And we have agreed to take full ownership of Lightsource bp, one of the top solar providers globally, a fantastic business with a track record of delivering equity returns in the mid-teens over the past few years with our development flip model. Integrating all of these are trading and shipping businesses, as I described earlier. This is our strategy in action, and we have more to come in ’24 and ’25 that I’ll describe later. But for now, let me hand over to Kate to take you through our fourth quarter results and our financial frame. Kate?
Katherine Thomson: Thanks, Murray, and good morning, everyone. I’ve been here once before, and I echo Murray sentiment. It is an honor to speak with you as CFO. Let’s turn to our results. BP’s focus on delivery supported another quarter of strong underlying operational and financial performance. Our upstream volume was 2.3 million barrels of oil equivalent per day, in line with our guidance. Gas and low carbon energy production was around 900,000 barrels of oil equivalent per day. The underlying financial result was around $500 million higher than the previous quarter, largely reflecting a strong gas marketing and trading result and stronger gas realizations, driven by higher gas prices. This was offset by a noncash write-off of around $300 million, largely related to the exit from a production sharing contract in Senegal and by lower production.
In oil production and operations, production was 1.4 million barrels of oil equivalent per day. The underlying result was around $400 million higher than the previous quarter, largely reflecting favorable price lag impacts in the Gulf of Mexico and UAE. In customers and products, the underlying result was around $1.3 billion lower than the previous quarter. Looking at the businesses. In our customers’ business, the underlying profit was $880 million, around $200 million higher than the previous quarter. The result benefited from stronger-than-expected fuel margins driven by a decline in supply and a one-off positive effect of around $100 million. This was partly offset by lower seasonal marketing volumes as well as higher costs in support of our transition growth engines.
In products, the underlying loss was $80 million compared to $1.4 billion profit in the third quarter. The result reflects significantly lower industry refining margins, albeit with a smaller decrease in realized refining margins because of wider North American heavy crude oil differentials. In addition, as we guided, there was a higher level of turnaround activity, including a full site turnaround at Castellon. The oil trading result was weak compared to the very strong result in the third quarter. Results from our other businesses and corporate segment improved around $200 million on the previous quarter, largely due to foreign exchange gains. And as we’ve said before, results in this segment do vary quarter-on-quarter. Reflecting these factors, we reported an underlying replacement cost profit before interest and taxes of $6.1 billion.
After interest and taxes, we reported group underlying replacement cost profit of $3 billion. Our underlying effective tax rate increased in the fourth quarter to 42%, mainly reflecting profit mix effects. And on an IFRS basis, we recorded net adverse adjusting items of $1.5 billion after tax, primarily related to impairments, reflecting changes in the group’s price, discount rate, activity phasing and other assumptions, partially offset by fair value accounting effects. We also recorded inventory holding losses of $1.2 billion during the quarter. Taking into account these items, we reported a headline profit of around $400 million. Turning to cash flow and the balance sheet. Operating cash flow was $9.4 billion in the fourth quarter, around $600 million higher than the third quarter.
This was largely due to a higher EBITDA and lower cash taxes compared to the third quarter related to the timing of tax installment payments. Operating cash flow included an underlying working capital release of $2.1 billion, largely associated with the delivery of LNG cargoes. Capital expenditure was $4.7 billion, which is $1.1 billion higher than the third quarter. This brought full year CapEx to $16.3 billion, which is broadly in line with our guidance. Divestment proceeds were $300 million, bringing the full year to $1.8 billion. That’s slightly lower than our guidance. And the $1.5 billion share buyback program we announced with the third quarter 2023 results was completed on the second of February. Our balance sheet continues to strengthen with net debt reducing to $20.9 billion.
That’s the lowest level for a decade. As you saw this morning, we’ve announced a 4Q dividend of $0.0727 per ordinary share, an increase of 10% compared to last year. And as Murray mentioned earlier, we announced $1.7 billion of share buybacks from 2023 surplus cash flow. As you can see on the chart, in total, we’ve now bought back over 16% of our issued share capital, since we started our buyback program in 2021. To sum up, it’s been another good year of delivering against our financial frame. Let me now take you through the guidance on our financial frame for the next 2 years. Our 5 priorities remain unchanged. Given the strength of our underlying financial performance, the disciplined approach to strengthening the balance sheet over the last few years and our confidence in our drive towards 2025, we now have the capacity to update our financial frame and provide clear guidance for the next 2 years through 2025.
We’re tightening our capital expenditure guidance, enhancing our share buyback guidance, all while continuing to maintain a strong balance and a strong investment-grade credit rating. As Murray said earlier, we’re focused on simplifying things where we can. Our first priority remains a resilient dividend accommodated within a balance point of $40 per barrel Brent, $11 RMM and $3 Henry Hub. With capacity for an increase in the dividend per ordinary share of around 4% per annum at around $60 a barrel, subject, of course, to the Board’s discretion each quarter. Our second priority is our strong investment-grade credit rating. We’re targeting to further progress our credit metrics within the A-grade credit range through the cycle. We’re not targeting a AA credit rating.
Third and fourth, we plan to invest with discipline. We’re driven by value and focused on delivering returns at least at our hurdle rates across our transition growth engines and our oil, gas and refining businesses. Capital expenditure is now expected to be around $16 billion per year through 2025, including inorganics. And finally, to share buybacks. As I said, we’re simplifying and enhancing our guidance. For the first half of 2024, we’re committed to announcing $3.5 billion. That’s $1.75 billion per quarter for each of 1Q and 2Q. This provides near-term predictability. And to be clear, this is in addition to the $1.75 billion share buyback we announced today for the fourth quarter of 2023. Over 2024 to ’25, subject to maintaining a strong investment-grade credit rating, our expectation, assuming current market conditions, is to announce at least $14 billion of share buybacks in total.
And on a point-forward basis, we’re now committed to returning at least 80% of surplus cash flow. This is an enhancement to our previous guidance of 60%, and it’s an affordable range underpinned by two things, the strength of our balance sheet and our confidence in the future performance of our business. Let me now close with a summary of our forward-looking guidance before I hand back to Murray. This slide is a little detailed, but it summarizes guidance for the full year ahead and the quarter ahead, and it’s all in one place for you. I’m not going to read it line by line, but let me start just by highlighting some points in relation to the first quarter 2024 compared to the fourth quarter. We expect upstream production to be higher. And customers, we expect seasonally lower volumes across most businesses and the absence of one-off positive impacts.
Fuel margins remain sensitive to movements in cost of supply. In products, we expect a significantly lower level of refinery turnaround activity. And in addition, we expect lower industry refining margins with a larger reduction in realized margins because of narrower North American heavy crude differentials. And with regard to the full year 2024, we expect this year’s capital expenditure to be weighted to the first half, while our target of $2 billion to $3 billion of divestments and other proceeds is expected to be weighted to the second half. And as Murray mentioned, our trading business has delivered on average an uplift of around 4% to group over the past 4 years. This slide forms part of some enhancements we’re implementing to help the investment community.
Starting with the first quarter 2024, we also plan to introduce a regular trading statement to provide our investors with up-to-date financial performance insights. Today’s announcement and our updates to the financial frame, together with our detailed guidance, we hope provides more clarity for the market. And with that, I’ll hand it back to Murray.
Murray Auchincloss: Thanks, Kate, nice to have her CFO, upgrade on the previous guy. Over the next 8 quarters, we’re focused on delivering our 2025 targets, our drive to 2025. We are confident in achieving these for two reasons. First, we’re clear on what businesses need to deliver. And second, we have strong momentum, as I’ve previously described. In oil and gas, we expect to start up 6 new major oil and gas projects, bring online 2 new central processing facilities in the Permian and BPX, checkmate and crossroads, I love their names. And equity and merchant supply to our LNG portfolio that underpins our 25 by ’25 target. We’ll continue to leverage our distinctive delivery model across project and operations to deliver plant reliability at around 96%, maintained base decline of 3% to 5% and $6 per barrel of oil equivalent unit production cost.
