT OIL -0.11% 74.66 Delayed Quote.44.68%
NOVO NORDISK A/S 1.00% 567.8 Delayed Quote.31.77%
ROLLS-ROYCE HOLDINGS PLC 1.62% 99.95 Delayed Quote.-11.67%
S&P GSCI CRUDE OIL INDEX -0.01% 394.1684 Delayed Quote.48.21%
UNILEVER PLC -0.10% 4045 Delayed Quote.-7.75%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) -0.10% 73.6223 Delayed Quote.-0.24%
WTI -0.07% 71.9 Delayed Quote.50.10%
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Financials (USD)
Sales 2021 219 B - -
Net income 2021 10 277 M - -
Net Debt 2021 39 966 M - -
P/E ratio 2021 8,64x
Yield 2021 5,18%
Capitalization 81 532 M 81 529 M -
EV / Sales 2021 0,55x
EV / Sales 2022 0,50x
Nbr of Employees 63 600
Free-Float 93,9%
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Number of Analysts 25
Last Close Price 4,04 $
Average target price 4,96 $
Spread / Average Target 22,6%
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Managers and Directors
Bernard Looney Chief Executive Officer & Director
Murray Auchincloss Chief Financial Officer & Director
Helge Lund Chairman
Gordon Young Birrell Executive Vice President-Production & Operations
Paula Rosput Reynolds Senior Independent Director
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