26th Apr 2005 07:01
BP PLC26 April 2005 BP p.l.c.Group ResultsFirst Quarter 2005 London 26 April 2005 FOR IMMEDIATE RELEASE--------------------------------------------------------------------------- RECORD QUARTERLY RESULT AND STRENGTHENING CASH FLOW=========================================================================== 1Q 2005 1Q 4Q 1Q vs.1Q$ million 2005 2004 2004 2004 ========================== Profit for the period* 6,602 3,010 4,912Inventory holding (gains) losses (1,111) 494 (648) --------------------------Replacement cost profit 5,491 3,504 4,264 29% ==========================- per ordinary share (pence) 13.55 8.71 10.49- per ordinary share (cents) 25.61 16.23 19.30 33%- per ADS (dollars) 1.54 0.97 1.16 ========================== o BP's first quarter replacement cost profit was $5,491 million compared with $4,264 million a year ago, an increase of 29%. o The first quarter result includes a net non-operating gain of $535 millon compared with $776 million in the first quarter of 2004. This includes gains from the sale of BP's interests in the Ormen Lange field and the Interconnector pipeline. o The first quarter trading environment was generally stronger than a year ago with higher oil and gas realizations, higher refining and chemicals margins, but with lower retail marketing margins. o Net cash provided by operating activities for the quarter was $9.4 billion compared with $7 billion a year ago. o The ratio of net debt to net debt plus equity was 18% compared with 20% a year ago. o The quarterly dividend, to be paid in June, is 8.50 cents per share ($0.51 per ADS) compared with 6.75 cents per share a year ago, an increase of 26%. In sterling terms, the quarterly dividend is 4.450 pence per share, compared with 3.807 pence per share a year ago, an increase of 17%. The company repurchased 193 million of its own shares during the quarter at a cost of $2 billion. BP Group Chief Executive, Lord Browne, said: "This strong start in 2005 reflects the results of our significant investment programme over the past few years and improvements in underlying performance. In addition, continuing higher oil prices have generated substantial additional cash flow which has been applied to the share buyback programme. * Profit attributable to BP shareholders. Summary Quarterly Results Exploration and Production's record first quarter result was up 53% on a yearago reflecting higher realizations in both liquids and gas, and higher volumes,partially offset by the impact of planned higher revenue investment and costs.In addition, the result includes net gains from non-operating items. The Refining and Marketing result increased 54% compared with a year agoreflecting improved refining margins, offset partly by lower retail marketingmargins. In Gas, Power and Renewables the improved result reflects primarily a higherresult in the natural gas liquids business, and gains from non-operating items. Interest and Other finance expense was $201 million for the quarter comparedwith $269 million in the previous quarter. A major component of the decrease isthe absence in the first quarter of the revaluation of provisions in the fourthquarter of 2004. The effective tax rate on replacement cost profit was 32%. This rate benefitsfrom the release of provisions for previous years as a result of current periodrestructuring actions, risk reassessment and tax settlements. Capital expenditure was $2.8 billion for the quarter. There were no acquisitionsin the quarter. Disposal proceeds were $1.3 billion. Net debt at the end of the quarter was $18 billion. The ratio of net debt to netdebt plus equity was 18%, compared with 22% at the end of 2004. During the first quarter, the company repurchased 193 million of its own shares,at a cost of $2 billion. Of these, 77 million shares were cancelled and theremainder are held in treasury. -------- The commentaries above and following are based on replacement cost profit. TNK-BP operational and financial information has been estimated. The financial information for 2004 has been restated to reflect the following,all with effect from 1 January 2005: (a) the adoption by the group ofInternational Financial Reporting Standards (IFRS) (see Note 1); (b) thetransfer of the aromatics and acetyls operations from the former Petrochemicalssegment to the Refining and Marketing segment; (c) the transfer of the olefinsand derivatives operations from the former Petrochemicals segment to Otherbusinesses and corporate; (d) the transfer of the Grangemouth and Laverarefineries from the Refining and Marketing segment to Other businesses andcorporate; (e) the transfer of the Mardi Gras pipeline from the Exploration andProduction segment to the Refining and Marketing segment; and (f) the transferof the Hobbs fractionator from the Gas, Power and Renewables segment to Otherbusinesses and corporate. Note 2 provides further detail of the resegmentation. Non-Operating Items First Quarter$ million 2005 --------Exploration and Production 780Refining and Marketing (27)Gas, Power and Renewables 105Other businesses and corporate (71) -------- 787Taxation(a) (252) -------- 535 ======== (a) Tax on Non-Operating Items is calculated using the effective tax rate on replacement cost profit. Reconciliation of Replacement Cost Profit to Profit for the Period First Fourth First Quarter Quarter Quarter$ million 2005 2004 2004 ================================Exploration and Production 6,486 4,750 4,242Refining and Marketing 1,421 1,337 920Gas, Power and Renewables 404 495 201Other businesses and corporate 207 (1,216) 1,094Consolidation adjustment (153) 57 (66) --------------------------------RC profit before interest and tax 8,365 5,423 6,391 --------------------------------Interest and Other finance expense (201) (269) (174)Taxation (2,612) (1,591) (1,919)Minority interest (61) (59) (34) --------------------------------RC profit(a) 5,491 3,504 4,264 --------------------------------Inventory holding gains (losses) 1,111 (494) 648 --------------------------------Profit for the period* 6,602 3,010 4,912 ================================ (a) Replacement cost profit reflects the current cost of supplies. The replacement cost profit for the period is arrived at by excluding from profit inventory holding gains and losses. BP uses this measure to assist investors to assess BP's performance from period to period. Replacement cost profit is not a recognized GAAP measure. Operating cash flow is calculated from the starting point of profit before taxation which includes inventory holding gains and losses. Operating cash flow also reflects working capital movements including inventories, trade and other receivables and trade and other payables. The carrying value of these working capital items will change for various reasons, including movements in oil, gas and products prices. Per Share Amounts First Fourth First Quarter Quarter Quarter 2005 2004 2004 ================================Results for the period ($m)Profit* 6,602 3,010 4,912Replacement cost profit 5,491 3,504 4,264 --------------------------------Shares in issue at period end (thousand) 21,367,827 21,525,978 21,996,888- ADS equivalent (thousand) 3,561,305 3,587,663 3,666,148Average number of sharesoutstanding (thousand) 21,441,285 21,607,872 22,087,796- ADS equivalent (thousand) 3,573,548 3,601,312 3,681,299Per ordinary share (cents)Profit for the period 30.79 14.00 22.24RC profit for the period 25.61 16.23 19.30Per ADS (cents)Profit for the period 184.74 84.00 133.44RC profit for the period 153.66 97.38 115.80 ================================ * Profit attributable to BP shareholders. Exploration and Production 1Q 4Q 1Q$ million 2005 2004 2004 =====================Profit before interest and tax(a) 6,491 4,747 4,250Inventory holding (gains) losses (5) 3 (8) ---------------------Replacement cost profit before interest and tax 6,486 4,750 4,242 ===================== Results include:Impairment and gain (loss) on sale ofbusinesses and fixed assets 940 (236) 25Environmental and other provisions - - -Restructuring, integration and rationalization costs - - -Fair value gain (loss) on embedded derivatives (160) - -Other - 8 - ---------------------Total non-operating items 780 (228) 25 =====================Exploration expense 160 258 136Of which:Exploration expenditure written off 84 151 67 =====================Production(Net of royalties)Crude oil (mb/d) 2,405 2,396 2,342Natural gas liquids (mb/d) 188 197 191Total liquids (mb/d)(b) 2,593 2,593 2,533Natural gas (mmcf/d) 8,745 8,714 8,600Total hydrocarbons (mboe/d)(c) 4,101 4,095 4,015 =======================Average realizationsCrude oil ($/bbl) 43.37 41.01 31.30Natural gas liquids ($/bbl) 28.14 31.20 23.14Total liquids ($/bbl) 41.74 39.88 30.48Natural gas ($/mcf) 4.26 4.28 3.79Total hydrocarbons ($/boe) 33.60 32.64 26.48 =======================Average oil marker prices ($/bbl)Brent 47.62 43.85 32.03West Texas Intermediate 49.88 48.29 35.30Alaska North Slope US West Coast 45.07 42.62 34.22 ===================== Average natural gas marker pricesHenry Hub gas price ($/mmbtu)(d) 6.27 7.07 5.69UK Gas - National Balancing Point (p/therm) 37.96 28.51 24.59 ======================= (a) Includes profit after interest and tax of equity-accounted entities.(b) Crude oil and natural gas liquids.(c) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels.(d) Henry Hub First of the Month Index. Exploration and Production The replacement cost profit before interest and tax for the first quarter was$6,486 million, a record result, representing an increase of 53% over the firstquarter of 2004. This result benefited from higher realizations in both liquidsand gas, and higher volumes, partially offset by the impact of planned higherrevenue investment and costs. In addition, the result includes gains of $1,070million on the sales of assets primarily from our interest in the Ormen Langefield. The result also includes charges for impairments of $130 million, relating tofields in the UK North Sea, and fair value losses of $160 million on embeddedderivatives in certain long term gas contracts where the contract price is tiedto oil and electricity prices rather than indexed to the gas price. Thecorresponding quarter in 2004 contained charges of $186 million for impairments,and gains on sales of assets of $211 million. Production for the quarter at 4,101 mboe/d reflected the continuing ramp-up ofproduction in the New Profit Centres and increased volumes from TNK-BP, partlyoffset by operational issues in the North Sea and the expected decline in ourExisting Profit Centres. Projects in the New Profit Centres remain on track. In the Gulf of Mexico, theMad Dog project achieved first production in January 2005, and the Thunder Horseintegrated hull and topsides has left the construction yard in Corpus Christifor installation offshore. In Azerbaijan, the Azeri project achieved firstproduction in February, and construction on the BTC pipeline remains on track.In the Existing Profit Centres, the Clair project in the UK North Sea commencedproduction in February. In addition, we sanctioned investment in the Saqqara gasfield in Egypt and received approval from the Indonesian government for theTangguh gas project. We have had exploration success in Angola with the 'Palas-1' and 'Ceres-1' oildiscoveries in ultra-deepwater Block 31. These are the fifth and sixthsuccessful discoveries that BP has drilled in Block 31. We have also beenawarded three blocks in Algeria's sixth international licensing round. Customer Facing Segments Refining and Marketing 1Q 4Q 1Q$ million 2005 2004 2004 =====================Profit before interest and tax(a) 2,363 811 1,473Inventory holding (gains) losses (942) 526 (553) ---------------------Replacement cost profit before interest and tax 1,421 1,337 920 ===================== Results include:Impairment and gain (loss) on sale ofbusinesses and fixed assets (27) (333) (160)Environmental and other provisions - - -Restructuring, integration and rationalization costs - (32) -Fair value gain (loss) on embedded derivatives - - -Other - - - ---------------------Total non-operating items (27) (365) (160) =====================Refinery throughputs (mb/d)(b)UK 164 218 198Rest of Europe 647 601 710USA 1,400 1,436 1,265Rest of World 299 296 399 ---------------------Total throughput 2,510 2,551 2,572 =====================Refining availability 95.2 96.5 95.1 =====================Oil sales volumes (mb/d)Refined productsUK 338 335 297Rest of Europe 1,323 1,363 1,352USA 1,648 1,664 1,683Rest of World 621 627 652 -----------------------Total marketing sales 3,930 3,989 3,984Trading/supply sales 2,196 2,194 2,502 -----------------------Total refined product sales 6,126 6,183 6,486Crude oil 3,635 3,731 4,058 -----------------------Total oil sales 9,761 9,914 10,544 ======================= Global Indicator Refining Margin ($/bbl)(c)NWE 2.84 4.72 2.73USGC 7.30 5.52 6.92Midwest 3.84 1.65 4.67USWC 12.88 10.36 8.06Singapore 4.98 8.02 3.42BP Average 5.94 5.69 4.89 ===================== Chemicals production (kte)UK 317 316 303Rest of Europe 806 779 797USA 1,218 1,122 1,183Rest of World 1,009 990 1,040 -----------------------Total production 3,350 3,207 3,323 ======================= (a) Includes profit after interest and tax of equity-accounted entities.(b) Refinery throughputs exclude the Grangemouth and Lavera refineries which were transferred to Other businesses and corporate effective 1 January 2005.(c) The Global Indicator Refining Margin (GIM) is the average of six regional indicator margins weighted for BP's crude refining capacity in each region. Each regional indicator margin is based on a single representative crude with product yields characteristic of the typical level of upgrading complexity. The regional indicator margins may not be representative of the margins achieved by BP in any period because of BP's particular refinery configurations and crude and product slate. The GIM data shown above excludes the Grangemouth and Lavera refineries. Customer Facing Segments Refining and Marketing The replacement cost profit before interest and tax for the first quarter was$1,421 million. This compares with $920 million for the same period last year,an increase of 54%. The year-on-year improved result reflects improved refining margins, offsetpartly by lower retail marketing margins. Improved refining margins weresupported by strong product demand, together with the continuing weakness in therelative price of extra-heavy sour crudes. Retail marketing margins in the firstquarter were significantly lower than those of a year ago, reflecting sustainedpressure from rising crude and product prices. The quarter's result includes a charge of $27 million for non-operating items.This comprises a gain on the sale of assets of $14 million relating to the saleof marketing assets and an impairment charge of $41 million. This compares witha loss on the sale of assets of $160 million in the same period last year dueprincipally to the disposal of BP's interests in the Singapore Refining CompanyPrivate Limited (SRC). Refining throughputs for the quarter were 2,510 mb/d, some 62 mb/d lower than inthe first quarter of 2004, due principally to the disposal of BP's interests inthe SRC and the closure of refining operations at the ATAS Refinery in Mersin,south eastern Turkey, in 2004. Refining availability was 95.2%, in line withthat of the first quarter of 2004. Marketing sales were 3,930 mb/d, slightlybelow those of a year ago. The Texas City Refinery in Texas, USA, experienced a tragic explosion on 23March at the Isomerization unit. The financial impact on the quarter wasminimal. During the quarter, BP and the South Coast Air Quality Management District ofCalifornia agreed to the settlement of two outstanding lawsuits regarding theCarson Refinery. The quarter's result includes a charge of $35 million inrespect of this settlement, including local community programmes relating to airquality and its impacts. Also in the quarter, BP and Sinopec Corporation of China signed a joint venturecontract to build a world-scale acetic acid plant in Nanjing, east China'sJiangsu province. The 500,000 tons per annum operation is planned to come onstream in the second half of 2007. Customer Facing Segments Gas, Power and Renewables 1Q 4Q 1Q$ million 2005 2004 2004 =====================Profit before interest and tax(a) 418 523 191Inventory holding (gains) losses (14) (28) 10 ---------------------Replacement cost profit before interest and tax 404 495 201 =====================Results include:Impairment and gain (loss) on sale ofbusinesses and fixed assets 63 40 -Environmental and other provisions - - -Restructuring, integration and rationalization costs - - -Fair value gain (loss) on embedded derivatives 42 - -Other - - - ---------------------Total non-operating items 105 40 - ---------------------Gas sales volumes (mmscf/d)UK 5,413 3,456 6,328Rest of Europe 387 449 442USA 14,188 13,852 13,618Rest of World 15,628 13,659 13,902 -----------------------Total gas sales volumes 35,616 31,416 34,290 ======================= NGL sales volumes (mb/d)UK 10 11 4Rest of Europe 13 12 1USA 371 421 462Rest of World 254 240 244 -----------------------Total NGL sales volumes 648 684 711 ======================= (a) Includes profit after interest and tax of equity-accounted entities. The replacement cost profit before interest and tax for the first quarter was$404 million compared with $201 million a year ago. The result reflectsprimarily a higher result in the natural gas liquids business, and gains fromnon-operating items. The natural gas liquids result has improved due to the higher level of liquidsprices and the wider spread between natural gas and natural gas liquid prices. Non-operating items include a gain on disposal of BP's interest inInterconnector UK Ltd. and net fair value gains on embedded derivatives. Other Businesses and Corporate 1Q 4Q 1Q$ million 2005 2004 2004 =====================Profit (loss) before interest and tax(a) 357 (1,209) 1,191Inventory holding (gains) losses (150) (7) (97) ---------------------Replacement cost profit before interest and tax 207 (1,216) 1,094 =====================Results include:Impairment and gain (loss) on sale ofbusinesses and fixed assets (24) (1,101) 1,257Environmental and other provisions - - -Restructuring, integration and rationalization costs (43) (90) -Fair value gain (loss) on embedded derivatives (4) - -Other - 66 - ---------------------Total non-operating items (71) (1,125) 1,257 =====================Analysis of replacement cost resultbefore interest and tax(a)Olefins and Derivatives 356 (964) (105)Other (149) (252) 1,199 --------------------- 207 (1,216) 1,094 ===================== (a) Includes profit after interest and tax of equity-accounted entities. Other businesses and corporate comprises Olefins and Derivatives, Finance, thegroup's aluminium asset, interest income and costs related to corporateactivities. The group's interests in PetroChina and Sinopec were divested inJanuary 2004. The first quarter result includes a charge of $71 million fornon-operating items. This primarily comprises a charge in respect of theseparation of the Olefins and Derivatives businesses of $43 million and an assetimpairment of $23 million, also related to the Olefins and Derivativesbusinesses. The Olefins and Derivatives result showed a marked increase over ayear ago due to higher margins. Dividends Payable June March June 2005 2005 2004 =====================Dividends per ordinary sharecents 8.50 8.50 6.75pence 4.450 4.522 3.807 Dividends per ADS (cents) 51.0 51.0 40.5 ----------------------- BP today announced a dividend of 8.50 cents per ordinary share to be paid inJune. Holders of ordinary shares will receive 4.450 pence per share and holdersof American Depository Receipts (ADRs) $0.51 per ADS share. The dividend ispayable on 6 June to shareholders on the register on 13 May. Participants in theDividend Reinvestment Plan (DRIP) or the DRIP facility in the US Direct AccessPlan will receive the dividend in the form of shares, also on 6 June. Outlook BP Group Chief Executive, Lord Browne, concluded: "World economic growth was sustained into the first quarter of 2005 across all regions. The current outlook is for some moderation of global growth towards trend rates through 2005. "Oil prices reached a further record average of $47.62 per barrel (Dated Brent) in the first quarter, $3.77 per barrel higher than in the fourth quarter. Prices appear to have been supported by high demand growth and limited spare production capacity notwithstanding that OECD commercial inventories are above seasonal five year average levels. "US gas prices averaged $6.27/mmbtu (Henry Hub first of month index) in the first quarter, down by $0.80/mmbtu versus the fourth quarter. Working gas inventories remain above year-earlier and five year average levels but the futures market continues to signal a supply-constrained market. "Refining margins improved by 25c/bbl versus the fourth quarter. Margins increased sharply towards the end of March and that strength has been maintained into April. Second quarter margins to date are currently above last year's second quarter levels, supported by demand growth and concerns about US gasoline supplies in the driving season. Retail marketing margins were extremely weak during the first quarter because of steadily rising product prices. Slightly weaker oil prices have contributed to improved marketing margins in the second quarter to date, but the depth and sustainability of the improvement is uncertain. "Our strategy is unchanged. We continue to execute it with discipline and focus. Strengthening cash flow enabled shareholder distributions in the form of dividends and share buybacks amounting to $4 billion in the quarter." ---------------------------------------------------------------------- The foregoing discussion, in particular the statements under "Outlook", contains forward looking statements particularly those regarding BP's asset portfolio and changes in it, capital expenditure, cash flow, dividends, future performance, growth and other trend projections, margins, movements in working capital items, production, share buybacks, and the timing of projects and operations. By their nature, forward looking statements involve risks and uncertainties and actual results may differ from those expressed in such statements depending on a variety of factors including the following: the timing of bringing new fields on stream; industry product supply; demand and pricing; currency exchange rates; operational problems; general economic conditions including inflationary pressures; political stability and economic growth in relevant areas of the world; changes in governmental regulations; exchange rate fluctuations; development and use of new technology and successful commercial relationships; the actions of competitors; natural disasters and other changes in business conditions; prolonged adverse weather conditions; wars and acts of terrorism or sabotage; and other factors discussed in this Announcement. For more information you should refer to our Annual Report and Accounts 2004 and our 2003 Annual Report on Form 20-F filed with the US Securities and Exchange Commission. ---------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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